Bitcoin vs. Traditional Payment Methods: Which Is a Better Choice?

Various qualities make a payment method reliable to use. These qualities make it a suitable payment method in the financial market. The most common thing people are searching for in an appropriate payment method is that it should be quick to settle, easy to use, and should have minimal to no fee criteria.

• Bitcoin vs. Cash

Cash is the payment mode most people prefer using. No transaction fee is applied to it, and business owners prefer this mode of payment. It also saves time with the advantage of being immediate. Counting the cash and sorting it out requires additional manhours, but accepting it is effortless. With this, you don’t need to worry about a merchant payment account or get a point-to-sale terminal.

Being an easy way to pay, it is not the most secure form; it can be lost, stolen, or even destroyed. Another issue is that a person needs to be physically present to conduct the transaction. With cash, digital and international processing of funds is restricted.

• Bitcoin vs. Money Orders/Cheques

There are many limitations similar to the cash payment method in money orders and cheques. But there are other issues like long settlement time due to intermediaries. Cheques can be used for both large and small amounts, where the payer wants to send it to the seller. The receiver has to deposit the cheque in its bank, and the money gets settled in your account after processing.

There are limitations like carrying a chequebook all the time and getting slow and unpopular with time. Using cheques brings a security concern, too; if you lose a pre-signed cheque that does not have the payee details or is to be cashed, then anyone can withdraw the funds.

• Bitcoin vs. Debit/Credit Cards

For debit and credit card payments, one needs to have suitable technology for processing them. Owners need to set up or integrate the technology with their businesses. The providers of such services are banks and other financial institutions. The settlement time of money is fast, but at the same time, there are risks associated with the card payments too.

The significant risks are true frauds or chargeback frauds that anyone can claim on the owner when there are glitches between the transactions.

• Bitcoin vs. Digital Payment Processor

Online payment processors have simplified payments for many businesses. With this, international clients can also connect with you and collaborate. This can be a practical starting point for your business to go global and enhance your reach in the financial market.

There are some limitations to it that can create potential problems on a large scale.

• Bitcoin vs. Bank Transfers

Banks provide electronic as well as in-person transactions. Various banks charge different amounts for transactions. It depends on whether the wire is outgoing, incoming, domestic, or international. Charges are applied based on the amount transacted. Internationally the transfers may take long.

There is an involvement of a bank employee who needs to complete some tasks in order to process the amount. This can take a few hours to reflect the numbers in your account.

• Fewer intermediaries

With other payment methods, one or more intermediaries are involved, while in Bitcoin, there are no third parties involved. Bitcoin processing is done entirely over the blockchain, so there is no need to look at the settlement of transactions manually. This gradually increases the speed and settlement time. Unlike other methods, Bitcoin provides more benefits due to fewer intermediaries.

• Improved efficiency

Transaction settlement is people’s most prominent issue while working with various payment methods. This decreases the efficiency of funds being settled in receivers’ accounts. After the Bitcoin lightning network launch, the transfers are almost instantaneous, helping traders and businesses improve the overall working procedure. The sender needs the digital address of the receiver, and the funds reach its destination.

• Distributed trust

Various sets of rules and regulations makes this overall platform trustworthy and reduce the chances of risk. Since the day it started, there have been no security flaws associated with Bitcoins. With the association of a decentralized ledger, there is no single point of failure. The entire data is stored in nodes, old and new transactions as well.

Keeping your currencies in the digital wallet holds your private keys and reduces the theft risk. Both cold & hot wallets have their own benefits, however, most people prefer offline wallets – not connected to the internet.