The more humans exist on earth, the more technologies and productive ideas are thought of, and the more humans can benefit from these ideas and copy them from one another, leading to higher productivity of human time and improving standards of living. - Saifedean Ammous
As a consumer immersed in the world of financial transactions, you're often blind to the intricate ballet that is the settlement process, a critical yet unseen engine that powers the transfer of your funds. Whether it's a simple act of transferring money to a friend or the daily routine of using a credit card at the checkout, the process is far from straightforward.
Take a typical bank transfer, for instance. It's not the real-time transaction you might expect in our modern era. Instead, it unfolds over one to five business days, a delay rooted in the financial institutions' vigilance against fraud and errors. This necessary caution, while a bulwark of security, often translates into a frustrating wait for resolution.
Credit card transactions follow a similar script. A purchase initiates an almost instantaneous authorization, but the funds then enter a state of suspension, only settling after a few days. This holding pattern, a necessary security measure, nonetheless leaves the funds in a state of uncertainty.
The concept of chargebacks adds another layer of complexity to credit card use. As a consumer safeguard, you can dispute a charge for reasons ranging from billing errors to unauthorized use, with a generous timeframe of up to 120 days to make your case. For merchants, this means the shadow of a fraudulent chargeback looms long after the sale, a precarious uncertainty that can disrupt financial planning and cash flow.
Recently, I decided to convert some traditional investments into Bitcoin, a decision that plunged me into an 11-day odyssey. The initial sale of my assets was just the beginning, taking a couple of days to settle. Then came the transfer to my Bitcoin purchasing account, adding several more days to the timeline. The sluggishness of this process was palpable.
However, the moment I pivoted to Bitcoin, the contrast was dramatic. After acquiring the Bitcoin, I transferred my holdings to my personal wallet. This part of the journey was a revelation in efficiency: less than 15 minutes to complete and irreversibly and securely settle. It's a poignant detail that had I utilized the Lightning Network, this already brisk process would have been compressed into mere seconds.
This personal experience underscores the agility of Bitcoin, akin to digital cash transactions that are immediate and final. Yet, Bitcoin transcends the limitations of physical cash, moving with the fluidity that only a digital medium can offer across the internet.
The traditional financial system, with its multi-day settlement periods and vulnerability to chargebacks, seems increasingly cumbersome when compared to the swift and final nature of Bitcoin transactions. The Lightning Network further amplifies this efficiency, offering near-instantaneous transactions. The growing use of Bitcoin will ensure financial settlements are not just faster but also more secure and less complex.