Bitcoin became a reliable source for people to hold their assets and invest more freely. After it was released on the market, the cryptocurrency developed so much that now you can buy Bitcoin with bank transfer, debit or credit card. The blockchain supporting the digital coin inspired plenty of other cryptocurrencies to be created, like Ethereum. Bitcoin’s popularity and value increased in the past years by leveraging fast transactions, low fees and decentralization.
But when it comes to transferring money, Visa and Mastercard are two massive cryptocurrency competitors, although they’re centralized companies. Compared to cryptocurrencies, these two solutions consume less energy and do not negatively impact the environment. However, in terms of speed and safety, cryptocurrencies might outshine Visa or Mastercard.
Visa, however, saw the opportunity of collaborating with Bitcoin and reached out to developers to blend the concepts and offer customers a premium transferring experience. But what technology is best at the end of the day?
Bitcoin ―mitigating financial freedom
Bitcoin was released at times when the Global Financial Crisis impacted the world from 2008 and 2009. As people were surrounded by the housing market bubble once the subprime mortgage market collapsed, relying on banks and centralized financial institutions wasn’t feasible anymore. Therefore, Bitcoin came in time to allow people to invest freely and more efficiently to make their long-term plans reachable.
Mining and trading digital coins helped many yield considerable returns. But when transferring or withdrawing those assets, things were more challenging in the beginning. Now you can move your assets from one digital wallet to another, and considering Bitcoin ATMs are quite common around more prominent cities, people can get their investments quickly.
Bitcoin has the advantage of not being the suspect of governmental control, giving people more financial freedom. Owning Bitcoin also didn’t require document formalities or include personal information. Above all, Bitcoin is an incredibly safe solution as it’s really hard to hack the blockchain due to its decentralized and cryptographic nature.
However, Bitcoin is prone to risks
Bitcoin’s most negative aspect is in regard to sustainability. Its considerable amounts of energy consumed by miners from around the world worry experts as they think cryptocurrencies add up to pollution. Other cryptocurrencies, like Ethereum, made significant changes within their systems to minimize their carbon footprint, but Bitcoin is still affecting the environment. One of the latest updates of the cryptocurrency, the Bitcoin Lightning Network, has still been issued with technical and security considerations. Even though there are decreased transaction fees, the update still hasn’t solved the prominent challenges of the cryptocurrency.
Despite the lack of a regulatory framework, Bitcoin is also struggling with worldwide acceptance and adoption. While some countries made it legal tender, like El Salvador, China banned it. Therefore, it might take some time until Bitcoin becomes the same in all countries.
Visa ―an efficient digital tool
Visa has been around for some time since it was founded in 1958, and it became the most valuable business globally, expanding its products to facilitate electronic transfers. In terms of technology, Visa surpasses Bitcoin in many aspects, such as transaction speed. While Bitcoin barely processes seven TPS, Visa can handle as much as 24,000 per second, and in theory, it can process up to 65,000. Mastercard also takes around 5000 TPS.
Visa is also better in terms of scalability, as neither Bitcoin nor the Lighting Network has proper scalability processes. This affects the market’s liquidity and slows down the network, leading to congestion. Visa is also more environmentally friendly, using around 148.63 kWh of electricity for 100,000 transactions, while 2,258.49 kWh are consumed for only one Bitcoin transaction.
But the company has its own disadvantages, such as fewer security measures. After the pandemic, Visa announced it had blocked more than $4.2 billion in fraudulent payments that involved especially e-commerce merchants.
Bitcoin and Visa are merging their power to create a unique tool
Besides their benefits and disadvantages, Bitcoin and Visa seem to work together quite efficiently since they’ve started collaborating recently. Now, you can get your own Visa card and use it to pay for services and products with cryptocurrencies. Many crypto platforms, like Binance, offer these options.
These cards work by offering instant PIN or contactless payments everywhere in the world. When you make a payment, the funds are transferred from the crypto wallet and converted to traditional cash by charging a considerably smaller fee than other cards.
Customers seem to appreciate this collaboration considering that Visa reported making $2.5 billion in crypto-linked payments only in the first quarter of 2022, consisting of 70% of the company’s fiscal volume as of 2021.
Bitcoin’s lack of regulation might hinder crypto-based Visa transactions
Despite its increased usage, Visa cards using crypto might lose customers’ interest considering the lack of regulatory framework. El Salvador indeed made it legal tender, but the project failed as citizens barely have internet access or their own mobile devices necessary for using Bitcoin.
Introducing cryptocurrency into a country requires the economy to be able to support considerable amounts of energy, as bills will definitely increase for all people in a neighborhood for those mining, for example.
At the same time, Visa struggles to maintain its collaborative plans considering the crypto winter and constant volatility of Bitcoin. Although Bitcoin’s value has increased and demand will multiply at the next halving, its scalability challenges and high volatility will impose more challenges to companies using it and users owning coins.
It’s also difficult to find a solution for blending decentralization and centralization in light of the opposing features of the two technologies. Crypto enthusiasts wonder if their financial freedom might stop considering collaborating with a centralized system.
It’s hard to say if Bitcoin is better than Visa or Mastercard. Each digital solution has different strategies and objectives, given their contrasting features. Depending on each customer’s need, one might be better than the other, but ultimately, it’s a personal choice whether you want to leverage fast transactions worldwide or have them fast and safe.