Are Bitcoins Better Than Credit Cards?


By Mark Norton: Editor @

More and more, the US is becoming a cashless society. Slowly over the years, as the number of people carrying cards and the number of merchants that accept cards has grown, it has become increasingly convenient to pay with everything from big purchases like Christmas presents to a candy bar on the way home from work with a card.

The benefits of this are obvious: You never have to get to the bank to get money, you don’t have to worry about carrying around large sums of money, and in the event that your card is lost or stolen, you can have it canceled and have any illicit transactions removed from your bill. Why wouldn’t someone want to go cashless? The security and convenience are obvious.

Except that that isn’t the whole story. The credit and debit cards are being sold to people as being a replacement for cash � and in a lot of ways, they feel like that. The downsides are also pronounced:

  • You can’t just ‘earn’ a credit card – you have to apply for it, and you can be approved, declined, or offered a card with high rates and strict conditions. In the case of a debit card, you need to have a bank account.
  • In most cases, you will be paying a variety of fees in addition to the interest rate for carried balances.
  • The interest rate can jump based on your payment history or a variety of other factors.
  • They can and will charge you fees for a variety of infractions.
  • They have all your information, can lose your information, and identity theft is a difficult thing to recover from.
  • All your transactions can be tracked, analyzed, and sold. Ever wonder why the fliers coming to your house seem purposely designed for you? They may be.
  • Cards can refuse service. If I want to give money in support of some news site, charity, or cause that a credit card company or government doesn’t approve of, they can shut off the flow of money with a flick of a switch. In a free society, though, a corporation or government shouldn’t be able to dictate where I send my money without due process.
  • It might sound like paranoia, but when all your transactions are tracked, they can also be used against you in a court of law. It sound nice to say that you have nothing to fear if you have nothing to hide, but the fact of the matter is, in the hands of a police officer or prosecutor whose main goal is not justice, even innocuous transactions might be made to seen nefarious.

Bitcoin for its part has been roundly smeared in the press for being a tool to move money illegally, buy drugs, or even fund terrorism. As a financial tool, Bitcoin has no politics. All of these things can be true of Bitcoin, but are much truer of regular money. Given the difficulty of converting large amounts of bitcoins to regular money, it’s much safer for criminals, drug lords, and terrorists to use the tried and true methods of moving money that have been in effect for generations � usually aided and abetted by the big banks.

The biggest advantage Bitcoin has over any other as we move into a cashless society is that it removes the need for a middleman:

You won’t need a bank to keep your money safe for you � unless you want them to. It’s been decades since banks offered anything like a real return savings accounts. With Bitcoin, since people, with a little effort and know-how, will be able to keep their own bitcoins safe, banks will have to start offering competitive interest rates to get people to deposit.

You won’t need a checking account, debit card, or PayPal, or Western Union. With Bitcoin, you can send any amount of money, anywhere, to anyone, almost instantly, for a miniscule fee (paid to the mining network for keeping the system secure). No more monthly fees, overdraft charges, declined purchases, transfer fees, complicated terms of service, etc. It may be that because of added services or convenience you continue using the services or businesses listed above, but you won’t have to. It will be a matter of choice and those businesses will have to compete to find a way to convince you that it’s worth your bitcoins to let them perform that service for you.

You may need or want a credit card. The fact is, though, that most people don’t really want a credit card, but merely like having the convenience of using one to shop online � and then have gotten used to having one to tide them over if money gets tight. Credit cards will shift away from being the way people pay for most things all the time to a way for people to pay now with future earnings. With the option of paying with Bitcoin, and considering the rules and fees of credit cards, people will start thinking more carefully about their credit card use.

So in the final analysis, are bitcoins better than credit cards? Well, it depends on what you want. If you want something that will give you instant credit to tide you over, credit cards will serve you well. And for almost everything else, Bitcoin is the winner.

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