The Stateless Man: How to Avoid Bank Fees With Bitcoin

Get Started with the Alternative Currency and Free Yourself From Costly Transaction Fees

By Yaël Ossowski | The Stateless Man

If there is a clear and present danger to the status quo banking system, it exists in the form of digital crypto-currencies like Bitcoin.


Unlike today’s national fiat currencies, Bitcoin is a decentralized, digital currency coded with the latest cryptographic protections and powered exclusively by a peer-to-peer network.

Its community-driven, open-source design purposefully keeps control out of the hands of central banks and governments, avoiding the threats of shutdown and confiscation. The currency’s self-imposed ceiling of 21 million also saves it from the ruinous fate of inflation, creating new Bitcoins only once data “miners” have solved a string of complex algorithms — ultimately becoming more difficult after each equation is solved.

The benefits to this concept became especially clear in the run-up to the Cypriot banking crisis of March 2013. Closed banks, capital controls, and news of a looming bailout by the European Union led to Bitcoin achieving an all-time highvalue of US$266.

And as a digital currency in cyberspace, Bitcoin provides great opportunities for expats and persistent travelers who wish to cheaply transfer money across international borders without the hassle of expensive fees.

Bank wire transfers cost a minimum of $35 for each transaction, and normally impose conversion costs on the receiving end as well. Airports exchange desks notoriously charge large fees for converting cash on the spot, sometimes as much as 27 percent.

Even PayPal, once thought to be a haven of online trade, has gradually been increasing the cost of sending money across national borders, charging as much as 6.5 percent for each conversion.

For an alternative to these currency exchanges, here’s a step-by-step guide for using Bitcoin to get the most of your money overseas.

1. Setting up your wallet

The first thing to do is set up a Bitcoin wallet to hold your funds.

The official Bitcoin-Qt app, available from, is one of the most basic desktop clients to hold your funds. It requires a lot of disk space and takes about a day to initially load, but it remains the most basic program for new users.

Multibit is popular because of its speed and relative ease, and Electrum offers a higher level of customization.

For the novice user, I would suggest an online wallet, such as Coinbase. It’s the largest and most reliable Bitcoin start-up, backed up with more $5 million in venture capital funds. The two-step verification keeps your wallet safe and allows you to buy and sell Bitcoins directly on the page.

Blockchain is another simple online wallet, but I’ve avoided it because it charges small fees for normal transactions. Many users of the digital currency prefer to host their wallets on their smartphones, allowing them to easily buy and sell goods on the spot.

The Bitcoin Wallet and Bitcoin Spinner apps are available for Android devices. Apple is not yet keen to accept Bitcoin wallets in its App Store because of the still unclear legal boundaries. That leaves iPhone users to resort to the wallets based on desktops and in the cloud. (iOS users can download the Blockchain app, but its functionality is still questionable.)

2. Changing your money into Bitcoins

Once you have your wallet, it’s time to get Bitcoins.

Without a doubt, this is the most difficult part of the process for new adopters. To deal with cash, make a deposit at CVS or Walmart with the specific account information provided by trader BitInstant. This will allow you to send cash immediately to a Bitcoin address (as explained in this video). The trader is recently flush with a $1.5 million investment from the Winklevoss twins, of Facebook fame, so it remains reliable.

Another option is to trade cash with a local dealer on, who will send Bitcoins to your digital address on-the-spot.

In the case of an expat or traveler already overseas, however, it’s easier to conduct all the trades online. For U.S. account holders, one method is the online payment processor Dwolla, which can easily withdraw cash from your domestic bank account and be converted into Bitcoin on BitInstant.

Earlier this month, the U.S. government shut down the Dwolla account maintained by Mtgox, the largest Bitcoin exchange, accusing the website of failing to register as a “money transmitting business,” according to the Department of Homeland Security’s seizure order.

Despite the setback, individual users can still use Dwolla to covert cash into Bitcoin and vice versa.

The same cannot be said for the digital currency service Liberty Reserve, once highly popular for converting cash into Bitcoin, which was forcibly shut down by the U.S. government in May 2013 for alleged money laundering.

Despite these high-profile shutdowns surrounding Bitcoin, it must be remembered that the only danger is to individual exchanges, not the currency itself.

In my opinion, probably the easiest vehicle for buying and selling Bitcoins online is Coinbase. After a few test deposits, Coinbase can link to your bank account and automatically deposit Bitcoins into your online wallet at less than 1 percent.

The only set-back to this process, however, is time. It takes up to 3 days to receive Bitcoins when purchased through Dwolla or Coinbase.

While this may be somewhat longer than exchange bureaus, banks and ATMs, it saves huge chunks of money that would otherwise be lost to the institutions completing the exchange.

3. Sending Bitcoins Now that you have Bitcoins in your wallet, it’s time to send them to an address in order to cash them out in an exchange.

Though Bitcoin is an international currency, most exchanges are nationally based. Mtgox is the most popular in the U.S., but a longer international list is maintained by the Bitcoin wiki page. Send your Bitcoins to your wallet on the foreign exchange. You can do this by scanning the QR code of the Bitcoin address or simply copy and pasting it on the website. This process will take a matter of minutes and is free. Once the request is complete, you’re ready to turn your Bitcoin into foreign cash.

4. Cashing out

Cashing out in your country of choice will require an online exchange or marketplace.

If you don’t have a bank account in the country you’re visiting, you can always meet up with buyers in your area after looking them up on This is the quickest and cheapest method for selling Bitcoins abroad, but also carries some level of risk, as one can expect. Be sure to read reviews of potential traders.


I live in Austria, so I’m most familiar with European virtual currency exchanges. For users wanting Euros directly deposited into a bank account, I would suggest, one of the largest Euro exchanges which also hosts online wallets. Authentication of a chosen bank account will take less than 2 days.

The marketplace displays the latest bids for Bitcoin, both buying and selling. You can choose an offer based upon the current asking price or you can create your own. Just like a true free-market, the price you pick will determine how quickly it’s selected by another user.

Once a trade is initiated, the exchange is left up to the buyer and seller. The marketplace charges a nominal fee of 0.5 percent, no matter the volume of the trade. The Single Euro Payments Area makes sending and receiving Euros quite simple, allowing any European bank account holder to send or receive money for free.

Euro bank transfers typically only take 1-2 days, and the Bitcoins will be transferred to the buyer once you have acknowledged receiving the cash.

5. Enjoying the digital economy

If all went well, then congratulations! You have successfully used Bitcoin to avoid costly bank transaction fees.

If you followed the exact procedure from beginning until the end, you will have paid a maximum of 1.5 percent in conversion fees, a fraction of that offered by banks and other currency dealers.


Of course, this is just a rudimentary run-through, and there are plenty of alternatives out there.

If you’d like to support the world of alternative money not controlled by central banks and governments, use Bitcoins online or visit participating stores in your neighborhood.

Happy trading.

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