Are Bitcoin Payment Services Similar to Credit Cards? What’s the Difference?

Visa vs. Bitcoin $Visa(V.US)$ $Bitcoin(BTC.CC)$
Bitcoin also runs on a network of computers but these computers are not merely facilitators between various institutions. Each computer on Bitcoin’s network, called a node, not only facilitates transactions but also records every transaction ever made. “Moreover, Bitcoin’s blockchain network is independent of the banking sector because it generates its own money through the proof-of-work (PoW) consensus mechanism”- says Max Krupyshev, CEO of Coinspaid.

In other words, while a Visa card represents a gateway to the banks, a crypto wallet is like a gateway to the decentralized Bitcoin network. Banks have central points of failure, but Bitcoin can only go down if all entire global internet services goes down due to its international distribution of nodes, each holding the ledger of all transactions. Distributed ledger technology (DLT) is the backbone of decentralized finance, as all records are stored across various nodes to ensure security and data redundancy.

Another important distinction is that a crypto wallet does not hold Bitcoin similar to a normal bank account. Instead, it holds a private key to unlock Bitcoin’s ledger from anywhere in the world to access the Bitcoin. If the private key was lost, the wallet address itself could be recovered with a seed phrase, unlocking your access to the funds.

The implication of this is staggering because one could lose all the hardware with crypto applications and wallets on it, yet still be capable of unlocking the funds via the seed phrase. When you own Bitcoin, you carry an entire bank in your seed phrase. Word of caution though, if misplaced or forgotten, one could lose a fortune like with Stefan Thomas when he lost access to 7000 BTC, now worth around $395 million.

Visa pales in comparison as merely a crutch for the existing banking system. In contrast, Bitcoin is not only a banking system but its own payment processor system as well.

Part of the content is taken from Yahoo.