One of the most worrying trends to be faced by consumers in the financial world today comes in the form of financial debt. All over the world, people are using credit cards to purchase items, regardless of whether they can afford them at that time. Keeping in mind how most companies and retailers offer a monthly payment structure to pay for goods when using a credit card, the amount of debt can add up very quickly. Bitcoin, on the other hand, keeps consumers free from debt, and allows them to manage their finances efficiently.
Also read: HSBC Disruption Highlights the Need for a Bitcoin System
The Looming Mountain of Credit Card Debt
Spending money has always been a whole lot easier compared to earning, and slowly but surely, consumers living on credit cards are starting the truth in that statement. While it may appear to be convenient to stop using cash and pay with a plastic card, people tend to forget the money for that purchase still has to come somewhere, albeit debiting the funds will not happen until the monthly statement comes around.
This is one of the major dangers to society: it has become far too easy to dig a hole of financial debt. Convenient payment methods aren’t everything, as consumers become careless regarding how they spent their funds on a monthly basis. .When using cash payments, the money is gone immediately. Credit cards create the illusion of spending money ahead of having it in a bank account, with major financial debt as the end result.
Compounding this problem is the option offered by various retailers to offer a monthly payment plan to customers paying with a credit card. All of those small amounts of money to pay back every month can quickly add up to large sums, creating even more financial debt worries. This trend seems to be getting out of hand – especially in the United States – where over US$900bn in credit card is debt by the entire population at the end of 2015.
Our society has evolved into a creature of mass-consumption, as we are all pushed to buy more things we may [not] need. Billboards, advertisements, and even targeted product placement during movies and tv shows, are all attempts to influence our consumer behavior. Plus, without the consumer being in full control of their money, practices like these can continue without hindrance. Luckily for consumers all over the world, Bitcoin is offering them a solution to stop creating more financial debt.
No Further Financial Debt With Bitcoin
Unlike its traditional financial counterparts, Bitcoin does not allow users to dig an even deeper pit of financial debt. There are no bank accounts involved, and Bitcoin users can only spend as much funds as they have in their wallet at any given time. Going into a negative balance is impossible in the world of digital currency, effectively putting an end to the growing number of consumer financial debt.
While there are lending services active in the Bitcoin world, no one is guaranteed to receive a loan without going through a thorough verification procedure. Furthermore, peer-to-peer lending is the most common form of loan in the Bitcoin space, and the final decision lies with those individuals a person is lending from directly. If they don’t deem you creditworthy, the loan will not be granted.
To some people, this may seem like a limitation, whereas most others see it as a true form of financial freedom. Bitcoin lets consumers all over the world manage their own funds at all times, while preventing further financial debt. As a result, an ecosystem is created in which both consumers and business can flourish, without chasing down payments, loans, or debts.