Bitcoin versus credit cards: know the differences
Bitcoin and credit card transactions both have their own advantages. But the broader acceptance of Credit card payments makes it more popular and convenient.
Bitcoin is so popular that, as a synonym of cryptocurrency, we use Bitcoin. With their impressive popularity, Bitcoins are also becoming a payment method. But the traditional Credit card transaction is still ruling the market. Here we will discuss the differences between Bitcoin versus Credit card transactions.
Transactions With Bitcoins
The inventor of Bitcoin, Satoshi Nakamoto, titled Bitcoin in his white paper as “a peer-to-peer electronic cash system.” The fundamental difference between bitcoin and Credit Card lies in this description.
Without going through a financial institution, the transfer of Bitcoin takes place directly from one party to the other party. This way, this transaction is different from traditional wire transfers or cash transfers. A private network of computers executes the whole process of payment.
Every time any transaction is made, all the information related to that same transaction is stored in the Blockchain as a new Block. This is public. This peer to peer transaction process relies entirely on Blockchain technology. The Cryptography concept secures it without any oversight of a third party.
Another thing is that when you are making a transaction with Bitcoins, there is no need to provide personal identification information, such as your name or your address. To know more details, you can visit btc system.
Transactions With Credit Cards
The credit card transaction is totally different from the Bitcoin transaction. For any credit card transaction, the buyer is required to authorize the seller for pulling a payment from their particular account. This transaction also passes through financial intermediates.
Suppose you are making a credit card transaction with your Visa card. This single transaction involves four parties. They are the merchant, the acquirer, or the particular financial organization, which enables the payment to the merchant, the issuer, which is the card holder’s bank, and lastly, the individual cardholder.
Basic Differences Between Bitcoin And Credit Cards
Now, as you get some basic idea about the Bitcoin and Credit Card Transaction, we will check some basic, detailed differences between Bitcoin and Credit Cards.
- The anonymous alphanumeric address that is required for Bitcoin transactions changes every time for every transaction. One also can complete a transaction with their mobile devices by using a quick response code or popularly known as QR codes.
- A credit card has a physical appearance, and you also can keep it in your physical wallet or cardholder. With no physical existence, You need to store Bitcoins in electronic wallets on your computer, cloud, or smartphones.
- All Bitcoin transactions or transfers are irreversible. Only the receiving party only can refund them. This is different from Credit card transactions, which can be canceled. So, while taking payment via Bitcoin, merchants do not get any charge-backs. In order to cover the loss on the disputed or fraudulent transaction, the credit card providers demand a chargeback for a retailer.
- The Bitcoin fees are totally based on the data amount that is sent. As a result, Bitcoin transactions require significantly less cost or no cost at all. But the Credit card fees range between 0.5% to 5%. In addition to it, there is another flat 20 to 30 cent fees charged for every transaction.
- For merchants, the payments that are made with Bitcoins offer fewer processing fees and also eliminate the risk of charge-backs. For shoppers, the payment with Bitcoins is super simpler, and it also charges low transaction fees. There are no interruptions from intermediaries, and user anonymity is another perk.
- Credit cards allow you to borrow money, get reward points along with giving protection against fraudulent activity. Almost all merchants accept payments with Credit cards. But interest charges, late fees, foreign transaction fees, adverse effect on your overall credit score are some of the cons of Credit card transactions.
Bitcoin and credit card transactions both have their own advantages. But the broader acceptance of Credit card payments makes it more popular and convenient. But with the increasing value price of Bitcoins, more large organizations and merchants are starting to accept Bitcoins.