An increasing number of expats and OFWs are choosing Bitcoin and other cryptocurrencies over fiat bank transactions to sending remittances. Why is it so?
Benefits of crypto over traditional bank transfers
Cryptocurrency transactions are not controlled by a central authority such as a bank. As such, cryptocurrency transactions work better for remittances, and consequently, more expats are choosing Bitcoin over fiat.
- There are no bank fees associated with sending Bitcoin and other cryptocurrencies. There’s only the transaction fee to account for.
- Bitcoin can be exchanged into fiat anywhere in the world including online on Redot crypto exchange making it a global standard of transacting.
- Holding Bitcoin and other cryptocurrency assets are usually linked to an interest gain on the held amount.
- Transacting through cryptocurrencies is anonymous and private. Large sums can be sent and received without raising any red flags.
- A bank’s server can be, theoretically, attacked and data can be compromised. Cryptocurrencies work on public ledger systems called blockchains. They’re highly decentralized that any attack to manipulate records is futile.
Should you worry about IRS?
IRS has recently made regulations regarding remittances via cryptocurrencies stricter.
It’s important to report any transfer worth $10,000 or more to the IRS.
Cryptocurrency regulation is becoming a key area of focus within the IRS. The IRS already identifies the many ways using which people are laundering their money through cryptocurrencies and crypto-assets. Indeed, it’s a growing problem.
What will happen if you forget to pay taxes on your crypto assets?
You can get into trouble if you fail to report and pay taxes on your cryptocurrency assets. Cryptocurrencies such as Bitcoin and Ethereum are considered property. As such, they are eligible for short-term and long-term capital gain tax when used as a means of investment and trading. On the other hand, cryptocurrency incomes (including mining rewards and airdrops) are considered ordinary income and have to be clubbed with other channels of income while filing your tax returns.
The bottom line
Detecting cryptocurrency money transfers is very hard for the IRS. Even when detected by exploring the publicly open blockchain ledger of Bitcoin and other cryptocurrencies, it’s impossible to acquire verifiable information on the person behind a transaction.
Cryptocurrency transactions provide users privacy, security, ease of sending money, getting over banking hassles and fees, and other benefits. Why an expat chooses to send payment via cryptocurrency can be one or more of these factors, or maybe something entirely different.
Do you know that some cryptocurrencies can do more than 10,000 transactions per second? For example, Ripple (ticker: XMR) can handle up to 17,000 transactions per second. Central banks all over the world are also looking at Ripple to solve their transactional bottlenecks.
Given that on a blockchain, actual cryptographically confirmable value is being moved in contrast to the banking system, where only 0s and 1s are changing to reflect a change in balances, this is a huge advantage over traditional banks. For example, Visa can handle 24,000 transactions per second, only 7,000 more than Ripple.
Belief in this technology to be the future’s ideal payment method might also be a solid reason for expats to choose Bitcoin and other cryptocurrencies for sending payments abroad.
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