Wire Transfers — Blockchain Transactions
How does Blockchain change Global Transasctions?
What is Wire Transfer?
Wire transfer, bank transfer, or credit transfer refers to an electronic transfer of funds via a network that is administered by banks and other transfer service agencies globally.
With wire transfers you can send and receive only via institutions, which require information about the party initiating the transfer (such as account number, name, etc.). A wire transfer can be made between bank accounts from banks or non bank providers (such as Western Union), and include those facilitated between domestic banks and international ones. Wire transfers are cost effective compared to other payment methods and you have the ability to send large amounts and choose different payment and receiving methods. But, it is important to mention that it’s still an expensive way to transfer money, because banks generally charge outgoing fees.
Wire Transfer Fees
Based on two types, domestic and international, the cost-fees and the delivery time varies.
Bank wire transfer fees usually range between $6 — $50 per transfer.
Domestic outgoing wire transfer charges typically range from $6 — $35, while international outgoing bank transfer charges are typically $35 — $50.
Furthermore, the recipient’s bank deducts approximately $8 — $10 from the amount of money wired to the recipient. Last but not least, some banks may charge hidden costs in addition to the transaction fee.
Blockchain — Bitcoin Transactions
In recent years, technology is evolving drastically and revolutionarily. Blockchain, a technological breakthrough, completely changing the financial and banking system.
Let’s talk about blockchain and payments — transactions.
Payments are similar with Wire Transfers but not the same. Bitcoin Payments clarifying is executed via Blockchain and the transactions are recorded in a public ledger.
Due to Blockchain technology we have the ability to eliminate the need to rely on intermediaries to approve transactions and have faster and cheaper transactions. Also, Blockchain technology has better suited the needs of cross-border payments. This technology has sped up transactions while maintaining the security of the process.
Bitcoin was designed for Peer-to-Peer (P2P) transactions so it removes the need for intermediaries. You don’t have to depend on any financial institution to hold and manage your money.
Bitcoin transactions are signed using cryptography and sent to the entire Bitcoin network for verification. The information is publicly signed on the blockchain (distributed ledger).
If you want to send or receive Bitcoin, you must have access to the Public & Private Keys. Each participant who wants to transfer Bitcoin, has pairs of public keys and private keys that control pieces of owning bitcoin.
-Public Key: is an address (bitcoin address), which is generated from random sequences of letters and numbers (such as a username or email address).
-Private Key: is your personal & unique password, which is also generated from random sequences of letters and numbers.
A user with a private key can sign transactions and thus transfer the value to a new owner. Then, this transaction is transmitted over the whole network in order to be included in the public ledger.
Never Share your Private Key!
Everyone who has access to your private key has access to your digital assets (BTC, XRP, etc.).
As we already mentioned above, Bitcoin Transactions are faster than any other traditional transaction.
Average Confirmation Time | 1 year (2021–2022)
On this network, the average confirmation time for a bitcoin payment is around 10 minutes. Sometimes, transaction times can vary wildly due to some main factors, such as the total network activity and hashrate.
It has been observed that the verification process of each transaction takes from 10 minutes to an hour.
Will Bitcoin transactions ever be faster?
Of course, there are solutions, one of which is the Lightning Network. The Lightning Network aims to introduce micropayment capabilities that are extremely cheap and fast at the same time.
Scaling solutions such as the Lightning Network aim to solve this problem by adding another layer on top of the Bitcoin blockchain to speed things up. It aims to introduce the capability of micropayments that are cheap and fast, solving a major scalability issue of Bitcoin.
Bitcoin Transaction Fees | 1 Year (2021–2022)
Transaction fees are a “mirror” of the speed which a user wants their transaction to validate on the ledger. More specifically, when someone wants his transaction to be executed faster than expected, he has to pay a higher fee.
In 2021, BTC transaction fees range between $1.80$ to $4.40 per transaction. The current period transaction fees range between $1.50 to $3.50 per transaction.
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