How I save money by using bitcoin to send money to Zimbabwe

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I have been using bitcoin to send money to Zimbabwe for more than a year in order to save money on fees and make a small profit on the exchange rate. As a result, I now use only about $275 to send $300 to my parents’ EcoCash account. This represents approximately $35 in savings per transaction compared to the $310 I previously used by channeling remittances through Money Gram. This method only requires moderate computer skills and is a good way to experiment with a very interesting technology.

This method works by taking advantage of bitcoin exchanges—websites where bitcoin buyers and sellers execute trades. First, I buy bitcoin in the United States on the exchange Coinbase. Then I transfer this bitcoin to the Zimbabwean exchange BitcoinFundi in order to sell it to a buyer in Zimbabwe.

There is more demand than supply for bitcoin in Zimbabwe, so I usually sell my coins for about 10% above what I pay in the United States—even after accounting for BitcoinFundi’s 1% transaction fee. Finally, after someone in Zimbabwe buys my bitcoin, I withdraw US dollars to the EcoCash account of my recipient. This person does not need to know anything about bitcoin, or even that it was used in the transaction, taking away the perceived technical pain often associated with Bitcoin. Furthermore, I am able to withdraw to as many recipients as I want for free—a useful feature when I want to send someone $5 of pocket money.

This method does entail some risk and inconvenience. Bitcoin can be tremendously volatile so you can lose (or gain) value on your holdings in the time it takes to complete a transaction. Bitcoin is also prone to theft by hacking so you put your funds at risk when you store them on exchanges. Also, the low volume of transactions on BitcoinFundi means that it usually takes a few days for a buyer to come along.

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Despite these risks, bitcoin is a fascinating technology due to its ability to easily transport value across international borders and store value outside of the traditional banking system. These factors—combined with the savings associated with the method above—make bitcoin useful in many entrepreneurial endeavors. For example, it could potentially be a lucrative endeavor to start an artisanal remittance service by keeping bitcoin and cash floats on various exchanges, arbitraging price differentials between markets, and undercutting Western Union and Money Gram by charging only a 5% fee.

Advanced users could even program a trading bot to constantly adjust orders on BitcoinFundi to track price movements on another exchange, automatically trigger a buy on a foreign exchange upon a sale in Zimbabwe, and send email or SMS notifications when transactions occur. Of course, transferring money for other people usually requires obtaining licenses and paying taxes in the countries where you operate. Violating these laws can easily get you into deep legal trouble and bitcoin is NOT anonymous as some people think—especially after you submit your identification to open accounts on bitcoin exchanges.

It remains to be seen if bitcoin will still be around in a decade, but there are some positive indicators. Exchanges like BitcoinFundi are increasingly available around the world, and are attracting a lot of attention from investors. UnoCoin in India just raised US $1.5 million, while Mexico’s Bitso secured US $2.5 million in funding. Meanwhile, the Digital Currency Group (a major investor in bitcoin exchanges), recently reported that monthly bitcoin-based remittances have increased from $5 million to $40 million during 2016 alone.

Taking BitcoinFundi for a spin is one way to get some hands-on experience with what some people speculate will become “the future of money.” CoinDesk has a good resource for learning more about what bitcoin is and how it works. To get started, view BitcoinFundi’s tutorials on depositing bitcoin, executing trades, and withdrawing funds to EcoCash. Also, consider attending the Blockchain Summer School in Harare this November 22-25. I will be discussing ethical issues related to blockchain technology.

This is a guest post by William Suk, a Bitcoin enthusiast.

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28 Comments

  1. confused says:

    I don’t understand bitcoin….there is no physical manifastetion of it….and therefore how can it have value…currencies are backed by gold reserves….but this is just software…it does not exist ….whats the difference between this and rtgs dollars….its just one I owe you to the next…by the way block chao summer school is way overpriced

    1. Langton says:

      That is why it is volatile. Uts backed by a currency used to purchase it which is then backed….

    2. TheKing says:

      Currencies are not backed by gold reserves, they are backed by trust in institutions like reserve banks and the strength of economies. Bitcoin on the other hand is backed by an algorithm. My only qualm with Bitcoin is most people are holding the currency for speculative reasons not for actual spending, so to me Bitcoin at the moment is a financial instrument not a currency.

