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.
Found at Bitcoin Warrior.
Read this HERE>
Bitcoin, Gold, or Both?
Last year, when the price of Bitcoin in US Dollar terms surged, it coincided with the beginnings of a huge correction in the price of gold. Once the price of 1 Bitcoin surpassed the price of 1oz of gold there was an inevitable rash of articles comparing the two. Was Bitcoin the new gold? Would interest in the virtual currency spell the end for the yellow metal? Was it a sign that the end of the world was near? Subsequent events have proven that none of that was the case. Bitcoin and gold both continued to see price volatility, but both seem to have settled down this year, leaving open the question as to which those looking for an alternative to fiat currency should hold.
As usual in matters Bitcoin, that particular argument last year included a lot of exaggerated claims by adherents and misinformed statements by detractors. It quickly degenerated into a war of words in which, as is the way of any war, truth was the first casualty. Of course, as is also usual in matters Bitcoin, in reality not that many people were aware of the debate and even less cared. Those who were suspicious or distrustful of fiat currencies argued it out amongst themselves, while the rest of us got on with making and spending government issued pieces of paper.
That there was a minor storm in a teacup, however, should not obscure the fact that the debate raised some important points; there are many similarities, but also many differences, between gold and Bitcoin. The similarities are often intentional and it is no surprise that a digital currency should, at least in some ways, be modeled on a commodity that has been a store of value for centuries.
Like gold, Bitcoin is inherently deflationary as a limited supply (21 Million) exists, or rather has the potential to be mined, and, over time, as mining becomes more difficult, the rate of supply will decrease. This is cited by some as a big negative for Bitcoin, but that deflationary nature and limited supply doesn’t really seem to have hurt gold too much. If Bitcoin were to completely replace fiat currencies as a method of payment for transactions globally I can see how the inbuilt inability to expand supply to keep up with global growth could be a problem, but only the most fanatical proponents of peer-to-peer currency can truly imagine such a situation. The rest of us see Bitcoin as an add-on to, rather than a replacement for, conventional currency; again, much like gold is today.
A more cogent argument against virtual currencies is the much simpler one of “Why bother?” If gold already acts as an alternative, deflationary store of value with limited supply and has done so for a few thousand years, why create another one at all? The answer, a common one in the digital age, is convenience. Physical gold is heavy and bulky and, despite its history, difficult to transact; payment for goods and services almost always involves the holder converting back to fiat currency. Aside from the physical properties, you could say the same about Bitcoin, but there are a couple of fundamental differences that make it more convenient.
Firstly, in an increasing number of cases, the merchant that you are dealing with will take Bitcoin directly as payment. The fact that they will, in the current scenario, then immediately exchange the digital asset that represents Bitcoin for one that represents a fiat currency is of little concern to the user. For the holder, spending gold directly is at best inconvenient if not actually impossible, which brings us to the second difference… speed.
Analyzing, verifying and weighing gold takes time whereas digital transactions can be processed almost immediately. That this process is done within the peer-to-peer network and between computers results in another benefit that Bitcoin users are well aware of: reduced cost. If you keep some of your wealth in gold, then spending it often leads to you paying fees to the financial institutions twice; first on the gold to fiat currency transaction, then on the buyer to seller transaction in that currency. Little wonder then that the world’s major banks are all in the gold business but very few have embraced digital currency.
These benefits alone are enough to convince me that, as we move forward, Bitcoin represents a more practical solution than gold for those who wish to hold at least some of their wealth in something other than government-issued currency. That doesn’t mean, however that it will replace gold any time soon; people will always place value in something that they can see and hold. Those who fear inflation don’t have to choose between the two, they can just hold both.
Read all of this HERE.