Bitcoin v/s Credit cards
Bitcoin and other cryptocurrencies are the shining stars nowadays and they are slowly becoming the most popular payment method because of the incredible benefits offered by them. This has led the mass adoption of bitcoin as a payment method with increased confusion among merchants and consumers which one is better to use. Here’s a guide that can help to clear the confusion and choose the payment method as per your convenience.
Transaction fees: The most favorable benefit offered by bitcoin is a significantly cheaper transaction fee that is about less than 1%. On the other hand, it is very well known that any transaction done using a credit card has a fee ranging between 3–4%.
In the bitcoin network, the transaction cost depends on the number of addresses participating in the transactions, whereas the transaction fee of Visa and MasterCard depends on the amount each transaction consists which in turn makes a costly venture.
Hidden chargebacks: Credit card companies can also adjust or add more fee without any prior notice which each merchant or consumer has to bear for the reversed transaction. Because if not paid it can lead to consequences i.e. fines or reputational damage in the credit world.
In the cryptoworld, this is something impossible because no one can pull back the money spent on the purchase made as all the bitcoin transactions are immutable and irreversible.
Secure: Card can be hacked if the card information and account details are known by hackers or any person you shared with during the transaction processing through the payment gateways. In contrast, hacking the bitcoin network is impossible as the hacker will require the computing power of more than 51% of the network nodes.
Stealing card details and making fraudulent purchases is an easy task but stealing Bitcoin’s private key will be a tough task. Also, when payment is done with a credit card, your personal data with the entire bank balance is revealed to the merchant whereas payment through cryptocurrency doesn’t reveal any personal data.
Storage: Bitcoins are virtual and they are sent and received through a computer, smartphone, or in the cloud whereas credit cards are kept in a wallet.
Address: Bitcoin transactions require an anonymous alphanumeric address which you can choose to change on every transaction, and a private key, while the Credit card transactions require the same card number and CVV every time.
Transaction Speed: Bitcoin transfer from one wallet to another can be instant or may face some delay depending on the network load and transaction fees whereas credit card transactions have fixed processing time and it can be raised up to three days.
Decentralized transactions: The whole Bitcoin network is decentralized, meaning there is no single issuer and is not made by any central organization. On the other hand, Credit cards provided by banks are directly controlled by the government directly or a small group of people.
The true owner of your money: To initiate a transfer or payment through the bitcoin network will require prior permission of the user. When and under what terms the payment has to be done is decided by the cryptocurrency owner. Whereas through the card-based transactions, the card number is stored by the merchants where they can apply an additional charge or fees without the user’s consent and the user have to bear the burden of going through the lengthy dispute procedure to recover the extra money.
Verification Process: Opening a new account or getting a credit card involves a lengthy verification process and paperwork that will have a waiting period of one or two days. With Bitcoin, there is no waiting period, the transactions can be done instantly after downloading the app or creating a cryptocurrency wallet using special software or you can create an account on a cloud wallet service provider.
Privacy: On every purchase done through credit card, the data is shared to merchants later shared to advertisers. Whereas Bitcoin transactions have no direct link to the user’s identity and they are 100% private.
Worldwide transactions: Credit card transactions are affected due to the national borders and require the authority’s approval to use it. Bitcoin transactions are limitless and you can use it until the internet connection is on. There is no wait time or permission of the third party is required.
This was a small gist of the key difference offered by the digital money over the physical money. Very soon this digital money will dominate the financial world. So be prepared for the future in advance.
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