# Would it be any cheaper to transfer US dollars to Canadian using Bitcoin?

I'm a Canadian working for an American company. I get paid in American which gets deposited into an American account. To get the money to Canada, I write myself cheques from my American account and deposit into my Canadian account. Would it be feasible/beneficial to transfer the money via bitcoin (convert USD to bitcoin, then convert bitcoin to CAD) instead of writing the cheques?

• Could you give approximate information on how much fees you pay for your current solution? Since you ask if using Bitcoin would be cheaper, that does affect what answer would be correct. – pyramids Mar 28 '14 at 20:24
• The exchange rate the last time I deposited was 1 CAD = 0.9 USD, and I deposited \$9000 and got \$743 on the exchange (so I lost \$157 on the exchange compared to the pure exchange rate). It's not just if it's cheaper, but is it simple? – Chris L. Mar 28 '14 at 20:28
• I deposited \$9000 USD. If I got the full exchange rated, I should have gotten \$9900 CAD after the deposit, but I actually got \$9743 – Chris L. Mar 29 '14 at 14:37
• Let me try to redo the math: If the exchange rate was USD 0.90 equals CAD 1.00, then the USD 9,000 you gave were worth CAD 10,000, so by getting CAD 9,743, you effectively paid CAD 257 or 2.57% in fees. – pyramids Mar 29 '14 at 14:48
• Yes, that sounds right. So the fees are comparable. How long would that chain of transactions take to complete? – Chris L. Mar 29 '14 at 20:46

If you exchange your US Dollars for Bitcoin and then use Bitcoin to buy Canadian Dollars, you will pay the exchange fees for that plus some more hidden costs such as for the bank transfers to fund these trades and the insurance cost for your Bitcoin exchange companies going bankrupt on you or the exchange rate dropping in between your purchase of Bitcoin and purchase of Canadian Dollars. Due to the volatility of Bitcoin and the surprisingly high rate of defaults of Bitcoin exchanges, these risks are, if priced correctly, much more costly than one might be used to in more established financial business.

Here are some wild estimates:

1. Low volume purchases of Bitcoin might cost up to about 0.5% in exchange fees.
2. Same for low volume sales of Bitcoin (i.e. for Canadian Dollars).
3. If you want to avoid the risk of the exchange rate moving between these transaction, you should budget for a similar loss (0.5%) due to the ask-bid spread.
4. Let us assume it takes you a week to complete everything including the money transfers, and that the risk of losing all is approximately the rate at which Bitcoin exchanges have historically defaulted (approximately half after one year of operation), and that you stand to lose all money involved if that happens. Then a fair insurance against this risk is another 1%.

The total of all this is an expense, either directly or as risk allowance to insure yourself, of 2.5%. Since you may be able to improve a bit on every point, this could be called competitive with banks' international currency exchanges (which have once been described to me by a banker as carrying a guaranteed flat-rate 2.5% fee plus hidden costs).

But if you only pay \$157 for exchanging \$9000 in your particular case, which is about 1.7%, it will only be advantageous to use Bitcoin if either you can improve significantly on my example, or manage to talk yourself into ignoring or neglecting the risk of the Bitcoin exchange defaulting on its obligation to you. Of course, there are many entrepreneurs, myself included, who are trying to improve on the poor track record of Bitcoin exchanges!

EDIT: From the comments to the question, my best guess currently is that you effectively paid 2.57% in fees with the solution you now have. This makes it a tough call to answer if using Bitcoin is advantageous---by my example, it only is if you put a very low value on the added hazzle of dealing with at least one company acting as a Bitcoin exchange. In practice, you might find it possible to improve on my estimates, so the answer might be that it may be advantageous, depending on circumstances.