The whole world is going gaga over cryptocurrencies these days. It's not just about investing your money in mutual funds and stock markets, but cryptocurrency investment has also become a thing. The first cryptocurrency, Bitcoin, was created in 2009 and in just a decade, it has taken over the market and has been accepted as a medium of exchange.

There was a time when a lot of investment experts used to believe that Bitcoin would just remain a virtual currency and would not have any importance in the real world. But very soon, their predictions were proven wrong. Big companies like Tesla announced that they would only accept payments in Bitcoin.

Other major companies like AT&T and also allow their customers to make payments in Bitcoin. This trend shows that the position of Bitcoin has changed drastically from 2009 to 2022. Bitcoin is now being widely used for transactions and some experts argue that soon Bitcoin is going to replace credit cards like Visa and MasterCard.

So, if Bitcoin really does replace credit cards, how will it affect you? Will it be an advantage or a disadvantage for you? In this article, I will discuss everything that you need to know about Bitcoin transactions and help you understand how it will benefit you.

What is the Difference Between Bitcoin And Credit Card Transactions?

Before understanding why Bitcoin transactions are better than credit card transactions, let us understand how these work and the key difference between them

In the case of credit card transactions, there are a lot of things involved. Firstly you will have to make the payment through your credit card, then your bank will be notified about the payment which they will have to process and send to your merchant's bank. After that, your merchant's bank has to accept the payment, and only then will the whole transaction process be completed. 

You might have had the idea that as soon as you make a payment using your credit card, the money directly gets transferred to your merchant. But in reality, there are a lot of things involved in this whole payment process. 

This also shows that credit cards are not a medium of exchange, but a means of facilitating interaction between various people. That is exactly where the difference lies between credit cards and Bitcoins. 

During Bitcoin transactions, you can directly send coins from your wallet to your recipient's address or wallet and complete the transaction by using your private key. The whole transaction also gets recorded on a blockchain where the records of these transactions can never be deleted. 

So, what is the key difference between Bitcoin and credit cards? In the case of Bitcoin transactions, coins are transferred to the merchant's wallet without including any third party in the whole transaction process. This is also why Bitcoin transactions are also known as a “peer-to-peer electronic cash system”. 

Here's an example for your better understanding of Bitcoin transactions. Imagine Harry has to buy a shoe from a local merchant who accepts payment in Bitcoin. All Harry would have to do is transfer coins from his wallet to the merchant's using a private key to authorize the transaction. 

Unlike credit cards, once the transaction gets confirmed by the miners, the merchant will receive the payment immediately without involving any third-party authorization, settlement process, and exchange. Bitcoin payments are completely hassle-free where the money gets transferred directly like wire transfers. 

Here are a few fundamental features of Bitcoin payments that will help you understand why it is a much better option than credit cards and why it will surely replace credit cards in the future - 

Quick Transactions With Bitcoin

Bitcoin payments are very quick. Speed ​​is one of the fundamental features of Bitcoin payments. When you make a transaction using credit cards, you are not directly transferring the money to your merchant. The bank plays a huge role in this transaction where they would have to authorize your payment. Sometimes, the authorization process even takes days to clear the payments. 

Although critics argue that credit card companies like Visa have to authorize approximately 24,000 transactions in one second. But it is not the lesser amount of transactions that make Bitcoin transactions so quick. Bitcoin itself works as a bank and a payment network where you would just have to transfer coins from your address to another address on the blockchain network

Bitcoin transactions hardly take 10 minutes whereas credit card transactions would take days to process. Not just take, but Bitcoin transactions could also be speeded up with the help of Layer 2 technologies. For example, Lightning Network makes the process of Bitcoin transactions even quicker by reducing the confirmation time and increasing the network performance. 

It is true that Layer 2 technologies like Lightning Network are still quite new but with time, it has the potential to change the payment network and create a world where Visa and MasterCard would have no value and credit card payments would be replaced by Bitcoin payments. 

Secure Transactions With Bitcoin

Bitcoin payments are also very secure. You must have heard people complaining about how they have been frauded and how their credit card information has been stolen and caused them immense trouble. Even big companies like Equifax, Target, Marriott Hotels, and Neiman Marcus have faced trouble for such fraudulent activities. 

