What’s the difference between Bitcoin and Credit Card transactions?

Credit Card vs. Bitcoin Transactions: An opening view point

For items they prefer to wait to pay in full, most people have a credit card they can use. But Bitcoin is also available to some. How do you decide which one to use if you have both, and when should you use which one to maximize your money?

Transactions with Bitcoin

As a peer-to-peer currency, Bitcoin was designed to remove all parties except the two parties making the financial exchange. You hold and control the Bitcoins in your digital Bitcoin wallet. A financial institution does not need to hold your money for you.

In a payment transaction, funds are transferred directly from one party to another without going through another financial institution. Each payment transaction is recorded in a blockchain, which is a public record of transactions executed through a private network of computers.

Bitcoin transactions do not require people to provide personal identification, such as their names and addresses. You can’t be monitored or restricted in your financial activity.

Transactions involving credit cards

A credit card transaction, however, involves a merchant “pulling” money from your account, which involves financial intermediaries. Visa, for example, requires five parties for a typical transaction: the credit card network, the merchant, the acquirer (the financial institution that enables payments to the merchant), and the issuer. A sixth party is sometimes involved – the payment processor, although many are also the acquiring bank.

The participants in the process charge each other fees, which are then passed on to the cardholder, increasing prices. The card has to be physically protected and stored securely. However, hackers are able to steal card numbers fairly easily, especially if merchants store the information for easy future access. The merchant’s records can be accessed by hackers regardless of whether you do.

 

Differentiations

A Bitcoin transaction uses a public key – a random alphanumeric address – and a private key. Mobile devices can be used to pay via quick response codes (QR codes) associated with your wallet. Mobile devices can also be used to use credit cards, but the payments must go through several entities before they can be processed and approved.

When you buy something at a point-of-sale terminal, you can swipe your card or hand it to another person. Hackers can access your card information through these machines, and simulated terminals can send it. Your credit card information can be stolen by a cashier, sold online, or used by them. Payments are made using Bitcoin, which is sent directly from your digital wallet to the party you’re paying, without anyone being able to intercept the transaction.

In contrast to credit card transactions that can be canceled, Bitcoin transactions are irreversible and can only be refunded by the recipient. The merchant does not have to worry about chargebacks when accepting Bitcoin payments. Charge-backs occur when credit-card companies ask retailers to cover their losses on fraudulent or disputed transactions. 

Latest

Easy Ways To Hide Your Electrical Outlets

Hidden Electrical OutletsThe invention of electricity has been very crucial for mankind. Our whole existence these days revolves around electricity and electronic gadgets. Be...

Fence Company: The Service That Sells

A fence company is technically the only licensed company meant to provide gate and fence construction services. The tools needed for these processes are...

Awaiting RBI directions on lifting curbs: HDFC Bank

Explaining the new initiatives, he said the digital factory would be focused on rolling out digital products, and the enterprise factory would focus...

Elon Musk’s Lessons In Business Scaling

In 2006 Tesla was struggling to pull off the first viable version of its car, which would prove at least the first feasibility...