Bitcoin transactions are 6000 times cheaper than traditional fiat transfers – at least according to Bank of America (BoA)’s own rates. Despite common criticism that cryptocurrency transactions remain too expensive, data from BoA shows that an international wire transfer in US dollars costs $45 per transaction, compared to an average transaction fee of $0.46 for Bitcoin (data from Bitinfo charts).
All Bank of America transactions are processed through the Federal Reserve’s money transfer network called FedWire. The Fed charges a maximum processing fee of 82 cents for using the network – which puts the margin for Bank of America transactions at 98% or more.
FedWire fees are estimated based on the size of the individual transactions and total volume of payments, and an additional ‘incentive fee’ discount can be applied for “transfers that exceed 60% of a customer’s historic benchmark volume”. US banks can pay as low as $0.32 in fees for transactions over $90,000 – but at least according to publicly available figures, customer fees do not benefit from this discount.
By contrast, a Bitcoin transaction worth $90,000 would cost only 75 cents, according to Earn.com data which puts recommended fees at eght satoshis per byte.
Despite the striking difference, Bitcoin fees remain one of the biggest hurdles the first cryptocurrency has to overcome. Transaction costs have decreased significantly throughout 2018, but remain high in the eyes of consumers and merchants who wish to use BTC. The SegWit consensus layer, which allows faster and quicker transactions, was introduced in 2017 and met with widespread acclaim from clients and investors alike.
Although adoption rates for SegWit have been slowly increasing, they remain slow and businesses that are yet to add support for the protocol have been criticised. Many of the popular crypto exchanges adopted the protocol in 2018, including Coinbase, which introduced SegWit to its platform in February of this year.