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Can bitcoin be used for cross-border payments?


In 2008, an anonymous researcher (or team of researchers) called Satoshi Nakamoto published a nine-page research paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System.” The document, known as the Bitcoin white paper, presented a new type of digital currency which could be sent directly between users without reliance on financial intermediaries.

Following the launch of Bitcoin in 2009, people around the world discovered its functionality allowed transactions, specifically cross-border transactions, to be sent faster than most international bank transfers. A bitcoin transaction could be settled in just a few minutes as compared to the 2-3 business days needed by traditional services. By removing banks from the process, Bitcoin mitigated the high costs often associated with cross-border payments.

How bitcoin payments work

Bitcoin network and blockchain

Bitcoin (BTC), the protocol’s native digital currency, circumvents the banking system by relying on a series of interconnected “nodes.”

These nodes are operated by volunteer users that make up the Bitcoin network and help to maintain it by using their computers to perform various tasks on something called the Bitcoin blockchain — a special type of ledger system used to verify and record transaction data.

You can think of these two concepts – the Bitcoin network and blockchain – like a globally distributed group of people all working together on an open Google Document. Whenever new information is added to the document, everyone else has to first make sure there are no errors in it. The document is also totally accessible to anyone who wishes to view it – not just those working on it.

In exchange for fulfilling energy intensive roles like data validation, nodes can earn rewards paid in newly minted bitcoin.

How a transaction works

When a person wishes to send a bitcoin transaction to someone, they first have to broadcast it to the rest of the network. Nodes then independently check the validity of the transaction (whether the sender has sufficient funds to transfer and isn’t attempting to double-spend their funds) and compete to win the right to add that and a batch of other transactions into a new block on the blockchain. 

If you want to learn more about the process of validating transactions and adding them to the blockchain, you can check out our Learn Center guide What is bitcoin mining?

Once a transaction is added to the blockchain, it’s finalized. And because there are no banks involved and payments are sent over the internet, it doesn’t matter whether the recipient is in the same country or the other side of the world – transactions take the same amount of time to process. You can think of it as sending an email versus a hand-written letter.

These properties are why cryptocurrencies like bitcoin are ideal for frictionless remittance and cross-border transfers.

Barriers to bitcoin payments adoption

While there are a number of advantages to using bitcoin over traditional currencies, a 2021 survey found that only 13% of U.S customers preferred to use bitcoin and other cryptocurrencies when sending overseas payments. This low level of preference occurs despite figures showing that 42% of surveyed people paid an average fee of 6.2% when sending traditional remittance payments.

So what’s holding people back? It’s possible people are put off by a number of misconceptions surrounding bitcoin payments.


Bitcoin transactions aren’t usually anonymous. When you use an exchange to transfer cryptocurrency you must submit something called Know Your Customer (KYC) data. This data often includes your personal information and a copy of your passport. KYC is important because it ensures that transactions are legal and regulated. 

Illicit activities

For many years, the pseudonymous nature of bitcoin payments has been abused by criminals to fund nefarious activities. And while it’s impossible to know exactly what percentage of payments are involved in illegal ventures, advancements in detection, tracking and enforcement have made it far less attractive. 

A recent report by Chainalysis reported around $10 billion dollars, or 0.34% of all bitcoin transactions, were flagged as being used to fund criminal enterprises.

Looking at traditional currency in comparison, the United Nations figures found up to 5% of global GDP is involved in money laundering and other criminal practices per year. This equates to around two trillion U.S dollars.

High energy consumption

It’s no mystery that the computational power committed to securing the bitcoin network is extremely high — around ~100 TW/h. However, it’s important to note this figure represents the energy consumption of a complete financial system, including issuance and transaction settlement. Moreover, a vast majority of the energy consumed by the network is used to create new units of bitcoin (through mining) which is systematically reduced over time through halvings.

Nobody has attempted to measure how much energy a major currency consumes per hour. Think about the U.S dollar and how many banks, money printers, ATM machines, card payment devices and security vehicles are needed to support just one currency. Now think about how much energy those combined items consume – potentially a lot more than the Bitcoin network!


Bitcoin is renowned for being a particularly volatile asset class. This means its price can fluctuate dramatically within a short period of time. 

For remittance payments, the volatility may lead to the recipient receiving less than the intended fiat-denominated amount once the transaction is completed. However, this volatility works both ways and sometimes during bullish market movements, recipients can receive a higher amount.

The effects of bitcoin volatility and transaction speeds can also be mitigated by the sender simply taking a few precautions. Namely, these involve trading during weekends when network congestion is low and avoiding sending remittance payments during particularly bearish episodes.

Overall, while some people may be dissuaded from using bitcoin for cross-border payments, it boasts a number of key advantages over traditional currency that make it an ideal solution; namely speed, cost and transaction finality. Keep in mind that after bitcoin has been sent across borders, it can quickly and easily be converted back to a government currency using a crypto exchange like Kraken.

Need help understanding how to use Kraken to manage your assets? Stop by our Support Center where our support team is available 24/7.

These materials are for general information purposes only and are not investment advice or a recommendation or solicitation to buy, sell, or hold any digital asset or to engage in any specific trading strategy. Some crypto products and markets are unregulated, and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the cryptoasset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in the value of your crypto assets and you should seek independent advice on your taxation position.


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