Vs Credit Cards- Why Would a Consumer Prefer Either?
With the heightened technological advancement seen in
recent times, with particular reference to the emergence of diverse electronic
cash systems with all promising to maintaining security for your money. It is on with this basis that this article compares
the likely risks and benefits of using either the bitcoin or credit card
Bitcoin payments are a cash transfer mechanism or wire
transfer system that simply requires that payment is “pushed” from a customer
to a merchant, peer-to-peer without taking the toll of going through a financial
institution, hence no third party.
Bitcoin and other cryptocurrencies process however publicly
registered in a blockchain and this is enhanced by a privately sequestered set
of computers and is made using an alphanumeric address that changes with every
new transaction. It never demands the consumer’s personal identification
information such as name, phone number or even address.
Contrastingly, credit card transactions as well as
most forms of electronic transactions rather practise a “pull” payment model.
The process starts off as the customer “pulls” a payment from their bank
account unto another account passing through various intermediaries.
Commonly used payment systems such as paypal, credit cards
and debit cards have as many as five merchants; the consumer, issuer (the
consumer’s bank), switch, acquirer and eventually the merchant (the financial
institution that makes payment possible). The “Pull” model of cash transfer with
its line up of middlemen exposes the consumer’s bank account to the risk of
being defrauded as all the intermediaries have direct access to every detail of
the consumer’s bank account. Woe betide any consumer that falls prey to a bad guy
Bitcoin, on the other hand is not a 100% safe with its
own distinctive kind of threat. Despite that Bitcoin has a limited number of middle
parties, hence reducing the chances of an account gaining exposure to fraud, an
even more disastrous circumstance could occur such as the systems getting hacked.
In the same vein, bitcoin provides a model of improved
data security as all its transaction details are sent to and from electronic
wallets which can be stored on electronic gadgets such as computers and smart
phones. It can only be stolen if the customer’s private keys are illegally
obtained or if the user is two-timed into transferring their bitcoins to a criminal
rather than the ideal recipient. Contrastingly, credit cards are mostly stored
in physical wallets and purses heightening the levels of risk.