Bitcoin has many advantages over the traditional banking system. It allows payments to be sent abroad without any problems with currency conversion. Transactions are usually approved within ten minutes and cannot be canceled after the transaction has been executed. Since the launch of Bitcoin, we have seen a significant improvement in its network security, allowing huge volumes of cryptocurrency to be retained by both large companies and individual users. Let’s look at the benefits of the use of Bitcoin for sellers and buyers, but let us also compare it to the current card system.
Bitcoin benefits for sellers
If you run your own business and receive payments in Bitcoin, you have undoubtedly seen several benefits. The first positive feature is that payment processing fees are borne by the sender and the service or product provider pays nothing for receiving funds from the buyer. At the same time, these fees are substantially lower than in traditional payment networks.
Bitcoin allows you to make transactions across the world without being constrained by differences in national currencies. Moreover, one-way Bitcoin transactions cannot be reversed, thus protecting sellers from various frauds. In addition, Bitcoin is becoming increasingly popular, making it more likely to become a widespread payment method in the near future. Unlike traditional bank accounts and payment systems, there are no monthly or handling fees within Bitcoin.
With this cryptocurrency, you can easily make large payments without any limit. Some traditional networks charge additional fees for processing large transactions, or otherwise limit the amount of funds you can send through them. This causes serious problems in selling and buying large items or carrying large amounts of funds.
Benefits for buyers
Using Bitcoin also brings many benefits to buyers. Approving transactions within ten minutes is convenient for international transactions, and you can order products from abroad without worrying about currency conversion. It is also extremely easy to store digital tokens. As a buyer, you will have to pay transaction fees, but usually only a few cents.
In addition, when exchanging goods for Bitcoin, the seller is not obliged to pay large transaction processing fees, which further reduces the total cost of the transaction by the buyer.
Bitcoin wallets can be used via any electronic device – be it Android, Apple or personal computer – and some wallets can be stored on USB sticks.
Recently, the security of transactions between private sellers and buyers has also increased significantly, removing a number of concerns about the active use of this crypto currency.
Bitcoin vs. payment card
Only recently have there been discussions that Bitcoin will be able to replace the current payment card system. The main argument is that the fees within the Bitcoin network are significantly lower than for debit and credit cards. Such a solution would be particularly advantageous for businesses that have low profit margins and consequently have to pay a large proportion of their profits to credit card providers. Of course, there are people who believe that credit cards do not go out of the scene so easily. Since this type of payment card allows consumers to draw on money that they do not currently have, credit cards are a popular feature of the current financial system. At the same time, there are other important factors to consider when discussing whether Bitcoin can replace credit or debit cards.
Using payment cards is extremely easy, Bitcoin is a bit more complicated
While Bitcoin and other cryptocurrencies have many advantages, they also have one drawback compared to other payment systems. Using payment cards is particularly easy – some people even argue that this ease of use does not benefit consumers at all. The use and provision of Bitcoin requires at least a minimum level of education in cryptocurrencies and technology. Perhaps the most difficult task is to ensure that the cryptocurrency units are actually sent to the intended target account, which is probably the most significant disadvantage of Bitcoin. In addition, if the consumer makes any mistake, there is no customer service department within the crypto currency system that can correct the error.
This means that when it comes to ease of use, credit cards have a huge advantage – especially in relation to certain categories of the population who have difficulty getting used to new technologies. No doubt you know a stereotypical pensioner who relies solely on cash and occasionally uses a debit card – he is not very likely to simply switch to Bitcoin. Some people may be reluctant to use Bitcoin simply because they do not believe it or do not believe its nature as a deflationary currency.
Bitcoin features can limit consumer spending, while credit cards support it
This brings us to the differences between the basic features of Bitcoin and the traditional fiat currencies, including credit and debit cards. Bitcoin is a deflationary currency – the total number of units of digital currency is limited and we know in advance how much will be released into circulation. This tends to discourage consumers from spending their available funds. Businesses wishing to replace credit card payments with Bitcoin, need to realize that if the whole world uses this cryptocurrency, their revenues could drop slightly. Consumers think twice about where to direct their precious tokens. The fact that a maximum of 21 million Bitcoin units are circulating causes cryptocurrency holders to fundamentally change their consumer behavior.
Suppose, however, that people will continue to spend their money to the same extent after switching to a payment system more complex than credit cards. In that case, we should look at transaction fees to see if Bitcoin payments would really be a better option than credit card payments. A variety of sources suggest that credit card payments may include fees ranging between 2.5% and 3% of the amount paid. The structure of Bitcoin’s fees, on the other hand, is influenced by the nature of the market and depends on the speed at which users try to process specific transactions.
Bitcoin network fees for any transaction are currently well below $ 1. Slower transactions are just a few cents. However, this was not the case all the time. When Bitcoin was launched, transaction fees were almost zero. When the cryptocurrency price reached nearly $ 20,000 per unit in December 2017, transaction fees also peaked at around $ 30. Therefore, no one can guarantee with certainty that Bitcoin fees will remain lower than for payment cards. However, the future development of the cryptocurrency market may also have a positive impact on this factor.
Bitcoin as an alternative
From the above mentioned reasons, Bitcoin is unlikely to become a system to replace established payment cards in the near future. However, this does not mean that people should not be able to use their digital tokens wherever possible. The more businesses start to receive payments in Bitcoin, the better the situation will be for all who own units of this (but also others) cryptocurrencies. We could even say that it will also benefit the economy as a whole.
First of all, Bitcoin is a wonderful alternative to the traditional fiat money, that changes value with inflation and is controlled by the government. Consumers should therefore regard cryptocurrencies as a key factor in securing their personal property. It should be borne in mind that, at present, a liquidity crisis, an economic disaster similar to 2008 and 2009, or another event that completely paralyzes traditional instruments – including payment cards – can in fact happen at any time. In this case, Bitcoin will become one of the prominent alternatives to the established means of exchange and the store of value.