Crypto Experts Agree: It’s Not Wise to Compare Bitcoin (BTC) to Centralized Payment Systems
Bitcoin is the largest and most popular virtual currency in the cryptocurrency market. It can be used to process transactions of $1 million dollars or more or even $1 dollars’ transactions. However, the miners have to pay the same price for processing a very small payment or large transactions.
For example, back in September, $193 million dollars were moved on the Bitcoin network for less than $0.2 dollars. Using traditional transfers and payment systems, this transaction would have cost much more expensive and would have taken days to be settled. Furthermore, a lot of compliance work would have been required to clear a payment of this size.
According to the researcher Nic Carter, a Partner at Castle Island Ventures and co-founder of Coinmetrics.io, explained that a comparison between Bitcoin and other centralized systems such as PayPal is inaccurate taking into account the number of transactions per second (TPS).
According to the image shown and created by Carter, Bitcoin and credit card networks (centralized systems) target completely different markets. Credit and debit cards, including other payment systems such as PayPal, target users that want to process small payments. Bitcoin, instead, aims at processing larger payments more efficiently.
In a blog post uploaded a few days ago, Carter wrote:
“Bitcoin transactions tend to be quite large. It’s hard to know the precise number, but your average transaction will be in the thousands of dollars, possibly tens of thousands. Your median transaction is well over $100.”
Indeed, it is possible to see multi-million dollars payments to be processed on the Bitcoin network in a very easy way. These kinds of payments are not usually settled using credit cards. This shows that it is not possible to compare Bitcoin and other centralized systems because they have been created for different use cases.
Carter noted that TPS can be used as one of the many measurements to evaluate and compare payment networks. The number of transactions per second will be a good way of comparing products and services that work in a similar way. A payment system such as credit cards or cash cannot be compared to a settlement system such as Bitcoin or gold. The functionalities are different and so their results.