Why Is It Many Times Cheaper To Send Physical Mail Across The Ocean Than An Electronic Money Transfer?

Because the government subsidizes and insures physical mail that is hard to steal, and less desirable to steal, using low skilled labor when handling mail, while private industry absorbs risks and the cost of semi-skilled manual labor to manually process wire transfers that are unprofitable, and easily fraudulent, and highly desirable to steal, but without which they cannot continue business operations. 

In other words, wire transfers are both more desirable and easier to steal than physical goods, and once stolen are unrecoverable. And they don’t want to process them so they keep the cost as high as possible.

The cost of wire transfers is due to the insurance cost of theft by retailers.  Imagine instead that the post office shipped and delivered envelopes of money, and how the behavior of the post office would change. 

That is why it is cheaper to send hard-to-exchange goods, than exchange goods.  And why it is more cost effective to steal money than stuff you have to sell or pawn.

This is why Bitcoin (BTC) are better and cheaper means of wire transfers.  The intermediaries in the chain of handling are not exposed to risk – just you.

Everyone argues that BTC is helpful for the high end of the market, and I totally disagree. The primary virtue of BTC is in its application to solutions for the poor – who pay high costs because the marginal value of each unit of currency is more expensive for them than for everyone else.


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