Note 1: You may have to be logged in to your Mt.Gox account to see some of the links in the directions below.
Note 2: CNY (Chinese Yuan) is the same currency as RMB (Renminbi).
Step 1) Open an account at Mt.Gox;
Step 2) Open an account at BTC China;
Step 3) Verify your Mt.Gox account by scanning and sending a photo ID and utility bill. This may take a business day or two, but will not have to be repeated for future transactions;
Step 4) Go to a Chase branch and deposit the money you wish to send to your Mt.Gox account using a deposit slip. There is no charge for depositing;
Step 5) Once the funds are added to your Mt.Gox account (this currently takes one business day but will soon be one hour), buy Bitcoins by clicking "trade" and entering your order at the market price. You will be charged 0.6%;
Step 6) Using the withdrawal page on Mt.Gox, send the Bitcoins you bought to your Bitcoin address on BTC China (this will take about an hour to complete, as the Bitcoin network verifies the transaction;
Step 7) Sell your Bitcoins on BTC China for RMB. You will be charged 0.3%;
Step 8) Withdraw RMB via TenPay. Withdrawal fees are on the order of 1 or 2 percent according to this guy;
Your total cost = USD sent - (RMB withdrawn x USD/RMB exchange rate).
Example using Mt.Gox/BTC China/Currency rates at the time of this post:
$100 USD to be sent to China.
Best ask (Mt.Gox) = 2.355 USD/BTC (Determine the number of BTC you can buy, here.)
Bitcoins purchased = 100/2.355 - 0.6% = 42.463
BTC China best bid is 15.21 RMB/BTC. The entire sell order cannot be filled at this price, so we are actually selling for a range of prices. You can place a fictitious order here to verify what you will get for your Bitcoins.
42.463 x (range of bids) = 604.51 RMB - 0.3% = 602.70 RMB
After withdrawal fee (assuming the high end of 2%) = 590.65 RMB
590.65 RMB x 0.1566 USD/RMB = $92.50 USD.
Total fee for sending $100 USD to China, including currency conversion = $7.50!
Overall costs will vary depending on the bid depth on BTC China and the amount you are trying to send. If you were trying to send $10, in this example, the fee would have been 2.4 cents.
I repeat, you can send $10 USD to China, including currency conversion, for 2.4 cents, right now. Previously, this was neither possible nor practical. This is a first...
...and it's only possible with Bitcoin. Got coins?
UPDATE: Here is a handy spreadsheet to see how much your transaction will cost you. This morning, I ran the numbers for $100 USD again and you would actually earn money! Just hit "File... Make a Copy" if you want to make changes to the spreadsheet.
very, very nice example. people need to see more of this.
ReplyDeleteThanks for posting this.
ReplyDeleteNice example.
ReplyDeleteAnd it's even cheaper - /much/ cheaper - if you're sending to bank accounts in currencies which MtGox or Tradehill already support.
I can deposit any currency Tradehill supports directly into any bank account in the country of that currency. Just fill in the account#, bank name, branch addy, etc.
We just need one ridiculously simple App.
I don't know about Tradehill, but Mt.Gox dings you 2.5% on the currency exchange. For example, if you deposit in CAD, buy BTC, then sell BTC into another currency, you end up dinged 1.25% on each transaction, plus the spread between the bid and the ask plus the 0.6% commission.
ReplyDeleteIf you convert the currency by going through a separate exchange that operates only in the destination currency, you are not dinged for the exchange rate. If you're patient and time it, you can take advantage of the arbitrage and come out even or ahead.
Yeah - you're right, GoWest.
ReplyDeleteI forget about that - I only deposit Bitcoin, which is free; not currency. I'm a miner...
Stiil, to send a hundred bucks costs 2.5% + 0.6% + spread (if negative). About three bucks? Still cheaper than Western Onion, or any other transfer agent I'm aware of. No?
You still have to get the other currency off the exchange and into a bank account. I think Euro SEPA transfers might be free. So, yeah, it's probably cheaper or at least comparable to Western Union or similar.
ReplyDeleteThe real advantage will be if and when Bitcoin becomes a currency unto itself. Transaction fees go to zero.
Intersango.com - it's currently a free service
ReplyDeleteIt's a shame that the whole "scan and ID and utility bill" step is in there, to sign up for MtGox. One of the beauties of Bitcoin is that no one ever needs to identify themself to use it, and transactions are mostly free. It's the exchanges that require identity and charge fees.
ReplyDeleteThe ideal case is if you have a friend willing to sell you some BTC. Install the BTC software on your computer (no ID required, no login, no games), then pay him some cash and give him your address. You can then send those coins to China for free and it cost you nothing.
Mt.gox sells rmb and already has a Hong Kong bank account - so you can transfer money to a Chinese bank account straight from there (either take the 2% fee for money exchange, or buy btc in $ and then sell them for rmb directly on mt.gox).
ReplyDeleteYou don;t need to do the utility bill thing - you can withdraw 100 btc from mt.gox per day, or 10,000rmb.
If you know someone who can sell you BTC in real life, then that's definitely the way to go. My guide, however, assumes nothing.
ReplyDelete@Mark: If you do everything through Mt.Gox, the fees you pay are the spread between the bid and the ask, the 2.5% currency exchange fee, and the 2 x 0.6% trade fee. There are a lot of variables, and your method is actually very inexpensive as well, but if you do it my way and time it well, you can send money to China for free.
ReplyDeleteExactly how is it possible to trade on BTC China when all it is is a bbs forum?
ReplyDeleteFalse: http://betwithbtc.com/btcchina.png
ReplyDelete@GoWest
ReplyDeleteIs that a recent screenshot? When I go to btcchina.com all I get is the options for Home, help, and forum. I don't get the options for transactions and account management. When I log in I am redirected to the board. I guess I will just ask on the board. Thanks for the screenshot.
I took it yesterday - it's very recent.
ReplyDeleteStrange. Well hopefully my account gets changed to a trading account. I have recently started doing my business in bitcoins and would love to start paying my employees and clients using them. I have a number of clients and workers in China but with the capital flow barriers is too expensive to continue send them traditional currencies.
ReplyDeleteAs an update. After about 3 days the account is transfered automatically to a trading account.
ReplyDeleteI live in China, and have watched BTC trading volume in China. In a country of nearly a billion people, maybe 80 coins are bought with RMB in a single day.
ReplyDeleteWouldn't that make cashout nearly impossible? Or is this process supposed to be telling us that a person can just convert USD to RMB with bitcoin, no need to actually sell said bitcoin to someone that is actually buying with RMB. The buyer could buy with USD, and it's up to the service to pay you in your desired currency such as RMB?
After 4 years in China, I've found that bank wires are great for large amounts. Checks also work nicely but are slow. And it can be useful to just set up an ATM card with a balance that you can put funds into, and your party makes withdrawals on Chinese AMTs. The costs for everything I just mentioned is about 2-3% depending on amount being sent.
China does have a cap however, of 50k per year but that's material for another post.
Yea, I have been playing around with Btcchcina.com. They have very low volume so if you are sending large amounts of money it is not very helpful. It could be used on micropayments. One think to take note, when you first open an account you are limited to 10 bitcoins withdraw per day. You can easily get it increased by emailing the admin at admin@btcchina.com and asking for a higher rate. This is important if you transfer say 100 bitcoins to your Btcchina.com account but then you want to have it back. Or say you buy some bitcoins on their exchange.
ReplyDelete