Five Reasons Bitcoin Will Replace Credit Cards

Perhaps this may sound far-fetched, but there are plenty of advantages that Bitcoin offers both consumers and merchants.

When you pay for a product with your credit card at a point of sale, the money doesn’t go directly to the merchant as you may think.

From this illustration, you can see that Visa is just a player in the payments network.

To pay in bitcoin, you transfer coins from your wallet to the recipient’s address by signing the transaction with your private key.

If you want to pay Bob with bitcoin, all you need is a wallet containing bitcoin and Bob’s public address on the blockchain.

Bob will immediately receive the money in his wallet once the payment is confirmed by miners, without enduring the authorization, exchange and settlement processes used in credit cards.

You only have to move coins from one address on the blockchain to another if you’re paying with bitcoin.

Also, Layer 2 solutions like the Lightning Network can scale Bitcoin to speeds to rival the fastest payments systems. Lightning Network offloads transactions from the main chain, reducing transaction confirmation times and boosting network throughput.

The downside of relying on multiple parties, as credit card payments do, is that it increases the risks of a malicious attack.

Large businesses, including Equifax, Neiman Marcus, Target, and Marriott Hotels, have been victims of targeted attacks designed to steal customers’ credit card information.

A hacker would need to compromise your device or use social engineering techniques, such as phishing, to steal your keys and initiate a Bitcoin payment.

Businesses won’t be tasked with safeguarding sensitive credit card information, eliminating the need for costly payment card industry compliance measures.

Credit card providers charge fees for processing payments, which can be as high as 3% of the original purchase.

With such low charges, it’s easy to understand why businesses are keen on integrating Lightning-powered Bitcoin payments into their revenue model.

Business owners wouldn’t have charges eating into their profit margins, while customers can pay for products without taking on extra costs.

You can’t just waltz into a bank, say “Hey, can I get a credit card?” and expect one to magically appear.

With Bitcoin, all you need to do is set up a wallet and generate your keys to start receiving and sending payments.

Many people associate Bitcoin’s anonymous transactions with right-wing extremists, terrorists or other criminals who need to sidestep traditional banks.

For example, a person purchasing an adult toy online would prefer a more discreet method of purchase than a credit card.

Businesses don’t store your information when you pay with bitcoin, so you can make purchases in peace.

For businesses, accepting bitcoin payments means reducing wait times for transactions, reducing chargeback fraud, and paying lower processing fees.

With new improvements like the Lightning Network, acceptance of bitcoin payments will only keep growing.

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