clock menu more-arrow no yes mobile

Filed under:

What will people be able to do with Bitcoin that they can’t do with conventional financial systems?


It’s hard to predict what path future innovations might take. But here are a few examples to illustrate the kinds of applications that might make Bitcoin useful.

One is international money transfers. Right now, companies like Western Union and MoneyGram charge fees as high as 8 percent to send money from one country to another, and it can take as long as three business days for transactions to clear. New Bitcoin-based entrants could easily compete on price and speed.

Bitcoin could also enable improvements in payment security. The conventional credit card network essentially works on the honor system, with fraud-detection happening after the fact. Bitcoin could serve as the foundation for payment systems that deal with fraud in a more sophisticated way. For example, a Bitcoin-based payment app could ask the user to approve a transaction on his or her smartphone before it goes through.

Finally, Bitcoin could be a lifesaver for people in developing countries with dysfunctional banking systems. The conventional banking system is geographically segregated, with people in each country expected to use that country’s banking system. But the Bitcoin network is global. So consumers in low-income countries who are worried that local banks will mismanage their funds could use Bitcoin-based financial services in a developed country such as Canada, Switzerland, or South Korea.

Sign up for the newsletter Today, Explained

Understand the world with a daily explainer plus the most compelling stories of the day.