    3. William Suk says:

      You are not alone in being confused—even after using bitcoin for a few years I still struggle to understand why it has any value. As you identified, it is not backed by gold or government and it has no physical form. Bitcoins are, essentially, numbers in an online database. However, people somehow believe that they do have value, and they will pay a lot of money for them, which is why they have value. I know, it’s circular reasoning, but this is actually the underlying logic behind all forms of money—diamonds/gold/cash all have value because people think they are worth something and behave accordingly. Bitcoin could easily collapse if this belief is undermined—if the protocol is hacked, if something better comes along, or if it is internationally banned and becomes too risky to use.

    4. Anonymous says:

      Most currencies are not backed by anything. The US dollar has been off the gold reserve for a while now.

    5. Tawanda Kembo says:

      If you want to attend the Blockhain Summer School but find the price too high for you, you can send me an email on support@bitfinance.co.zw and I’ll see what I can do to organise a ticket for you. Just mention that you saw this comment on TechZim

    6. Tawanda Kembo says:

      No currency is backed by gold. All currencies have their value determined on a forex market (whether it’s bitcoin or USD). Of course, in the case of the US dollar, it’s called the forex market and in the case of bitcoin, it’s called a bitcoin exchange but at the end of the day , the value (or price) of a currency is determined by the buyers and sellers on a free market and it changes every time someone agrees to buy/sell – all currencies are therefore volatile. Of course, some more than others.

      I wrote a blog post a couple of months ago talking about the history of money and where it gets its value from. You should check it out here; https://steemit.com/bitcoin/@tkembo/where-do-currencies-get-their-value-from-or-a-history-of-money

  2. james says:

    this article is infact an advertisement of bitfinance.co.zw and their services.

    please be more responsible!

    1. William Suk says:

      I am not an investor or employee of BitFinance. I use their exchange because right now it is the only one in Zimbabwe. They do have some work to do. Right now there is little volume and their exchange interface is a bit buggy so you have to be very careful when inputting orders. If there was another option, I would have mentioned it in my article.

      But to be honest—you are right—I would love to see BitFinance succeed. I have been sending money to Zimbabwe since I got married 10 years ago. In that time I have paid thousands of dollars in fees to Western Union and Money Gram. I would be thrilled if a Zimbabwean-owned and operated business were able to profit off of my money transfers rather than these huge, multinational corporations based in the United States.

      The remittance sector is constantly changing—from Western Union to Mukuru, to sending money or goods via South Africa with bus drivers, to having people profit off of you during by delaying transactions when there is inflation. I see bitcoin as one new experiment in this space, which could take off or just as easily disappear. If it does take off–and it’s a big “if”–wouldn’t it be nice if a Zimbabwean company owned a small slice of the pie currently dominated by European, American and Chinese companies? I guess I am biased.

  3. Macd Chip says:

    The money you save in sending fees is spend on time and complexity of the process when sending money!!

    I send money a lot and get charged, but l do not see bitcoin as way of saving me money. Its not yet for the masses, you cannot be a trader and consumer at the same time.

    Bitcoin needs to grow up and give a clear and simple way of doing business, at the moment its a currency for the geeks.

  4. william suk says:

    Regarding your point that money saved on fees is spent in time: this is especially true if you are new to bitcoin. However, now that I know how it works, it is actually more convenient because I can do it all from my desk and don’t have to go to the bank to get cash, go to the money transfer place, stand in line, call Zimbabwe with the MTCN number, etc. However, I am sure a lot of people would find it easier and more convenient to continue using Western Union.

    But you are essentially right—bitcoin is currently a toy for geeks and others with time and money to burn. It is risky and has a significant learning curve. As you correctly observe, the “masses” will probably not be using bitcoin any time soon. Moreover, if they ever do start using bitcoin, the main ones who will benefit are the same geeks who bought into it in the early days. For this reason bitcoin has been compared to a ponzi scheme like MMM. Thanks for raising this point. I will be discussing some of these issues that are not frequently acknowledged by “bitcoin evangelists” in my talk at the blockchain summer school.

  5. Taps says:

    How is the volume at the moment? Can I sell $1000 worth of bitcoins in a day?

    1. Tawanda Kembo says:

      Our 30 Day volume is now in the range 30 – 40 BTC. This month we’re going to do 50 BTC for the first time.
      Yes you can sell $1K worth of bitcoin a day. Our 24 Hour volume is currently mostly around 1 – 2 BTC. You can check out our volume stats at the footer of any page on https://bitcoinfundi.com

    2. William Suk says:

      It depends. Like I said, the volume right now is not great. I think this is a function of the fact that there are often few bitcoins for sale, so buyers have not really come along. If more people have bitcoins for sale, this will probably drive down the price, which is a good thing in my opinion, because it will attract buyers and volume. There may also be increasing volume due to the fact that people can deposit funds by bank transfer, which can be a way to convert these funds. However, the best time to sell is when bitcoin is increasing in price. When the price of bitcoin is falling it is harder to sell. At the moment, it can be difficult to sell 1k usd over night, but it depends on the price that you set. As the site grows in popularity, and if any new exchanges open, it may get easier.

