With Bitcoin at the fore, the rise of cryptocurrency rocked the financial world and changed it forever. Now Bitcoin is everywhere, from balance sheets in boardrooms to the checkout at your local Starbucks.
After a turbulent few years that saw the Bitcoin price sink from the highs of 2021 (refer to the Bitcoin price chat), the cryptocurrency remains popular and is on the rebound. More and more companies are adopting it as a payment method signaling that the coin is here to stay.
How Bitcoin Is Likely to Impact Digital Payments
As opportunities for digital payments continue to grow, Bitcoin is set to play a major role in the shift to a cashless society. Here are some of the ways in which the protocol is helping accelerate the adoption of digital payments:
Decentralization
While traditional payment systems are controlled by a single central authority, Bitcoin transfers control to a network of its users. This makes it more reliable since there is no single point of failure.
It also puts cryptocurrency and decentralized finance on the path toward replacing banks and other institutions that act as intermediaries. As a result, many banks, including global giants such as Goldman Sachs and JP Morgan, are slowly stepping into cryptocurrency to retain and attract customers.
Lower transaction fees
One of the main drawbacks of traditional payment systems is high transaction fees. Bitcoin offers lower processing fees, making it a more appealing alternative to online merchants. On average, charges range below $1 per transaction, which rivals the roughly 5% Paypal charges for cross-border transfers. Bitcoin also eliminates the risk of chargebacks since transactions are irreversible and can only be refunded by the receiver.
In addition to eliminating chargebacks, merchants using Bitcoin can avoid the inconveniences caused by frozen funds. Complaints of withheld funds are common with traditional digital payments and can be caused by something as minor as a change in selling patterns.
Global accessibility
Bitcoin is one of the most versatile payment methods. It’s available in most countries worldwide and can be used by anyone, anywhere in the world, with an internet connection. Compared to traditional payment methods, Bitcoin has few barriers to entry. For instance, you don’t need a bank account and can transact without verifying your identity.
The global accessibility of Bitcoin is pushing traditional payment methods to enter previously ignored markets in Asia and Africa. The past few years have also seen increased integration of local mobile payment methods directly or through third-party merchants.
Privacy
While Bitcoin transactions are not truly anonymous, they offer pseudo-anonymity. This allows you to transfer money without revealing your real identity. Traditional payment methods, on the other hand, have no way to hide user information. Every transaction is logged and can be instantly linked to a specific individual or group, allowing the sender or receiver and the payment company to see your identity.
Transaction Speed
Cryptocurrency payments are faster in transferring money across borders, especially in the developing world. Bitcoin transactions do not need the robust infrastructure necessary to sustain traditional digital payments.
Here to stay
The rise of Bitcoin has marked a new era in digital payments. Its unwavering popularity continues to put pressure on traditional payment methods. With PayPal and many other popular digital payment companies now supporting cryptocurrency trading, the future might already be here.
That said, it’s important to note that Bitcoin is still a relatively new technology. It continues to face challenges like price volatility and regulatory uncertainty. But as the technology continues evolving and gaining wide acceptance, we may see it take center stage in digital payments, heralding a new era of increased privacy and accessibility.
