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 is a term that refers to a currency, protocol, and network. These components compile and make the digital payment gateway operate. Bitcoin is a new-age digital currency that can be used similarly to a traditional currency; the only difference is that it is borderless and conducts near-instant transactions. Any central authority does not control this currency, and Bitcoin is available in a finite amount.
There are only 21 million bitcoins, and they will be exhausted by the year 2140. Also, the supply of bitcoins automatically increases at pre-determined rates. The protocol that Bitcoin follows solves many problems like double-spending of currency and provides the required security to the users.
Bitcoin network is a peer-to-peer ecosystem that interconnects computers and verifies transactions. These computers are called nodes; it also keeps track of all the dealings with the help of a maintained ledger. This ledger keeps the records of all the past transactions too.
The market has multiple payment methods, and a large population also uses them. By comparing Bitcoin with them, it will be possible to understand the differences much better.
There are multiple transaction systems, and they are functioning very well in the current market. When it comes to Bitcoin, some payment methods are its competitors.
Let’s get to the details of these payment methods and compare them with the digital ones.
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.
|Bitcoins are decentralized and not regulated.
|Money is government-regulated currency.
|Non-physical currency no banknotes and coins.
|It includes banknotes and coins.
|Included in virtual currency and cryptocurrency.
|Comes under the fiat currency and commodity currency.
|Miners verify the transactions by identifying the amount and the digital signature.
|The financial institutions verify transactions.
|Transactions are done through a digital address.
|All the transactions need a physical presence.
|There is a small transactional amount and network fee that miners charge.
|No cost of transactions when paying in cash.
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.
|Cheque or Money orders
|The payment gets confirmed in real-time or in a few seconds.
|Cheques take days to get confirmed.
|The transactional data is visible to all the world.
|Cheques are private, and nobody except banks can see the transactional data.
|Settles in a few seconds, enhancing trust among the transactors.
|The payer is charged for the cheques which are bounced.
|It is accessible to everyone worldwide.
|Cross-border or international payments through cheques not possible
|Fully digital hence cant be stolen until and unless the private keys are shared.
|Has security risk when lost or stolen by someone.
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.
|There are no charges when operating a merchant account.
|Monthly charges to operate and upgrade POS terminals.
|Network fees and transactional charges apply.
|A percentage fee is applicable on each and every transaction.
|Push transactions lead to the prevention of chargebacks.
|The possibilities of fraudulent chargebacks are high.
|There is no need to have a minimal amount. One can also send the tenth part of Bitcoin, which is satoshi.
|The minimum amount needs to be kept in the account to operate a debit card.
|POS terminals are optional and can be replaced with a simple QR code.
|A POS terminal is required to operate card transactions.
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.
|Digital payment processor
|Anyone can use Bitcoin through the free platform of blockchain.
|Charges a set-up fee for using the platform.
|Bitcoin is borderless and is available worldwide.
|There are limited options for international transfers.
|Bitcoin transactions get settled instantly or in a few seconds.
|When a transaction is done, it takes days to get settled and confirmed.
|This is accessible all over the globe, and anyone can conduct transactions
|Some payment processors are not accepted in certain regions due to their legal restrictions.
|With the Bitcoin payment method, only BTCs can be transferred.
|Multiple currencies can be traded with a digital payment processor.
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.
|Advantages of having a pear-to-pear transaction.
|There is an intermediary included in the form of banks and their employees.
|From domestic to international, all kinds of non-expensive transactions settle instantly.
|International transfers are expensive and take a little time to settle.
|Covers the currency worldwide for exchanges and converts in real-time.
|The exchange rates are quite high, leading to losing money.
|There is no manual processing, and everything functions automatically over the blockchain.
|Manual processing takes certain hours before the money gets settled.
|All the transfers are done anonymously, and the user identity is protected.
|Wired transfers are easy targets for scammers, and they can attack these transactions easily.
Bitcoin has made its mark in the financial market since its creation, it has reduced the transactional fee and is highly efficient at the same time. With its acceptance globally, other payment methods are considered less secure than this. Some points explain why Bitcoin is a better payment method than those mentioned above.
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.
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.
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.
The comparison in this article states that Bitcoin is a very advanced payment method and a future of payment. Regarding settlement time, fees, and security, it can be considered the most reliable method. Bitcoin payment processors like Speed provide the feature to transact Bitcoin with the help of a lightning network. Bitcoin is available to a large number of the population without being a part of the traditional banking system.
From individuals to businesses, everyone is benefited by accepting Bitcoin payments. It can be said that Bitcoin is the most simple solution that is establishing its presence over other payment methods. Being a payment method Bitcoin is now presenting itself as a leading global currency.