[repsilat]

I wonder if it's liquid enough to do an "instant trade". Essentially, you could route (possibly international) financial transactions through BitCoin and avoid big fees by doing a buy on the buyer's side, transferring the coins to the seller, then having them sell the coins in their local currency.

The best part about this is that neither the buyer nor the seller needs to have the slightest interest in BitCoin and it doesn't matter at all if the value of the currency is reasonable so long as it's reasonably stable. Even better, neither side needs to know the other's bank details, just a throw-away BitCoin account number. This isn't just an IMT-killer, it's a PayPal killer as well.

Assuming the BitCoin market is more or less efficient relative to currency markets, and assuming those transactions could be cleared within ~1 day, you could absolutely kill the international transfer market (known for high fees, long delays and shitty exchange rates).

[bencoder]

This can be done but I believe it is a bit more expensive than via banks, since you have exchange fees and the spread as liquidity isn't quite high enough (assuming you want to transfer ASAP. If you are willing to wait on both sides you can do a lot better)

Example exchanging 500 GBP to EUR (via intersango at current rates):

Buy 104.6 BTC @ 4.76GBP Fees for instant trade: 0.95% = ~1 BTC. Balance: 103.6BTC

Sell 103.6BTC @ 5.8EUR = 600.88 eur Fees for instant trade: 0.95% = ~5.71. Balance: 595.17EUR

500 GBP went to 595.17EUR. Exchange rate: 1.19. (google tells me the exchange rate is about 1.26 at the moment, so this is quite poor)

[repsilat]

You're right, that's not good. I imagine it would get better if people started doing things like that in higher volumes, but that's a bit of a Catch 22.

Until then, there are a couple of mitigating factors:

- You may not get the market rate from anyone. The UK post office is only giving me a rate of 1.2260 to the Euro.

- If you need to pay a fee for a transfer it could be worthwhile for small amounts. The UK post office doesn't charge a fee, but it has a min transfer of £250. www.tranzfers.com charges £7 or $15AU. I've paid more elsewhere.

[pessimizer]

I've seen a lot worse at the airport. Assuming that people are using bitcoin for reasons other than a favorable exchange rate, 7 points isn't going to be a deal killer, or even a deal slower.

[kiba]

There's some report of an export business paying their supplier back in China in bitcoin. It's just a rumor though.