Two Charts Show How Different Bitcoin and Fiat Payments Really Are

What is most frustrating about banking today is the process that must be endured by both consumers and businesses.

AccessTimeIconMay 29, 2014 at 9:30 p.m. UTC
Updated Sep 11, 2021 at 10:49 a.m. UTC

Today, we live an exciting era when financial technology could upend a long-standing 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 the fact that there is now a viable alternative to government-backed money, not to mention the problems inherent to the existing global financial system.

Process and procedure

What 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.

However, it is the procedure behind the scenes that might be the biggest albatross of all. What has been beneficial for the global banking system is that it has 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:


However, 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:


Financial technology

In 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 for consumers who want to have an account and store money with a financial company.


USA 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 account

A huge problem continues to exist for users of digital currency, whereby converting fiat into bitcoin is still not very easy.

When 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 bitcoin become global, the concern from these institutions is they will be left out.


Transforming 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.

Banks, though, have a lot of time and effort to put in as well. These organizations must appease a new generation that will demand more from them.

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 Glenbrook


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