How Does Blockchain Money Transfer Work?

If you’ve ever sent money overseas, you know the process can be slow, expensive, and hard to track. Blockchain promises to change that. What started as the foundation for cryptocurrencies has evolved into a powerful tool for moving money across borders quickly and efficiently, without relying on layers of intermediaries and long settlement times. But how does a blockchain money transfer actually work?

Below, we break down the mechanics behind blockchain-based payments, how they compare to traditional methods, the benefits and risks, and where this technology is headed.

What Is a Blockchain Money Transfer?

A blockchain money transfer is a way to send value — usually in the form of digital assets such as stablecoins or other cryptocurrencies — over a blockchain network. Instead of relying on multiple intermediaries, a blockchain transfer relies on a decentralized network of computers (called nodes) to validate, record, and secure the transaction.

This allows payments to bypass centralized clearing authorities, reducing both time and cost. All transactions are recorded on a public digital ledger, providing transparency and traceability.

What’s the Difference Between Traditional Money Transfers vs Blockchain?

Traditional ways to send money internationally rely on a chain of intermediaries, including multiple correspondent banks (financial institutions that provide services on behalf of other banks) and third-party payment providers. Each step adds time, cost, and complexity. Blockchain transfers remove many intermediaries by settling transactions on a decentralized ledger.

Here’s a closer look at how the two types of transfers compare:

How a Blockchain Money Transfer Works (Step-by-Step)

Although blockchain may seem complex, the actual transfer process is straightforward — especially with modern apps for international money transfers that simplify the user experience.

Step 1: Initiating the Transfer

The sender selects a block-based service or digital wallet and may need to enter:

Then the sender authorizes the transfer, which they may do using their private key — a secure digital signature proving ownership of the funds.

Note: Some modern platforms and apps only require the recipient’s contact details and transfer amount in U.S dollars, then handle the blockchain steps behind the scenes.

Step 2: Converting Fiat Money to a Digital Asset (Like a Stablecoin)

If the sender starts with fiat (traditional, government-backed) currency, like U.S. dollars, it must be converted into a digital asset — often a stablecoin — before sending.

Step 3: Verifying the Transaction on the Blockchain

Once the transfer is initiated, the blockchain network begins verifying the transaction.

Here’s what happens:

This verification process helps to ensure the transfer is secure, legitimate, and permanently recorded. Unlike traditional money transfers, blockchain does not rely on a single central entity to approve or process the payments — verification is distributed, which can improve transparency and help reduce fraud.

Step 4: Receiving the Funds and Converting Back to Fiat

Once the transaction is verified, the recipient typically receives the transfer within minutes.

If they receive it as digital assets in their wallet and they want fiat currency, they can convert it through an exchange or digital wallet with cashout options. The recipient can then transfer the fiat currency to their bank account or spend it directly using compatible payment services.

Some payment platforms convert funds automatically into local currency at the destination and deposit them into the recipient’s bank account.

Recommended: How to Send Money Internationally Safely

What Are the Benefits of Blockchain for International Money Transfers?

Using blockchain for international money transfers offers a wide range of advantages, such as:

Benefit 1: Lower Transaction Fees

Traditional international transfers often involve fees such as intermediary bank charges and poor foreign exchange rates. Blockchain transfers typically require only a small network fee and sometimes a processing fee from the provider. For high-volume transfers, the savings can be significant.

Benefit 2: Faster Settlement Speeds

Instead of waiting several business days for funds to travel through correspondent banks, blockchain transactions often settle within minutes, regardless of destination or time zone.

This speed can be particularly beneficial for families sending urgent remittances, businesses with international suppliers, and freelancers working for global clients.

Benefit 3: Increased Security and Transparency

Every blockchain transaction is recorded on a decentralized ledger that cannot be altered. This provides:

Benefit 4: Greater Accessibility (24/7 Service)

Blockchain networks operate 24/7 so users aren’t limited by cut-off hours, weekends, regional banking holidays, or location. Blockchain transfers can be especially valuable in regions with limited banking infrastructure.

Are There Risks or Downsides to Using Blockchain for Payments?

While leveraging blockchain for cross border payments offers many benefits, it also comes with challenges users will want to keep in mind.

Price Volatility Concerns

Certain cryptocurrencies are known for price fluctuations. This creates risk during transfers: The value of the asset could rise or fall before the recipient converts it to fiat. Stablecoins and instant conversion mechanics (offered by some payment providers) largely resolve this issue. However, both solutions rely on the trustworthiness of the issuer or service provider.

Regulatory and Compliance Hurdles

Because blockchain operates globally, it often falls into regulatory gray areas. Certain challenges include:

As regulations evolve, users may face new requirements or restrictions. It’s important to ensure any platform you’re considering adheres to regulatory requirements and laws.

