Table of Contents:
- 1. Introduction
- 2. Credit cards are friendly for users. Bitcoin not so much
- 3. Bitcoin properties do not encourage to use it as a method of payment
- 4. Transaction fees
- 5. Summary
Bitcoin, often referred to as digital gold, was intended to be also a means of payment. Is Bitcoin likely to replace commonly used credit cards and become the method of payment on global scale? Let us have a look at the current situation and see whether it is possible or not.
Credit cards are friendly for users. Bitcoin not so much
In spite of many advantages of Bitcoin and other cryptocurrencies, it also has plenty of downsides that other, commonly accepted forms of payments do not have. Credit cards are very easy in use. Some people claim that they are so simple that it is actually harmful to customers. Bitcoin requires some effort to properly store it, secure against threats, and send transactions. Making sure that the payment goes to the correct address is probably the most significant defect of Bitcoin. What’s more, if the user makes a mistake, there is no customer service department that could fix it.
It means that credit cards have got huge advantage when it comes to the ease of use, especially for users, who are not susceptible to learning new technologies. Older people, who are still using cash, and from time to time credit cards, will probably never use Bitcoin. Reluctance may also be caused by the lack of faith in the idea of Bitcoin as a defilation currency.
Bitcoin properties do not encourage to use it as a method of payment
As a defilation currency, which the increase of the value results from the limited number of coins and the growing demand, Bitcoin discourages us from spending money. Companies that wanted to replace the credit card payments with Bitcoins have to understand that even if everyone will accept cryptocurrency, their sales may drop since people will think twice before making a purchase. The fact that there will be only 21 million coins makes the users of Bitcoin to behave differently from average customer.
Let’s assume; however, that people still spend money at the same pace and they accept less friendly method of payment than it is in case of credit cards. Let’s take a look at transaction fees and see whether paying with the use of Bitcoin is more beneficial than paying with a credit card. Depending on the services, the credit card transaction fees are subjected to a commission between 2.5% to 3%. Charges in the world of Bitcoin are dependent on the current market.
Current fees for BTC transaction are much lower than the value of $1 for each transaction. If we do not care about the time, the cost can be lowered to even few cents. However, that wasn’t always the case. In December 2017, when the price of Bitcoin amounted at $20 000 and the network was heavily loaded, you had to pay even $30 for each transaction. Unfortunately, no one can guarantee that the fees for the people, who use Bitcoin, will be lower than fees for the use of credit cards.
What’s more, the fees for the use of credit cards are already included in the prices of most products, making them invisible for the customers. The transaction fees for BTC users occur always. The users of Bitcoin are aware of that. It discourages from spending money in some cases and it is profitable only for large transactions. Those, who claim that Bitcoin should be used to everything, have lost their arguments, especially if we take into account the fact that few cents that we will now spend for a transaction, will be worth many times more in time.
Summary - Is it worth to be interested with Bitcoin?
Thinking about Bitcoin as a method of payment that will replace credit cards is a bit far-fetched. It doesn’t mean; however, that the people shouldn’t be able to use their coins everywhere they are. The more companies accept Bitcoin, the better for people, who owns these coins and it’s also better for the whole market. Bitcoin is, above all, the alternative for traditional, inflationary means of exchange, which are controlled by the government. Everyone, who invests in the cryptocurrency, should be aware of that. People have to remember that when economic crisis, which we witnessed in 2008-2009, or any other event that will limit the traditional payment methods, such as credit cards, occur, Bitcoin will become one of the best alternatives for the current financial system.