Whenever huge funds are being moved, everyone paying attention will notice. The cryptocurrency exchange, Binance has been spotted moving significant amounts into a cold storage. Thanks to the transparency of blockchain technology, these transactions cannot be hidden. First, Binance moved over $1 million in BTC in block 550211 paying about $8 as fees. The transaction fee was considered high. This is most likely because it was a small transaction taking only 1550 bytes.
Yesterday, Binance created the largest unspent transaction output within a 24 hour period at 109k BTC. This amounts to about $600 million. The transaction was flagged by CoinMetric’s Antonie Le Calvez. The cost for performing this transaction shows that the Bitcoin Blockchain doesn’t base fees on the amount of the transaction but on the computer resources required to store information per transaction. This transaction was made in block 550155. It comprised of about 5981 bytes but cost only $7.
Moving Funds On the Blockchain Vs Traditionally
Keep in mind that you cannot compare any of the existing banking products to a cold storage wallet that provides 100% security. A cold storage for cryptocurrencies can only be accessed when it is connected to the blockchain using the internet. It offers maximum security and doesn’t require services of intermediaries.
If large amount of funds are to be moved from one traditional financial institution to the other, it will take a while to find out the cost. Besides, you can’t compare banking services to the kind of services you enjoy with the blockchain. Notwithstanding, interbank fees usually cost around 4% of the amount being sent. Whether funds are moved domestically or internationally, these fees still apply. They usually vary from bank to bank.
Thanks to Ripple’s enterprise technology and other blockchain solutions, some banks have been able to cut the cost for moving funds. Also, one-time deposits can be made when large amounts are being moved. With a cold storage, Binance may need to pay to access the funds when they are ready. However, the cost will depend on several factors that are typically external. Simply put, these kind of large transfers would have been impossible or difficult for a company like Binance if not for blockchain technology.
Bitcoin (BTC) Price Today – BTC / USD
To drive the point home, compare the cost for using blockchain to the fees payment service providers like PayPal charge. Even if a collaboration between Binance and PayPal seems unlikely with such a large transaction, in a hypothetical situation, it would cost Binance about $17,400,000.30 to move the $600 million via PayPal. Note the difference between a fund transfer on the blockchain ($7) and one on a traditional payment service provider ($17,400,000.30). Let’s not forget about the delays that may occur when you try to move such funds from PayPal to your bank account.
Blockchain technology has the potential to remodel the entire financial industry for the better. The cost for transfers will reduce dramatically while the fees charged by intermediaries will be cut off. Granted, a lot of these third party service providers will have to evolve or change their business, but the effect will be beneficial to end users and blockchain-based businesses. The important thing right now is an increase in adoption.