I am brand new to Bitcoin. I am retired investor.

What benefit would using Bitcoin have over, say, using a credit card, etc.? It appears that Bitcoin is primarily designed for businesses, buying, selling, and using Bitcoin as the exchange medium.

I saw a chart which showed the Bitcoin/USD value at approximately $32 and then dropped to $2 and now is back around $15 as of August 18, 2012.

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    Hi George and welcome! You should change the title to something understandable that sums up your question. Is your question simply what benefits Bitcoin has over credit cards?
    – D.H.
    Aug 18, 2012 at 18:58
  • The security model is different - with credit cards, you give private information to a merchant, and you need to trust that merchant to make charges correctly. Additionally, the private information that you give is exactly the same for all of them. This is why credit cards NEED a chargeback system.
    – Nick ODell
    Nov 26, 2012 at 4:14
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    @NickODell you provided one of the reasons but not the only reason. Some transactions require a chargeback (i.e. escrow) system, because some merchants give bad service and don't issue refunds when they fail to honor their side of the contract or generally accepted business practices in lieu of an explicit contract. Note, there is a VerifiedByVisa program, where the CVV2 and/or password is never seen by the merchant. Security (as differentiated from privacy) may not be the strongest advantage for P2P currency over the long-term. Mar 21, 2013 at 17:00

5 Answers 5


I don't consider these to be competitors.

Credit cards are a convenient way of doing payment processing on top of fiat currency. Bitcoin is a digital currency on itself.

Sure, Bitcoin today can function as a very rudimentary way of doing payments (just like cash-via-mail can be), but it's not particularly good at it - all it provides is storing and transferring value. What I hope is that in the future it will become a platform upon which payment processors can build. Since the currency is already inherently digital, building a payment platform on top of it should be significantly easier. Furthermore, since it is decentralized, everyone has the ability to become their own payment processor (or bank...).

  • I upvoted, but I'm not sure they could not be competitors in some future scenario. Mar 21, 2013 at 17:21

As a consumer, the choice of payment method comes down to a tradeoff between convenience and cost. When a merchant offers credit card payment or cash, oftentimes customers will choose credit card or debit card because it is convenient and costs no more than when paying with cash. The credit card issuer may even be offering a perk to provide incentive to pay using a credit card.

But that is really a subsidy as there are costs to the merchant when payment are made using credit card. There are tens of billions of dollars that go to payment card networks each year. Merchants don't actually pay this, they simply add the cost to their prices.

Some merchants either refuse to offer credit card payments, or they offer two sets of prices. You'll see this at gas stations, where payment for fuel pumped at the lower price must be given in cash, whereas the higher price is charged when payment is credit card.

The reason this "cash discount" isn't seen more often is because credit card companies had built into their agreements a "no surcharge" restriction. Thus you couldn't add the fee after the sale depending on which payment method was used. In the U.S., the card companies were just forced to abandon that part of their merchant agreement. So you may start seeing surcharges when you use a credit card (in states where that isn't prohibited). This will likely push many towards paying with cash.

But cash is not always convenient nor cheap. ATM fees can cost 5% to 10% for the smaller withdrawal amounts for many accountholders. Merchants have losses due to employee error, theft and management of the cash. An electronic alternative would be welcomed by both consumers and merchants, if the fees would be less.

So if your merchant accepts only cash or bitcoin, or csah, bitcoin at one price and credit card at another higher price, you won't be asking what benefit bitcoin has but instead you'll be appreciating how it is saving you money at every purchase.

Merchants also like bitcoin for additional reason. There are no chargebacks, so if you as a customer are due a refund, the merchant would need to issue it -- versus today's fraud-laden method where the consumer initiates the chargeback, whether it was founded or not.

