Why use bitcoin when we already have credit cards, debit cards and even electronic cash? Well, bitcoin is far better than those. There are a number of key differences in the way they function, including:
No accounts — you do not have to have a bank or credit card account to use bitcoin. This means you don’t have to be over 18, or live in a developed economy, have a regular income, or have an ID. You also shouldn’t have to provide your name, address and personal details to everyone you pay money to.
No fees — for merchants, accepting bitcoin is much cheaper than credit cards’ processing fees and there’s no need to operate specialized or proprietary hardware.
No third-party clearing required — the bitcoin blockchain handles all transaction records and each transaction is permanent once confirmed by the network. Credit card transactions can actually take up to six months to be settled completely.
No chargebacks — bitcoin transactions cannot be reversed. This a double-edged sword: for merchants, it’s a protection against chargeback fraud. However consumers need to be extra careful in making sure the party they’re paying is trustworthy. If you make a mistake or want a refund, only the receiver can help you.
“Push” vs. “pull” payments — debit and credit cards “pull” payments from your account. For this to happen, you must provide the receiver with full access to your funds (and trust they’ll keep this information secure and not abuse it). Bitcoin is a “push” system where you only supply the information necessary to send the amount for that transaction. No matter how badly a retailer gets hacked (e.g.: Target) the attackers won’t have access to your entire bitcoin balance.
No national currencies — All bitcoin’s advantages as an international, non-government or central bank currency apply here too. There’s no conversion fee when you spend it abroad. And if your national currency is somehow unreliable, bitcoin is outside that system.
What are some other ways bitcoin is far better than other digital payment systems? Let us know.
Now that you know about the differences between Bitcoin and credit/debit cards, you may have even more questions, such as:
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