  6. Understand says:

    I see my comment was removed so this is a sponsered article. I get it now that bit coin only value is speculative and can then be used as an i owe you that has 2 advantages one of its finite and two is very difficult to forge. It’s being pushed by the few who have it already as they have aquired for a song. So comes back to the point that rbz is pushing their own version of Bond coin it has not value but I use it an an I owe you easier that carrying credit notes that are shop specific. Difference is people are pushing bitcoin and people are against bond

    1. Tawanda Kembo says:

      I’m pushing bitcoin but I’m not really against bond coins. They way I see, both will fill different use cases. Bitcoin is great for making online payments and cross-border payments. In fact is it’s the fastest, cheapest and easiest way to make an online payment or move money across a border. Bond notes on the other hand can’t do that. Bond notes are great however for making POS payments. If I want to buy from a Vendor or in a supermarket, it may be better to use bond notes. But if I want to buy a car from Japan, I would use bitcoin to make the payment.

      1. Macd Chip says:

        ”…..In fact is it’s the fastest…” You sound like a salesman there. Years of buying, sending money and paying for goods in other countries tells me you are misrepresenting facts there for your own benefit.

    2. William Suk says:

      ” It’s being pushed by the few who have it already as they have aquired for a song. ” This is a fact. Thanks for underlining it. Bitcoin was never, and will never be, an egalitarian currency, open to equal participation by all. The disproportionate benefits accrued by early buyers is what makes many people liken bitcoin to a pyramid scheme and others liken it to a smallcap stock in a promising company. Many people who buy and hold bitcoin are indeed speculators. However, it is also a fact that bitcoin is useful because there are actively traded bitcoin markets worldwide, which makes it useful for international payments. These two uses–utilitarian/speculative–are linked. The price goes up as more people use it, which makes more people buy it for speculation. Of course, this can also happen in reverse.

  7. Clear says:

    @kembo read your article… I understand that currencies have lost their food backing
    And are medium of exchange just like button… But that does not make it right… We should return to gold baking… There’s no difference between this and bond… They both are value less

  8. Clear says:

    @kembo read your article… I understand that currencies have lost their food backing
    And are medium of exchange just like bond… But that does not make it right… We should return to gold backing… There’s no difference between this and bond… They both are value less

    1. Tawanda Kembo says:

      All currencies are valuable as long as there is someone willing to accept as payment or someone willing to buy them. I think we should be moving away from the gold standard, from governments and from central banks and towards decentralised currencies like bitccoin – whichn can’t be manipulated by governments.

      Here are some other things to think about:

      – The US dollar is just as bad as the bond note. The bond note will likely be worse but the RBZ is just doing what every other Central Bank in the world does: The government (and this is true in every country) lives beyond it’s means, so they just print money to make up for the difference.
      – Did you know that when the US was formed in 1776, it only had it’s first Central Bank (the Federal Reserve) in 1912. The Central Bank was formed to ‘preserve the value of the US dollar’ even though the value of $100 in 1912 was still the same value as $100 in 1776 (before the Central Bank, the US dollar maintained it’s value for 136 years. Between 1912 and now, the US dollar has lost 98% of it’s value. My point is that, money without government is a better form of money. A lot of people don’t realise this

  9. Clear says:

    Button should bond

  10. Gour Lentell says:

    Great article William, thank you.
    I’ve been waiting for BitcoinFundi to go live and was not aware it had happened. Have signed up and transferred my first test Bitcoin deposit.
    It’s awesome!

  11. Gour Lentell says:

    I tried it out today, worked perfectly.
    Thank you again William.

  12. Sean says:

    Thanj William tried it it works

  13. jaiso says:

    i would better trust bitcoin than trust RBZ and mangudya

  14. bitcoinesbuh says:

    I really think btcpop should be good for some purchase.You can invest presently in explains and a couple of loans which are that has 100% protection so guarenteed profit.also these folks provide 5% per annum savings plan.Less but completely safe You can profit shelling out .1btc even though that is really really small like you and your family will outright get wide variety of satoshis funds in in real estate investment however you’ll can attempt to buying brand new coins in addition to the wait in its the price to lift and getting rid of them

    1. william says:

      This is a scam. Please do not sign up for things that promise they are “completely safe” they are scams to steal your bitcoins

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