Is Bitcoin payment services similar to credit cards? Here is the Difference!

Have you ever considered Bitcoin as a payment option, the same as we do with credit cards? Electronic money transfer is now getting more advanced by the day and with crypto entering the financial space, things are getting more interesting. Apart from Bitcoin trading, the crypto “Bitcoin” could be used for product purchases, like the same we do with credit cards. Both forms of payment systems might be similar, but there are certain things to understand how these systems work.

How does a Bitcoin payment system work?

Best depicted by a Crypto payment gateway service provider, the Bitcoin payment system runs on a network of computers, which are facilitators between various institutions. Every computer on the network works as a node facilitating payment transactions and records each one as well. To make payments Bitcoins can be stored in a digital wallet which is a gateway to the decentralized Bitcoin network. This form of payment network is independent of a banking body and generates money to make payment for product purchases through the proof-of-work (PoW) consensus mechanism.  

How does a credit card payment system work?

Credit cards have always been the favorite payment solution for people for many decades and there are billions of cards in circulation to date. This makes credit cards the largest payment processor on a global scale. A credit card payment system is quite similar to a Bitcoin payment system, as both forms of payments rely on a vast network of computers. Credit cards are connected to banks via debit or credit cards but come with a limit on how much money is allowed to spend on credit. Product purchases made with credit cards have to be repaid to the banks which also generates credit scores with every payment.

Is Bitcoin superior to credit cards as a payment system?

With Cryptocurrency development in Kolkata skyrocketing, the financial space got jolted with the introduction of more fast and efficient payment systems. A payment system has only one vision, to transfer money from one party to another without the involvement of third parties. As mentioned earlier Bitcoin payments are made through the proof-of-work (PoW) consensus mechanism and distributed ledger technology or DLT is the backbone of decentralized payments made using Bitcoins. All the transaction records of Bitcoin payments are stored in the nodes ensuring security and data expendability.

As of now, payment is always about adoption and it could be quite challenging initially as the payment system will work in tandem with traditional finance systems and payment methods. But with security and privacy as the foundation, the Bitcoin payment system will successfully become a globally trusted payment system after credit cards.

There are several advantages of making payments using Bitcoin over traditional payment systems like credit cards. Crypto payment gateway can save up to 80% on processing fees, zero charges, and boost the user base as well. The gap between traditional payment systems and crypto payment systems is shortening and things are about to change with the increasing support for digital assets in the coming year.