There has been a lot of buzz around the idea that this new digital currency Bitcoin is a better payment system than the already established played in the industry, PayPal. However, in order to validate rumors from facts, we need to analyze and compare the functionality and the customer feedback of both these payment systems.
First let’s look at the highlighting differences between Bitcoin and PayPal.
To simplify, PayPal takes data from your financial institutions (banks, credit card companies) who holds your finances on your behalf and uses that information to conduct a financial transaction online. PayPal acts a middleman whenever you want to make a payment to a third party by deducting the money in your bank or card. The process is simple and you never reveal your important information to anyone. Except you’re trusting PayPal with your money.
Bitcoin, on the other hand, is like cash. It’s your money. There is no middleman taking care of your money while conducting a financial transaction online. The process is simple and you never reveal your important information to anyone either, but here you don’t have to trust anyone with your finances.
Now that we have pointed out the key differences between Bitcoin and PayPal, let’s look at 10 reasons why Bitcoin isbetter than PayPal and what do people have to say about it.
1)Decentralized – A trustless or decentralized payment network doesn’t allow a single entity or clearing house to have the majority of control on the network. An automated process which doesn’t require you to trust anyone.
2) Universal – Open source and available to anyone in the world. Sounds like the internet? That’s because it is. Bitcoin is money without borders – just like the internet. PayPal’s services are not available in many countries of the world.
3) Cheaper to use – The average fee to use Bitcoin is $0.0005 per transaction and that too is an voluntarily action to be taken by the sender. PayPal’s fees, on the other hand, after taking all things into consideration is an average of 3% every transaction.
4) Freedom – The fact that you are your own bank can’t be stressed enough. Bitcoin makes that happen. PayPal account holders are at mercy of the service providers.
5) No chargebacks – Once the Bitcoins are sent, they can’t be chargedback unlike PayPal where your money is put on hold if there’s a dispute by the buyer. This system has been abused by crooks and left honest sellers with their accounts frozen by PayPal.
For instance, one seller on Reddit shared his experience here:
“So I logged into paypal today to find out an eBay buyer opened a dispute after 92 days. They are claiming I never sent the item, but I did and I entered the tracking info into eBay.”
6) More secure – Bitcoin relies on private keys for security. PayPal uses passwords to secure your account. The chances of a hacker getting access to your PayPal passwords are much higher than your cryptographically secured Bitcoin keys.
7) Open source – It’s an open source platform. Anyone can develop another app to be part of the innovation. PayPal is an institution with a central body governing its direction.
8) Less Friction – $0.1 or $1 million – it doesn’t matter with Bitcoin. The fees and time to process the transaction remains same. PayPal, however, intervenes if you’re crossing the transaction limits.
9) Privacy – There have been several complaints of identity theft by people when someone has fraudulently accessed their PayPal accounts. With Bitcoin, your name and addresses are never revealed to anyone.
10) Financial Empowerment – Bitcoin has empowered individuals from around the world due to its versatility. For instance, Bitcoin helps Afghan girls achieve financial freedom
At least 2,000 WAF users in Afghanistan are paid in bitcoin. Their average income falls between $250 and $400 monthly.
On the other hand, PayPal keeps you in the same financial loop and offers no solution for financial freedom.
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