There are many other advantages to Bitcoin, included here:

  • You emphasized that Bitcoin transaction fees might be less than credit card, but this is not absolutely guaranteed going forward if there needs to be some way to insure enough mining for security when the debasement scales down over the coming years. You say that merchants don't like chargebacks, but you didn't mention that in many or most cases, customers like to have that option available (especially for big ticket items). I don't think you have presented the strongest advantage of P2P currency, which is privacy and no regulation. Could be very important with global capital controls coming. Mar 21, 2013 at 17:18

My list of advantages for Bitcoin over credit cards (and money transfers) are:

  1. instant free registration, no id checks

    (for merchants, their customers, "banks", or any type of user)

  2. increased anonymity and control over privacy
  3. no self-regulation1, no limits
  4. no authority exists to report to tax and other authorities
  5. greater security
  6. lower transaction fees
  7. available 24/7 on demand
  8. irreversible transactions
  9. global acceptance
  10. e-wallet ownership card can be duplicated and backed up unlimited times

I think #1 - 4 are the most significant advantages. I elaborated on some of the reasons in comments below some of the other answers on this page. #5 would also be but the P2P systems are not theoretically secure against deep-pocketed attackers (e.g. a ruthless government perhaps China or other soon-to-be totalitarian state).

Disclaimer: I am not advocating tax avoidance, nor giving any tax nor financial advice. I am merely stating significant differences with which some people might think are advantages.

1 The P2P systems don't impose any regulations nor restraints on transactions. FinCEN's guidance (FIN-2013-G001) is that creating and using decentralized currencies for purchasing goods and services are not regulated as money transmitters, but selling the currencies is.

  • All those speculating on the appreciation of Bitcoin should take note that FinCEN classifies selling of decentralized currencies as a money transmitter activity and falls under their regulation. There are forms and compliance activities that must take place with sometimes dire penalties otherwise. Mar 21, 2013 at 21:01

With Bitcoin the user does not give out any sensitive creditcard information. Instead of giving out the information so the merchant can use this to withdraw money. The user sends their money without giving out any information. Thus there is no information for a hacker to steal or for an employee to abuse or sell.

This means that the network can have much lower fees. When you compare the fees a creditcard charges 100 000% percent higher fees per transaction than the Bitcoin network.

Another advantage is that its free to get a Bitcoin adress.

There is also a projekt in the work, that might make it possible to use a creditcard to pay with Bitcoins. Called Openpay.

So it might become possible to use Bitcoin at any shop that takes VISA/Mastercard.

But the real benefit is that the Bitcoins in a Bitcoin network only belongs to the owner controlling the adress.

As opposed to having the money in a bank, in which the money belongs to the bank. What you see on your bank account is how much money you have lended out to the bank and for this they give you an interest rate.

Thus, Bitcoins is the only way to own your own money in electronic form.

  • You claim that owning a wallet with Bitcoin units is complete control ("only belongs"), as compared to a bank account. This is not true. As the question states, Bitcoin can also experience a "bank run" and the value drop from $35 to $2. As with a bank account, the Bitcoin owner only holds a claim on external assets. That claim is dependent on market conditions. Mar 21, 2013 at 17:07

There are countless reasons why you should choose bitcoin over credit cards. Some are the following: 1) No Paperwork Involved-it does not ask for any identification information unlike credit cards wherein you’re required to input your address and contact details., 2) It’s Quick and Easy--generally confirmed within an hour or less, 3) Irreversible Transactions-only payment method that is 100% irreversible and cannot be charged back., 4) You can carry it anywhere-BTC can be store either in your desktop of smartphone; just scan the QR code and you are good to go.

Source: Bitcoin’s Advantages over Credit Cards--http://bitcoindaily.com/bitcoins-advantages-over-credit-cards/"

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    I am pretty sure there aren't countless reasons to choose Bitcoin over CC. ;) Anyway, I think you haven't read the other answers: 1)-3) have already been mentioned . And concerning 4) I fail to see how Bitcoin is more mobile than a credit card, especially if you store them on your desktop PC. Leaves me wondering, whether the main goal is to plug the website linked at the bottom.
    – Murch
    May 7, 2014 at 12:28

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