What are the benefits of using Bitcoin as a payment system? How does it benefit buyers (and merchants) as a payment system? And, what's the future of Bitcoin in the commerce? We'll discuss all these essential points in this article, so keep reading.
Bitcoin offers numerous advantages for both buyers (and sellers) over "traditional" banks. It allows people to send payments across the world without having to worry about currency conversion. Just like credit card and gift card (more information on how they manufacture bank card), Bitcoin can be used to accept payment from buyers and merchants.
Typically, transactions are completed within 10 minutes, and once made, it cannot be cancelled, however, which can either be positive or negative.
Since its inception, significant improvements in its technology have been made to make Bitcoin network secure and safe to store coins. Excellent news for buyers and sellers, especially large and multinational companies that require a place to save large amounts of money at a secure location.
And although Jack Ma (Alibaba founder) may not be a massive fan of Bitcoin, Mark Zuckerberg (Facebook founder) has a different plan running up his sleeves. Currently, Mark and his team are doing in-depth research on cryptocurrencies. Soon, you might see Facebook integrating Bitcoins as a payment system, too.
Here's how Bitcoin may benefit buyers and sellers (merchants) all over the world:
1. Benefits to the merchants (sellers/retailers)
Bitcoin as payment offers many benefits to merchants. First, the merchants do not have to pay anything to receive funds - the sender pays the processing fees. And, these processing fees are usually lower than those of traditional banks.
Unlike traditional payment processing networks, there are no monthly or subscription fees to use Bitcoin directly.
It allows merchants to send their items all over the world without limitations. It's a "one-way transaction," meaning it cannot be reversed, but that's how Bitcoin works, but it can also be viewed as a benefit: merchants are not at risk of a chargeback.
Moreover, Bitcoins as a payment system is slowly gaining momentum, so it's more likely to be accepted as a secure (and comfortable) payment method shortly.
Merchants can also make large payments quickly and easily without worrying about paying higher fees. There are also no limits on transaction sizes, which might cause a lot of problems down the line, mainly when selling high-end items.
Now, let's look at the benefits it offers to the buyers.
2. Benefits to the buyers
For buyers, Bitcoin offers several incredible benefits:
For instance, Bitcoin payments are faster than traditional payments - transactions are confirmed within 10 minutes - which is quite useful for international transactions.
It allows buyers to purchase items from wherever they want, without having to worry about currency conversion.
There's no shortage of space to store coins.
Buyers don't have to pay the transaction fee - the sender pays it (and it's only a few pennies.)
Since the merchant doesn't have to pay hefty processing fees, and the buyers can buy items at a lower overall cost.
Bitcoin users can use their wallet on any device, such as iOS devices (iPhone, iPad tablets,etc.), Android devices, PC, and even on USB type sticks.
And, with safety measures such as multi-signature wallet, the transaction between private buyers and sellers has been dramatically increased.
3. Escrow services
Escrow services, a trusted third party (or multi-signature 2-of-3 wallets), offers online safety for buyers during Bitcoin transactions.
The buyer, the seller, and the trusted third party each hold the key to the wallet.
So, if there's an argument between the buyer and the seller, the third party can intervene and give the key either to the buyers to return the funds, or to the sellers to give the funds to their wallet.
Today, it's an accepted norm for private sellers and buyers to use a multi-signature Escrow wallets for Bitcoin transactions. On the other hand, larger, and well-established companies don't use Escrow services because they have a good reputation and genuine.
What will be the future of Bitcoin in commerce?
Since Bitcoin is decentralized in nature, it has the potential to change commerce and allow people to make online transactions from international borders.
The transaction cost is only a fraction of "traditional" payment system. Plus, there's no ongoing cost for having a Bitcoin wallet, which is good news for both buyers and sellers.
Bitcoin trading helps connect buyers and sellers around the world and reduce fraud with the use of multi-signature escrow.
Moreover, Bitcoin allows you to keep your actions private from unwanted people, and the wallet software can manage your records quite efficiently.
Managing funds becomes easier as wallet software can be built in-house, rather than having to rely on external (expensive) payment network to integrate with your system, giving you more flexibility (and control) of your commerce platform.
Potential downsides
Bitcoin as a payment system also has some potential disadvantages, and they are:
- Without escrow services, there's a risk of fraud.
- Tax authorities in some countries still do not fully understand the implications of Bitcoin trading.
- Transactions may take longer time than 10 minutes to confirm due to the block size limitation, especially during the times of high demand.
- Since this technology is in its infant stage and the price is volatile, hence, most sellers are somewhat reluctant to trade using Bitcoins.
To Recap
Bitcoin is a new payment technology that can change (and improve) the traditional way of doing commerce.
It offers numerous benefits for both buyers and sellers, such as:
- Low transaction fees
- No fees for the sellers to receive payments for goods
- Many technology improvements (such as multi-signature wallets) means improved safety for both buyers and companies that accept Bitcoin.
- Works the same across the borders
- And, other improvements such as improvements to the block size limit are still in progress.
Considering all these benefits and safety measures for the buyers and sellers, Bitcoin as a payment system can be an excellent alternative to the limited cash payment system. It has the potential to be digital cash, and it costs merchants next to nothing to accept payments for goods.
Final words
Well, in this article, we covered all the benefits Bitcoin offers to buyers along with the actual benefits of using the Bitcoin payment system, the cryptocurrency holds the endless number of advantages over traditional payment modes. It has a potential to be used as digital cash in the future, as more users start to use it. So, adopting this new e-commerce technology as early as possible can be an excellent idea for buyers and companies alike.
By Sakshi Kaushik
Content Writer
A passionate writer and tech lover, she strives to share her expertise with mobile app developers and fellow tech enthusiasts. During her moments away from the keyboard, she relishes delving into thriller narratives, immersing herself in diverse realms.
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