If hackers steal your credit card and use your information to make illicit transactions, you will be at risk. Not just stealing, but you might also pose a threat to yourself while using credit cards for online transactions. Hackers might get your information from retail outlets or self-service gas pumps easily and use it. Credit card transactions increase the risk of malicious transactions.

If you are making online credit card transactions from some trusted website, you will never face any issues, but when the website is not authorized, your information might be stolen by hackers and you might end up losing all your money. 

That is exactly why Bitcoin payments are so secure. It does not include any third party for the whole transaction process. And something that makes these transactions so secure is that apart from the amount of payment and the recipient's address, you would not have to provide any information to complete the transaction process. 

All you would have to do is authorize the transaction yourself using the private key that is saved in your Bitcoin wallet. Even if the hackers wanted to get hold of your coins, they would have to get hold of your device or use various social engineering techniques and steal your private key to make a Bitcoin payment. 

But such phishing can be easily avoided by staying away from unauthorized or fake websites, keeping your private key safely, and also using a safe wallet to store your coins

Not just that, if you own a business, accepting payments in the form of Bitcoin also gives you security against chargeback fraud. Some buyers tend to cancel credit card payments after they have reviewed the product. But the irreversible nature of Bitcoin transactions prevents such fraudulent activities. 

Bitcoin Transaction Fees Are Much Lower 

Credit card payments are not free of cost. These payments require transaction fees which could go up to 3% of the total amount to be paid. The shopkeepers often have a very low margin of profit and thus push the transaction fee on the customer. Thus, you would have to pay much more than you actually should have paid while processing credit card transactions. 

Bitcoin payments are also not free of transaction fees. If you want to transfer coins from your address to someone else's address, even you would have to pay some transaction fees which are not cheap as well. 

But this issue can again be easily solved by Layer 2 technological solutions like Lightning Network. The transaction fee charged by Lightning Network for any payment is one satoshi which is equivalent to $ 0.0004 or 0.00000001 BTC. This is exactly why business owners are so interested in including Layer 2 solution-powered Bitcoin transactions in their business. 

Using Bitcoin as a mode of payment is a win-win situation for both the business owner as well as the customer. Neither would the owner have to bear the burden of the transaction fees and cut their profit margin nor would the customer have to pay more than what they should have paid for a particular product or service. 

Lesser Paperwork With Bitcoin Transactions 

In developed nations, getting credit cards does not include a lot of paperwork. But you cannot just walk into the bank, ask for a credit card and get it immediately without going through a particular process of documentation and identity verification. You might not have to write a long application but the process can be lengthy and time-consuming. 

In fact, in developing countries where technological advancement has not yet taken place, getting hold of a credit card can be a task. But with Bitcoin, you would just have to set up a wallet where you could store your coins and make transactions with the help of the private key whenever you want. 

Installing a Bitcoin wallet and signing up is also part of the process, but not only is it very time-efficient, but also very simple. Even a non-technical person could install and use it easily by following a few steps. To make a Bitcoin payment, you would only need to have a mobile and an internet connection. It saves time and does not include any paperwork. 

Bitcoin Transaction Prioritises Privacy

People want privacy and anonymity for their transactions for various reasons. Bitcoin certainly provided them with both privacy and anonymity. When you make a Bitcoin transaction, only your public address gets stored on the blockchain and nobody can ever know who you are or get to know your personal information. 

That is exactly why some people believe that Bitcoin transactions are only preferred by those who make illegal purchases to keep their identity a secret. But that is not true. Most people use Bitcoin to buy regular goods and services as well. 

For example, if someone wants to buy an adult toy, they would choose to keep their identity a secret. Purchasing such items with credit cards allows the companies to know what you are buying and fill your screen with related ads. No one would certainly want their screen to be filled with “Best adult toys for your pleasure” ads.

In fact, some credit card companies even block payment for products like marijuana when purchasing them is completely legal in some countries. Bitcoin is thus the best option for payment when you do not want businesses to store your information. 


Although a lot of experts argue that Bitcoin can never take over credit cards and replace them completely, right now, it seems inevitable.

Bitcoin will be preferred by both the business owners as well as the consumers as it benefits both of them equally. Once the Layer 2 technologies bring in the new improvement and make Bitcoin transactions even better, people will undoubtedly choose it over other methods of payment.