The SGD->EUR bitcoin route - Part 1 (itbit)

matthias on 2015/06/20

Update 2016-11-26: It looks like this does no longer work. itbit does no longer accept SGD deposits. I’m not sure if this is a regulation-driven or a pure business decision.

It looks like I have finally stumbled upon a real use case scenario for Bitcoin. An anonymous forum user has sent me the following details for a currency transfer from Singapore to Germany. His first attempt involves a Bitcoin exchanges (itbit  with somewhat tedious verification procedures),  and a bank in each country.

He also tried another route  via two exchanges (adding kraken with similar “Know your customer” procedures) and a Bitcoin wallet (Bitgo) in the middle. This will be described in my next post.

Depositing at itbit

After the account at itbit is set up, you can wire SGD to their local OCBC bank account and send them an email so they can credit this money to your account. They are licensed and regulated, so I’m not worried about them losing the money. This process is somewhat tedious however.

Trading at itbit

After the SGD are in the itbit account you convert them to BTC on their exchange. Since the author wanted to compare the fees involved with the fees of a bank transfer he accepted whatever the exchange was offering at the time and paid the 0.5% taker fee (if you enter an order that sits on the exchange for a while this fee turns into 0.1% maker rebate on itbit).

Note how impressively tight the order book is on itbit. The spread is only (307.45 - 306.97) / 306.97 = 0.0016 for small volume. Actually, 20 BTC are 4000 USD already, so it’s not that small but of course far from gathering institutional interest.

02-orderbook2The trade confirmation on itbit looks like it would at a regular broker.04-tradeOn to the BTC->EUR transfer. Here is the EUR order book on itbit at the same time. The spread there is (206.17 - 205.84) / 205.84 = 0.0016. The total SGD/EUR rate is therefore given by EUR/SGD = EUR/BTC * BTC/SGD = 205.84 / 307.45 = 0.6695 or rather the reverse SGD/EUR = 307.45 / 205.84 = 1.4936.

03-orderbookEURWith two transfers on itbit however, we’d be paying the 0.5% fee for each of them and an 8 EUR withdrawal fee for a SEPA wire. He explains that this is an interesting option, but he wanted to do even better. With that 1% factored in the spread would become considerably larger. The SGD/EUR rate with commission is given by: SGD/EUR = SGD/BTC * 1.005 * BTC/EUR * 0.995 = 307.45 * 1.005 / (205.84 * 0.995) = 1.5086.

If you sell in straightforward fashion and add the same 0.5% commission in every trade, you wind up with: 306.97 * 0.995 / (206.17 * 1.005) = 1.4741. If done in that fashion the spread becomes: 0.023. If you manage to get the maker rebate it becomes much better of course!

Reference spreads for comparison

The forex reference rate on yahoo finance was 1.5008. This means that trading on itbit is quite close to yahoo finance:(1.5008 - 1.4936) / 1.4936 = 0.0048.

The user mostly compares this BTC transfer to the following alternatives. He took the screenshots on the day he completed the trade on Kraken. They can thus not directly be compared to the itbit trade. However, if we look at the spreads instead of the absolute level, they provide a decent reference.

DBS currency transfer

 http://www.dbs.com.sg/personal/rates-online/foreign-currency-foreign-exchange.page

DBS is a local bank where the user holds a bank account. He points out that they charge around 80 SGD in fees to send a wire out internationally and there may be additionally charges on the receiving side. In bank language, I suppose that means there will be.

The spread is (1.504-1.4654)/1.4654 = 0.026. This is slightly worse, but not drastically different from the BTC transfer before the fixed fees.

11-DBSrates

Arcade money changer

http://arcademoneychangers.com.sg/ratesbiglogo.asp

This a local money changer in Singapore close to Raffles MRT. It is one of the few that publishes their rates online. The downside is that they’re only dealing in cash. The upside is that there is no minimum to convert, no commission and the spread is quite low: (1.5-1.492) / 1.492 = 0.005. This is one fifth of DBS’ spread and the itbit transfer without even taking into account the commission they charge.

12-arcaderates