BitcoinVs Credit Cards- Why Would a Consumer Prefer Either?With the heightened technological advancement seen inrecent times, with particular reference to the emergence of diverse electroniccash systems with all promising to maintaining security for your money. It is on with this basis that this article comparesthe likely risks and benefits of using either the bitcoin or credit cardpayment system Bitcoin payments are a cash transfer mechanism or wiretransfer system that simply requires that payment is “pushed” from a customerto a merchant, peer-to-peer without taking the toll of going through a financialinstitution, hence no third party. Bitcoin and other cryptocurrencies process however publiclyregistered in a blockchain and this is enhanced by a privately sequestered setof computers and is made using an alphanumeric address that changes with everynew transaction.
It never demands the consumer’s personal identificationinformation such as name, phone number or even address.Contrastingly, credit card transactions as well asmost forms of electronic transactions rather practise a “pull” payment model.The process starts off as the customer “pulls” a payment from their bankaccount unto another account passing through various intermediaries.Commonly used payment systems such as paypal, credit cardsand debit cards have as many as five merchants; the consumer, issuer (theconsumer’s bank), switch, acquirer and eventually the merchant (the financialinstitution that makes payment possible). The “Pull” model of cash transfer withits line up of middlemen exposes the consumer’s bank account to the risk ofbeing defrauded as all the intermediaries have direct access to every detail ofthe consumer’s bank account. Woe betide any consumer that falls prey to a bad guyas middleman.Bitcoin, on the other hand is not a 100% safe with itsown distinctive kind of threat.
Despite that Bitcoin has a limited number of middleparties, hence reducing the chances of an account gaining exposure to fraud, aneven more disastrous circumstance could occur such as the systems getting hacked.In the same vein, bitcoin provides a model of improveddata security as all its transaction details are sent to and from electronicwallets which can be stored on electronic gadgets such as computers and smartphones. It can only be stolen if the customer’s private keys are illegallyobtained or if the user is two-timed into transferring their bitcoins to a criminalrather than the ideal recipient. Contrastingly, credit cards are mostly storedin physical wallets and purses heightening the levels of risk.