Log inRegister

Two Charts Show How Different Bitcoin and Fiat Payments Really Are

bitcoin miner
Today, we live an exciting era when financial technology could upend a longstanding regime that has had total control of consumer money.Digital currencies such as bitcoin and the burgeoning number of altcoins allow tech-savvy people the ability to better bank themselves. At the same time, the industry’s consumer services and nascent startups are beginning to bring social elements into the ecosystem in effort to appeal to mainstream consumers.This work is raising awareness of that the fact there there is now a viable alternative to government-backed money, not to mention the problems inherent to the existing global financial system.Process and procedureWhat is most frustrating about banking today is the process that must be endured to move money. This is experienced by both consumers and businesses alike.But, it is the procedure behind the scenes that might be the biggest albatross of all. What’s been beneficial for the global banking system is that they have been able to easily conceal its byzantine systems from the public.A bitcoin transaction from one party to another, anywhere in the world, might look something like this: Source: BitcoinfeesSource: BitcoinfeesHowever, with fiat money, things aren’t so simple. Sending money globally from one party to another is massively complex.Any party sending money to another one internationally, for example, has to go through a lot of hoops. That procedure often can look something like this: Source: Paymentsviews(Click to Enlarge) Source: PaymentsviewsFinancial technologyIn exchange for dealing with overly complex procedures, banking customers are paying the price.They do so in the form of exorbitant fees, and many of these fees are mandatory in exchange for having an account and storing money with a financial company. Source: The Financial BrandSource: The Financial BrandUSA Today recently reported that 30-35% of people 18-34 years old would bank with a technology company. It’s no mystery why. That demographic’s view is that technology companies are able to solve real problems. The simplification of banking and complicated fee schemes is something many clearly feel is possible with technical innovation.The procedure for moving money from one country to another, as the chart shows above, is messy. Even a Federal Reserve economist has said that banks will have to “adapt or die” in the face of technical innovation.Unit of accountA huge problem continues to exist whereby converting fiat into BTC is still not very easy.Sending USD to a country that accepts only another form of currency as payment, there are a ton of banking hoops to jump through. It requires fiat conversions through financial procedure.It is why many banks today are making it difficult to be involved with bitcoin. Should BTC become global, the concern from these institutions is they will be left out. Source: XapoSource: XapoTransforming cryptocurrencies from being a store of value to a useful accounting measurement will help this tremendously. If that were to happen, the need for exchanging bitcoin into fiat for regular purchasing  will be reduced.There is major upside for bitcoin if the industry itself can get past some of the major issues that exist today. Regulation, access and thus adoption are some of the major hurdles. This will take time to work itself out.But, banks have a lot of time and effort to put in as well. These organizations must appease a new generation that will demand more.In exchange for the storage of money in a bank, customers and businesses should be expecting more – and digital currencies will force this issue.Image via Glenbrookbanksbusinessconsumertransactions
Original author: Daniel Cawrey