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The Bitcoin System Versus the Traditional Payment System

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Unlike the traditional payment and currency system, the bitcoin system is the digital and modern currency and payment system. Bitcoin is now the present as well as the future. Knowledge of regulation of bitcoin will help out to build your future by giving the opportunity to understand this digital system. Let’s see how the transactions of the cash and the card differ when compared with Bitcoin.

  • Cash Transactions: 

The trustworthiness concern is handled quite successfully in a cash payment. You possess currency from the sale of a client who offers you a conventional currency note. There’s no broker. Flaws still persist, however. For instance, you may have a fake banknote from the consumer.

  • Card Transactions:

Payments must be processed with card payment through a card network like VISA or Mastercard and a centralized banking system of financial services for permission, clearance, and payment. Trust comes from possibly the best financial organizations, which carry out a variety of checks although the payment is underway. The procedure flow for online transactions appears in the heading below.

  • Bitcoin Transactions:
  1. The procedure includes several distinct paths while sending bitcoins across the Bitcoin network.
  2. First, as a sender, you enter the Bitcoin address of the recipient and the number of bitcoins to transmit via your digital currency interface (this is equivalent to a bank transfer requiring the bank account number).
  3. This data is sent to the system by the wallet to sign the transactions digitally with your ‘private key.’
  4. A few miners will be transacted even before the information has been transferred into other miners, and your payment has spread over the entire network within a few seconds.
  5. Then ‘Miners’ collects transactions in a bunch and starts to try to solve a significant computational task. The pioneer to resolve the problem informs the system that it is complete. 
  6. Every other miner can quickly check if this miner speaks the truth so that the new transaction, i.e., a block, is added to the blockchain.
  7. The transaction will be verified by the trader wallet when the block, including the transaction, is incorporated in the blockchain and stored in the distributed ledger.
  8. Finally, the trader will become the new possessor of bitcoin.

Due to a number of variables, the duration for this complete process may differ. But for the mining of a block, 10 minutes is an average time. Although if you wish to wait until five additional blocks (six validates – the usual standard), in order to consider the payment transaction really effective, you can only reasonably assume the payment to take place in about one hour.

Advantages Of Bitcoins Over Traditional Payment Systems:

Although several potential benefits of the Bitcoin network, including its privacy, clarity and autonomy from national governments, centralized banking systems, and other third-party interference, seem ideological. Bitcoin undoubtedly offers advantages in operating efficiency and reliability.

  • Less Interference: 

In the end, only two essential intermediaries are required to send the coins properly; when shipping Bitcoins to some other party; first your wallet, and second the Bitcoin system. Miners or nodes are merely parts of the network, and the addition or removal of some of those does not impact the performance of the system. The credit card transaction system, by comparison, requires at least four intermediaries, and typically more in fact.

  • Greater Efficiency: 

The Bitcoin Protocol as a distributed network enables all the aspects of the system to continuously validate and simultaneously access and check for all ongoing transactions and operations in the past, creating time efficiency. And no mistakes can occur while you are transacting; as long as you enter the appropriate address when the transaction starts, the payments are to their intended destination. The conventional payment system has more intermediaries, but it also multiplies the transmission interchanges that happen sequentially back and forth. It takes a bit of time, and mistakes can take place anywhere in the process

  • Reliability Distribution and Single Failure Spots:

However, Bitcoin’s significant benefit lies in handling transaction confidence and removing individual failure spots. It would be best if you believed that rules and procedures will not lead to mistakes with the conventional method and that all of the counterparties involved are working correctly. If a peer is somewhat affected along with the network, the entire blockchain will be affected. With Bitcoin, theft, misuse and mistake are impossible because of the laws and principles, and mechanisms ensured by the system. Because Bitcoin is public access software, everyone may access it and critique it worldwide.