Purchasing power: bitcoin vs credit cards

Bitcoin is the most popular decentralised virtual currency in the world, with its distribution controlled by a complex algorithmic process devised at its inception.

Bitcoin is the most popular decentralised virtual currency in the world, with its distribution controlled by a complex algorithmic process devised at its inception.

Despite being introduced a few years ago, this virtual currency has won fame as the most popular virtual currency and also as a valid substitute for traditional currencies.

Below is a comparison between bitcoin and credit cards with regard to security during purchase of goods.

Bitcoin’s cryptographic security system has given it the ability to withstand serious security threats from hackers. Similarly, credit cards employ powerful security measures to protect users against fraudsters.

Some of the security measures used by credit card companies include the use of encryption programs so that personal information, even when intercepted by malicious persons, cannot be used to steal money from the credit card owner.

Bitcoin also uses encryption procedures for its wallets to protect its users. However, neither system is infallible and hackers have taken advantage of weaknesses in the security of bitcoin exchanges numerous times.

Unlike with credit card fraud, when bitcoins get stolen their original owners tend never to see them again. Trading actual bitcoin will continue to be viewed sceptically until such security breaches are fixed.

When it comes to chargebacks, bitcoin is more secure than credit cards. With a credit card, the person buying the goods can initiate a chargeback procedure and get their money back after making a paying for a good. 

This security loophole is sometimes exploited by fraudulent buyers to make purchases and then stop the money from reaching the seller. No such problems are experienced when dealing with bitcoin. 

Once bitcoin is used to pay for goods, the buyer cannot retrieve them from the seller’s account without their consent.

Bitcoins are also more secure than credit cards when it comes to revealing secret information. With a credit card, the owner is forced to fill forms that require information such as the name, credit card number, and security number. This information is enough for anyone to use the funds in the account linked to the credit card. With bitcoin, users only provide public information during transactions. 

Furthermore, this virtual payment system validates the identity of the person making the transaction in a way that prevents anybody from spending another person’s money.

Truthfully, bitcoin may be better suited to handle security threats that plague online financial transactions. Both bitcoins and credit cards use formidable encryption systems to protect private financial information during transactions.

Nevertheless, bitcoin goes a step further to seal the security loopholes that affect credit cards during 

online purchases. For instance, buyers using bitcoin cannot reverse transactions without the seller’s consent. Additionally, bitcoin users are not forced to supply private information during online purchases, as is usually the case with credit cards.

Jonathan Sumner

Margarett Reinger

Jonathan was the Director of Digital & Social Media at Bonhill Group plc until 2020 before moving on to become Chief Digital Officer at GRC World Forums.

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