It goes without saying that paying for stuff in the 21st century is mostly done through credit cards. But, plastic is slowly being phased out by digital currencies which are more convenient, user-friendly and private.
What to Know About Bitcoin Transactions
When Bitcoin was initially introduced to the world, it was through a white paper titled “A Peer-to-Peer Electronic Cash System.” This perfectly describes what Bitcoin is all about. It’s what sets it apart from archaic systems like credit cards.
To understand why you should use Bitcoin, you should understand the comparison of Bitcoin vs. Credit Card when it comes to carrying out transactions.
First of all, Bitcoin offers direct transactions between two parties without a middle man. It’s similar to a cash transaction which means there are very small charges involved. The public blockchain ledger records each transaction. A private computer network facilitates the entire payment process. Not only that, but Bitcoin is backed by a peer-to-peer system that’s secured by cryptography. At the same time, the public blockchain ledger makes for more transparency.
What About Credit Card Transactions
On the contrary, a credit card transaction must go through an intermediary even though it’s between two people. For instance, there are typically four parties involved in a single Visa card transaction. Four! This includes the merchant, the issuer (bank of the cardholder), the acquirer (the financial institution which facilitates the payment) and the individual cardholder.
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When comparing Bitcoin vs credit card, BTC clearly lends itself more to privacy and anonymity. That’s because a Bitcoin transaction doesn’t require you to provide your personal credentials, which are front and center of any credit card transaction.
Still wondering why you should use Bitcoin? Read on for the key differences in Bitcoin vs. Credit Card transactions.
Bitcoin is more private and anonymous because it doesn’t require users to provide personal credentials in order to carry out transactions. Bitcoin shows the hash value of the transaction instead of the personal details required in a credit card transaction.
Bitcoin transactions happen through a private key and an ever-changing anonymous alphanumeric address. Users can make transactions on their smartphone and computer devices, or in the cloud. Either way, you can access your digital wallet from anywhere in the world and there’s no risk of it getting stolen by someone like it could happen with a regular physical wallet would. You can make transactions instantly from your mobile device using QR codes.
It’s much cheaper to send and receive payments via Bitcoin because transaction fees are contingent on the amount of data you send. Meanwhile, credit card transactions come with standard fees that range from 0.5% to 5% of the amount, in addition to a pre-defined flat fee.
Also, Bitcoin transactions carry lower processing fees and virtually no charge-backs. This makes them a no-brainer option for merchants.
While you can easily cancel a credit card transaction, you cannot do the same with Bitcoin transactions. The only way to reverse a Bitcoin transaction would be to speak to the receiving party and get them to refund you. It’s also worth noting that the only reason why credit card companies can offer a refund is because they charge a charge-back fee to cover the possible cost of disputed and fraudulent transactions. You don’t get that with Bitcoin.
Shoppers that pay with Bitcoin enjoy benefits like user anonymity and low transaction fees. You cut out the middle man and the whole process is much simpler. An increasing number of merchants are also starting to accept digital currency. This includes merchants like Etsy, Dell, and Overstock.com.
On the other hand, credit cards offer benefits like rewards points, fraud protection, and merchants from around the world accept them. But they come with the downside of foreign transaction and late fee charges, interest charges and using them affects your credit score.
Nobody Can Block Cryptocurrency
Another reason why you should use Bitcoin is because it protects you against blocked payments and confiscated balances. This is a huge benefit for companies in the cannabis and other similar industries that often face payment problems, despite being a legitimate operation.
In fact, there was a case recently where the Cyprus government seized the accounts of certain users. Events like this could never happen with cryptocurrency because it’s based on a decentralized system that prevents all restrictions and confiscations.
Clearly, considering the differences in Bitcoin vs credit cards and BTC being a relatively new player on the market, cryptocurrency is the future of the global monetary system.