Bitcoins and Travel: A Safe Payment Method?

These days, we hear more and more about Bitcoin, a cryptocurrency that breaks away from the rules of the traditional banking system.
Below, we explain what this strange currency is and list a few of its advantages and drawbacks when it comes to using it to pay for a trip.

What is a Bitcoin?

Bitcoin is a cryptocurrency, or in other words, digital money. Like all virtual currencies, Bitcoin is based on a system of encrypted transactions. Each transaction has a unique code, which is sent to a receiving address. The recipient must "unlock" the code in order to obtain the Bitcoin. Thanks to a peer-to-peer system, all users are part of the Bitcoin network, which differs from the traditional banking system in the speed of its transfers. Indeed, all transactions are hosted in a public ledger called the "Blockchain", which all users can access and use to validate the transaction in real time. So, thanks to this decentralised management of transactions, a Bitcoin transfer can take 2 minutes, compared to 2 days for a traditional bank transfer.

Paying for a trip with Bitcoin: what's the point?

Travel agencies, transport companies, hotels or residences accepting Bitcoin are not yet widespread, but their numbers are gradually increasing. Some countries, such as El Salvador, have even adopted Bitcoin as an official means of payment.

3 main advantages

1. No transaction fees: Bitcoin is an international currency accepted worldwide. When you make an international bank transfer, you automatically pay transaction fees. That's not the case with Bitcoin, since it's transferred directly from your address to the recipient's. So you can book your hotel stay without paying any extra fees. If the merchant does charge a fee, it shouldn't come to more than a few cents.
2. Speed: When you receive money from abroad, transfers usually take a few days to reach your account. That's not the case with Bitcoin, which is transferred in just a few minutes. Thanks to the peer-to-peer network, transactions are validated in real time by the Bitcoin community.
3. No intermediary: For example, when you book a flight the traditional way, payment goes through an intermediary, namely the bank. With Bitcoin, there's no third party involved in your banking operations, which offers more privacy (but sometimes less recourse in the event of fraud).

The number of outlets, brands and shops accepting Bitcoin is growing every day; you'll easily find them with a simple search engine search.

3 main drawbacks

1. Lack of recognition: the currency is not widely recognised or accepted for paying for travel bookings, transport, etc.
2. Lack of control and stability: the Bitcoin exchange rate is uncertain, and the currency is not subject to oversight by a central body. Since Bitcoin transactions aren't subject to any regulatory body, fraudulent practices can't be ruled out. So be very careful if you choose this type of payment.
3. Lack of insurance guarantees: most credit cards come with insurance, some even including a special travel (assistance) package that can prove very useful. By paying for your trip with Bitcoin, you don't benefit from any insurance guarantee. So be sure to look into and compare credit cards with travel insurance before you get to the booking stage.

How does it work?

If you'd like to join the community of Bitcoin users, the first step is to buy a Bitcoin wallet. This is an electronic wallet ("wallet") that holds all the keys allowing you to unlock transaction codes. So your wallet doesn't really contain Bitcoin as such. So, when a transaction is made, a code is sent to the recipient's address via an internet connection. The recipient then looks up the key in their wallet to unlock the code. It's once it's unlocked that the recipient becomes the owner of the Bitcoin. The recipient can create a new receiving address for each transaction from their digital wallet.

Where can you buy Bitcoin?

You can acquire Bitcoin in several ways, even offline. There are indeed Bitcoin ATMs (2 in Antwerp, 1 in Ghent and 1 in Hasselt). You can also buy them from an individual, such as a friend who wants to sell theirs.

Another option available to you is to go through an exchange office such as BTCdirect, HappyCoins or Bitonic, where you simply pay via a Bancontact transfer. These exchange offices generally charge a commission equivalent to around 2% of the current Bitcoin rate. You can also go through an exchange platform such as CEX.IO, Kraken (also see their explainer guide) or Paymium. These work on the same principle as a regular stock exchange and let you buy and/or sell your Bitcoin. All you need to do is enter the number of Bitcoin and the price you want. However, note that prices differ from one platform to another, as they largely depend on supply and demand!

Finally, you can also follow online marketplaces dedicated to Bitcoin, such as Bitcoin-otc.com. To buy through this channel, simply post an ad and/or browse the offers from individuals listed on the forums. You might just find an interesting offer, provided you search carefully.

This article was written by TopCompare.be in collaboration with Redion.
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