Nick Tomaino is on the business development team at Coinbase, and is also a first-year business school student at the Yale School of Management.
Prior to that, he worked in venture capital, most recently for Softbank Capital.
Bitcoin is an open payment network that anyone in the world with an Internet connection can use.
The open, global nature of bitcoin has tremendous advantages over existing financial infrastructure for international travellers. These advantages became clear to me during a recent trip to South America.
Below are some of the problems that international travellers currently deal with.
Hassle of currency conversion
When travelling to foreign countries, it can be a major hassle to convert to local currencies and carry around local cash. I traveled to Buenos Aires, Argentina, and Rio De Janeiro, Brazil, on my trip and had to worry about exchanging currency three times (when both entering and leaving a new country).
Wouldn’t it be great to be able to eliminate one of the major hassles of international trips? As a global currency used by consumers and merchants worldwide, bitcoin eliminates the need for dealing with multiple currency conversions and carrying a lot of cash.
In addition to the hassle of dealing with currency conversion and carrying cash, it can also be quite costly to get cash and make payments in new countries. During my time in Brazil, I incurred three approximately $15 ATM fees to withdraw Brazilian Reals from a local bank – a $10 charge from my large US-based bank, in addition to $5 from the local Brazilian bank – for each withdrawal. I incurred one $15 ATM fee in Buenos Aires, as well. Additionally, I was charged a fee every time I used my card to make a purchase.
The twelve times I swiped my card to buy something ended up costing me $36 dollars. The high fees I paid ($96 in total) on my trip highlight the massive friction that exists between existing payment networks worldwide.
An open, global payment network reduces friction and fees. As the world continues to become more inter-connected, I think this will become a more obvious benefit of bitcoin.
When you use your credit card internationally, you give unfamiliar foreign merchants your payment credentials. These merchants can either intentionally or unintentionally expose those payment credentials to criminals.
While I was in Buenos Aires, I purchased water at a convenience store. The following day, I got a call from my bank telling me I had hundreds of dollars of fraudulent charges made with my debit card.
The unfamiliar merchant in Buenos Aires must have exposed my payment credentials to a fraudster. My bank account was compromised, and while the charges were covered, my bank told me it would take five to seven business days for them to mail me a new debit card. This left me without access to my bank account for a week in a foreign country.
Luckily, I had another card to cover me from the rest of the trip, but I’m not sure what I would have done if I did not. This is a scenario I suspect is all too familiar for many who have travelled internationally.
Bitcoin solves many problems that international travellers currently deal with. It eliminates the hassle and fees associated with converting to local currencies and carrying cash, and it securely protects the payment credentials of consumers to avoid fraud risk and the potential to lose bank account access in a foreign country.
While it is tough to travel with only bitcoin on international trips at the moment, the rapid merchant adoption of bitcoin is changing this.
Travel-focused merchants such as CheapAir.com, BTCTrip and Pointshound are just a few merchants generating significant bitcoin sales from international travellers. As more travel related merchants accept bitcoin, and consumers continue to realize the huge efficiencies that bitcoin provides, I expect the travel space to continue to lead bitcoin adoption.
Next time I travel internationally, I hope to be able to leave my credit and debit cards at home.