Bitcoin’s greatest potential is as a global payments network, to power transactions that are extremely low-cost, virtually frictionless, and easily flow across national borders.
In a recent report from BI Intelligence, Business Insider’s paid research service, we looked into all the reasons why Bitcoin shows promise as a technology that may one day threaten other forms of payment, including cash, credit cards, and money transfers.
- Bitcoin is scalable: The design may place a strict limit to how many units can be created — 21 million. But each coin can be divided into 100 million pieces, which will allow it to scale as a payments technology.
- Bitcoin dispenses with the need for intermediaries. It allows for the simple and secure transfer of value online, without intermediaries, including the credit card networks and card-processing companies that rely on skimming transaction fees for their revenue.
- Specialised Bitcoin payment processors are stepping in to address price volatility. Bitcoin’s transaction confirmations can take 10 minutes or even longer. Bitcoin payments processors serve as intermediaries and clear transactions in seconds, and also help merchants to avoid exchange risk.
- In the U.S., regulators have been largely friendly to Bitcoin.
- Bitcoin dramatically reduces transaction fees: Bitcoin’s efficiency and low cost in comparison to legacy payments tools will ultimately prove too tempting for merchants, individuals, and business-to-business billing. Bitcoin processors charge only 1% to process bitcoin transactions, compared to the 2 to 3% often paid by merchants for credit card processing.
In full, the report:
- Explains how Bitcoin works.
- Examines the problems Bitcoin was created to solve and the elegant solutions it provides which have clear advantages over the current payments system.
- Gives an insider’s view of Bitcoin through exclusive interviews with Bitcoin industry executives.
- Explores the open questions surrounding Bitcoin pertaining to security, volatility, and regulation and provides potential answers to these questions.
- Analyses the players in the legacy payments system which Bitcoin has the potential to eliminate if it catches on as a transaction network.
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