"Where is bitcoin being used today?" This is a question we get often, so we're taking the time to highlight the industries for which bitcoin is solving real business problems.
The next industry on our list? Foreign exchange. Several of the top platforms in the foreign exchange ("forex") space have chosen to accept bitcoin payments through BitPay, including Europe's FX Primus and Axiory, ShiftForex, and Golden Capital FX in Latin America. Here's why.
Forex payment problems, bitcoin solutions
Forex platforms allow users to trade between currencies, usually in large amounts. Currency markets are some of the most active markets for speculation and arbitrage – they're open every day in the business week for 24 hours per day all year long, and they regularly see global trade volumes of more than $5 trillion on a daily basis.1
The quick access to liquidity and trades between currencies provided by forex platforms help to balance currency prices against one another. This is valuable for an economy at a macro level, but it presents micro-level opportunities for traders. Investors and speculators in the forex market stand to gain from arbitrage opportunities where currencies are over or undervalued.
While trading has become nearly instant on online forex platforms, the account loading methods available to investors and speculators have not caught up. Credit card payments can get declined easily by banks from certain countries. International transfers can take days to clear, with large and unpredictable fee costs for investors due to exchange rates, taxes, and fees charged by middlemen banks.
Forex traders need a better way to move in and out of currency markets. That's where bitcoin comes in.
Why forex platforms choose bitcoin
As a first of its kind currency with its own trading potential, Bitcoin is a natural fit for forex platform users' currency trading. But Bitcoin offers something which other traded currencies don't: its own innovative payment system and its own advantages as a payment method.
Many traders already speculate on the global bitcoin market's exchange rates. This means that adopting bitcoin as a load and payout option lets forex platforms take advantage of a universal currency already used across markets. Bitcoin allows forex platforms' customers to easily move in and out of bitcoin toward any local currency.
Bitcoin is especially valuable for forex traders in developing countries which have limited access to wire transfers or credit card payments. Bitcoin settles faster (usually in minutes) and more cheaply than any wire transfer. Unlike credit card payments, bitcoin transfers can be as small as a dollar, and they are not subject to the frequent credit card declines which affect forex traders paying from developing countries. Many of these unique benefits of bitcoin are useful even for overbanked users – traders with sufficient access to credit card transfers or wire transfers.
For the forex platform, bitcoin removes the cost of credit card fees and the risk of chargebacks on what are typically large payments. This greatly reduces the cost and effort of processing deposits from traders. And with its benefits to users in both underbanked and overbanked economies, bitcoin helps forex platforms reach further than ever before.
Bitcoin has an edge in payouts for forex platforms
Since regulators are strict in preventing money laundering, it’s important that forex platforms keep a closed loop with payment methods. This means that a forex platform's withdrawal method should be the same as the payment method. When used as a payout method as well as a payment acceptance method, bitcoin solves this problem.
Compared to other withdrawal payout methods, BitPay's bitcoin payouts also shine in both expense and settlement times.
* Based on average of top 10 US banks
* Not including processing time
Why forex platforms choose BitPay
We believe there's a strong case for bitcoin as a solution to the problems of moving money in and out of forex platforms. BitPay is allowing forex platforms to accept bitcoin payments and receive EUR, USD, or other local currency settlement to their bank accounts, without any risk of bitcoin price volatility. BitPay's bitcoin mass payouts are also simplifying payouts – platforms can fund one batch payout in their local currency, and BitPay will send bitcoin to any number of recipients worldwide for a flat fee.
We're excited to continue to give our clients in this space the tools they need to take advantage of bitcoin's strengths in fast, secure, and affordable online and international payments.
Interested in learning more about how your forex platform receive or send bitcoin payments with BitPay? Reach out to our team!
PayPal cross-border payout fees: https://www.paypal.com/us/webapps/mpp/mass-payments ↩
Wire transfer fees, average from top 10 US banks: https://www.mybanktracker.com/news/wire-transfer-fee-comparison-top-10-us-banks ↩