Wednesday, October 19, 2011
Send Money to China with Bitcoin and Save Huge!
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Your total cost = USD sent - (RMB withdrawn x USD/RMB exchange rate).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.