Technical Know-How and User Error

Blockchain transactions are generally irreversible. Sending funds to the wrong wallet address — or losing private keys — can result in permanent loss. While some modern platforms simplify the process, users may need to understand concepts like wallet addresses, private keys, network fees, and supported blockchain networks. This learning curve can be a barrier to those who are new to buying crypto.

Common Examples of Blockchain Money Transfers

Blockchain is already widely used for various types of global payments. Here are some common real-world applications.

Use Case 1: Personal Remittances (Sending Money to Family Abroad)

Millions of individuals send money to family members living in other countries. Traditional global remittance services often charge high fees and involve long wait times.

Blockchain allows senders to send funds instantly, avoid excessive remittance fees, and give recipients faster access to money. This can make a meaningful financial difference for families relying on frequent transfers.

Use Case 2: Business-to-Business (B2B) Cross-Border Payments

Businesses that pay overseas suppliers, contractors, or partners often struggle with slow settlement, high bank fees, and currency conversion costs. Blockchain enables companies to make international payments more efficiently. Some companies even use stablecoins for payroll to remote workers.

Use Case 3: Global E-Commerce and Retail Purchases

Some online merchants accept crypto payments from customers around the world. Both retailers and customers can benefit from features such as faster transactions, lower costs, and smoother international payments. Merchants can instantly convert crypto payments into fiat if desired.

Can You Use Bitcoin to Transfer Money Internationally?

Yes, Bitcoin can be used for global transfers. Its decentralized, borderless, 24/7 nature makes it suitable for efficient global transfer. However, Bitcoin may not always be the best choice for money transfers due to:

Many users prefer stablecoins for international payment because they maintain a constant value tied to traditional currency.

Some payment apps use the Bitcoin Lightning Network behind the scenes to provide fast, low-cost payments. The app instantly converts to and from Bitcoin automatically, protecting users from volatility.

What’s the Difference Between Bitcoin vs. Stablecoins for Money Transfers?

Here’s a side-by-side comparison of Bitcoin and stablecoins for blockchain money transfers:

Recommended: How Will the GENIUS Act Impact Stablecoins and Bitcoin?

The Future of Blockchain in Cross-Border Payments

Blockchain is rapidly reshaping global finance. Major trends include:

Emerging trends include:

Recommended: Crypto and Blockchain Innovations at SoFi

The Takeaway

Blockchain money transfers offer faster, cheaper, and more transparent alternatives to traditional cross-border payments. With stablecoins and decentralized ledger technology, sending money internationally is becoming more efficient and widely accessible than ever before.

SoFi Checking and Savings members can now send money to 30+ countries, including Mexico, India, Brazil, and more. Plus, make three international money transfers by 3/31/26 to earn $30 in rewards points.

SoFi worldwide money transfers are a fast, affordable, and simple way to transfer money to loved ones abroad — directly from the SoFi app.

Fast, easy international money transfers.

FAQs

How long does a blockchain money transfer take?

A blockchain money transfer typically takes minutes to complete, which is significantly faster than the three to five business days common with traditional international wire transfers.

Is it safe to transfer money using blockchain?

Yes, transferring money using blockchain is generally considered safe. The technology uses advanced cryptography to secure transactions, and every transfer is permanently recorded on a decentralized, immutable ledger that is highly resistant to fraud and tampering. However, any software that interacts with the blockchain could be more vulnerable to hackers, and users must take precautions, such as safeguarding their private keys and ensuring they send funds to the correct wallet address, as blockchain transactions are generally irreversible.

Are blockchain money transfers cheaper than wire transfers?

Yes, blockchain money transfers are typically cheaper than traditional wire transfers. The primary reason is that blockchain technology significantly reduces the number of intermediaries (like correspondent banks) involved in the process, which eliminates many of the associated bank fees, processing charges, and foreign exchange markups that increase the cost of a traditional wire. Blockchain transfers typically only incur a small network transaction fee and sometimes a processing fee charged by the payment platform/exchange.

Do I need to own cryptocurrency to send a blockchain transfer?

No. Many modern international money transfer platforms that use blockchain technology simplify the process by allowing you to initiate the transfer with fiat (traditional) currency, such as U.S. dollars. The platform then automatically handles the conversion of your fiat currency into a digital asset (often a stablecoin) for the transfer, and then converts it back into the recipient’s local fiat currency upon arrival. These applications manage the complexity of the blockchain and crypto conversions behind the scenes, making the user experience seamless and similar to a traditional money transfer.

What companies use blockchain for cross-border payments?

Many companies are actively using and developing blockchain solutions for cross-border payments. Some notable entities in this space include JPMorgan Chase, Coinbase, PayPal, BitPay, Ripple, Mastercard, and SoFi.

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Global remittance services are available to SoFi members through SoFi Checking and Savings. SoFi Checking and Savings is offered by SoFi Bank, N.A., Member FDIC. Transfers are subject to the terms of the SoFi Bank Deposit Account Agreement in effect at the time of payment. Fees, exchange rates, and estimated delivery times will be presented prior to payment confirmation. Service availability may vary by country or recipient.

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