The recent data breach at Target is one of the worst breaches of credit card information ever. But if those millions of Target Corp. (NYSE: TGT) customers had been using Bitcoin instead of credit cards, the thieves could not have stolen any of their personal data.
The thieves who stole the credit card data from Target customers took the information from Target's own computer systems. They got credit card numbers, names, and home addresses. In short order, the Target thieves were selling this data to other criminals over the Internet.
This is more evidence of the rising vulnerability of credit cards to clever and determined thieves.
But using Bitcoin is much more secure than paying with your Visa or Mastercard.
In fact, Bitcoin's security is one of the chief advantages of using Bitcoin over other payment methods, and a big reason why we'll see more merchants move to accept the digital currency - making Bitcoin more valuable.
"A Bitcoin-based alternative to conventional credit card networks could be significantly more secure and, as a result, more convenient and affordable for everyone," Washington Post technology writer Timothy B. Lee said recently.
How Using Bitcoin Is Safer Than Using a Credit Card
Bitcoin is actually much more like cash than most other forms of payment.
Each transaction only contains an address (a unique string of characters) for the sender, an address for the recipient, and the amount of Bitcoin being transferred between them.
The address can only successfully send Bitcoin if it has access to the private key associated with a person's Bitcoin wallet. This private key is never sent as part of the transaction, however.
But just as importantly, using Bitcoin instead of a credit card also means that no personal data is transmitted or stored. That leaves potential data thieves empty-handed save for the Bitcoin addresses, which are useless without the private keys.
Another aspect of Bitcoin that is appealing to web shoppers: Its anonymity makes it harder for anyone to track what you buy and where you bought it. This is comforting to consumers who are uneasy about the trend towards data mining of personal shopping habits for commercial purposes.
Of course, at this point in the digital currency's young life, using Bitcoin today is not as easy as using a credit card. The good news is that the number of merchants accepting Bitcoin is growing daily.
You Won't Have to Wait Much Longer to Start Using Bitcoin
Merchants have plenty of reasons to start using Bitcoin themselves, and the superior security over credit cards is just one of them.
Credit cards also charge merchants transaction fees of between 2% and 3%, while any fee for using Bitcoin is less than 1% - if any fee is incurred at all.
What's more, recent studies have shown that Bitcoin users are among the youngest and wealthiest consumers out there. Accepting Bitcoin could win more of their business.
One thing that has held back wider consumer adoption of Bitcoin, in addition to not having enough places to spend it, is that the process of acquiring and using Bitcoin is not simple enough yet for the majority of consumers.
Let's face it, for all of its flaws, using a credit card couldn't be any easier. At some point - almost certainly within the next year or so - some entrepreneur will develop a super-easy way to for anyone to use Bitcoin.
And that will accelerate the momentum toward mass adoption of the digital currency among both merchants and consumers.
Think about it. The credit card as we know it today emerged in the 1950s and 1960s - a half century ago.
Now given its susceptibility to data theft and fraud, the credit card is all but obsolete.
Bitcoin has defied its critic over and over again. Just recently, two major governments tried to curb the use of the digital currency - and have failed utterly. Here's why governments and central banks can't stop Bitcoin...
- Money Morning:
Who Uses Bitcoin Is Suddenly a Big Deal to These Businesses
- The Washington Post:
Credit Card Security Is Broken. Here's How Bitcoin Could Help Fix It.
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.