What are the benefits of using bitcoin as a payment system?
There are many benefits to using Bitcoin as a payment system. This article will discuss the advantages for buyers and merchants to using Bitcoin as a payment system, and it will also discuss escrow services, the future of Bitcoin in commerce, potential drawbacks, and a summary on the benefits.
Bitcoin offers many advantages over traditional banks. It permits sending payments internationally without concern for currency conversion, it permits transaction confirmation within ten minutes typically, and transactions cannot be reversed once made. This side can be seen as a positive or negative.
There have been security improvements since its inception, which make it safer to store coins when large companies hold extreme amounts of funds, and also for buyers. The Bitcoin network and blockchain is very secure with a excellent deal of computing power working to secure it.
Very first, the benefits for merchants will be discussed.
Benefits for merchants
There are many benefits accepting Bitcoin as payment if you are a merchant. Very first is that the processing fees are paid by the sender, and the merchant pays nothing to receive funds. These fees are considerably lower than traditional payment networks.
It permits you to send items worldwide without currency being a limitation. It permits one-way transactions that cannot be reversed as this is how Bitcoin works, so the merchant is not at risk of a chargeback. It is gaining traction so is more likely to be an effortless payment method to accept in future, and there are no subscription or monthly fees for using Bitcoin directly, unlike traditional bank accounts and payment processing networks.
Large payments can be made with ease without caps on the size of the payment. Some traditional payment processing networks charge higher fees for larger transactions or otherwise have boundaries to transaction sizes which can cause problems when selling big-ticket items and other large transactions.
Benefits for buyers
There are many benefits for buyers when it comes to using Bitcoin. It permits rapid confirmation time within ten minutes, which is handy for international transactions. It permits you to purchase items from abroad without worrying about currency conversation. Storage of coins is not difficult. The transaction fee is paid by the sender of the coins but this is typically pennies.
It could result in a lower overall cost of items purchased by a buyer due to the merchant not having to pay large processing fees among other things.
Bitcoin wallets can be used on any electronic device such as android, apple, PC, and some wallets can be on USB type wedges.
Safety for Bitcoin use on large transactions inbetween private sellers and buyers have also greatly enlargened with multi-signature wallet escrow services.
Escrow services have resulted in enlargened online safety for Bitcoin transactions for buyers. These are typically a trusted third party, or more recently multi-signature 2-of-3 wallets. The buyer and seller each hold one key to the wallet and a neutral trusted third party holds a third key. If there is a dispute, this person can mediate and either give their key to the buyer to comeback their funds, or the seller to give them their funds to their own wallet.
The use of Multi-Signature Escrow wallets for transactions especially inbetween private sellers and buyers has become an accepted norm with Bitcoin, albeit Escrow services are typically not used for larger, more respected companies which already have a good reputation of being genuine.
Future of Bitcoin in commerce
Bitcoin due to its decentralized nature has the potential to revolutionize commerce and enable transactions across international borders with ease. It permits the sending of transactions for a fraction of the cost of major payment networks and there are no ongoing costs for having a Bitcoin wallet. This is an advantage for both buyers and merchants. It has the potential to help connect buyers and merchants across the globe and with the use of multi-signature escrow services might help reduce fraud in some areas. Use of Bitcoin in general can eliminate chargeback fraud for a merchant. But this can also pose a problem for buyers who are in genuine need of a chargeback.
Bitcoin is an emerging technology and has the potential to switch commerce. You can also keep your deeds reasonably private from prying eyes yet due to the nature of the blockchain it also means records could be kept fairly lightly managed by your wallet software. It has the potential to make managing funds lighter for businesses as wallet software can be run or developed in-house without needing to rely on an outer payment network to work with your system, providing more overall control of a merchant’s e-commerce platform.
There are some potential drawbacks for using Bitcoin as a payment system. Some of these are being improved at the time of writing. They include the following:
- Risk of fraud without escrow services, with no recourse.
- Until the block size limitation is motionless, transactions may be slow to confirm during times of high request.
- Incapable to chargeback if there is a genuine need.
- Not yet fully understood by tax authorities in some countries.
- Still an emerging technology and volatile in price, not accepted by most merchants universally.
Bitcoin is an emerging technology that has the potential to switch and improve commerce as we know it. It has advantages for both buyers and merchants, such as no fees for merchants to take payments, low transaction processing fees, works the same across world borders, and has many technical improvements in the works, some of which have improved safety for buyers and companies which accept Bitcoin, through multi-signature wallets. Other improvements such as solutions to the block size limit are in the works. Bitcoin is a payment system that would be a good thing for merchants to accept, as it is the potential future of digital cash, and it costs merchants next to nothing to accept it.