The mass adoption of cryptocurrency is increasing by leaps and bounds. Going along the lines of the aforementioned statement, many financial experts have hinted the possibility of credit cards being replaced by Bitcoin.
The concept of cryptocurrency which came into being as an answer to the centralized financial system could be able to make credit cards a thing of the past. After all, credit cards are the advent of the same traditional financial system that digital currencies were invented as an alternative to.
Moreover, transactional fee involved in Bitcoin transactions is less compared to the handling expenses charged by the credit cards. The said high fees are borne by the merchants before the burden transfers to the shoulders of customers. Using Bitcoin could, in fact, save those merchants millions.
There’s a huge percentage of people backing the idea of Bitcoin replacing credit cards. Professor and Chair of Department of Economics at Long Island University Post, Panos Mourdoukoutas portends that with a cut-throat competition on an increase and offer of low transaction fees by Bitcoin can make merchants strand credit cards and switch to the cryptocurrency.
Mourdoukoutas quoted Ian DeMartino and said, “From a merchant perspective, Bitcoin has the advantage of not having large fees from credit card companies that cut into profits.” Credit cards usually charge 3 to 4 percent of the total amount in the transaction which easily takes up most part of the profits. This is how he concluded that credit cards reduce the profit margins estimated by the merchants. This is one reason why the creator of Bitcoin, Satoshi Nakamoto, claimed that Bitcoin transaction were similar to the cash transactions.
In a whitepaper named Bitcoin: A Peer to Peer Electronic Cash System, Nakamoto was quoted as saying,
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
Other than the costly credit card transactions, another drawback that continues to plague this payment mode is fraud. Even though the introduction of EVM chips in the cards have made transactions safer, it has been prophesied that the number of frauds will only increase in the years to come.
The probability of Bitcoin making credit cards obsolete gets even stronger as the card issuers are now substantiating the advantages of Bitcoin over credit cards. For instance, a week ago on the 21st of August, Mastercard obtained a patent for increasing the speed of crypto transactions.