One of the main reasons for the development of cryptocurrency was to make anonymous payments. Even though cryptocurrency is complicated for an average person, transactions using cryptocurrency are comparatively simple.
In the initial days paying using cryptocurrency needed a computer program. Nowadays, the complex process of sending or receiving cryptocurrency is similar to using an app to send or receive money. The process involved in payment using cryptocurrency depends on the payment platform that is chosen, which generally differs from one platform to another.
There are multiple benefits to making payments using cryptocurrencies which include secure transactions, and low cost on financial transactions without a bank intermediary. Bank transfers usually take several days to complete while crypto payments only take a few minutes.
As crypto transactions are mostly anonymous, without revealing the sender, receiver, and the amount transferred, it has enhanced privacy. Crypto transactions are virtually impossible to alter and there is a reduced risk of fraud and hence secure than other forms of traditional payments.
Various transactions can be executed using crypto. One can transfer money to a merchant who accepts crypto payments and executes peer-to-peer payments. Crypto debit cards can be used to convert crypto into cash. It can also be used to pay bills similar to the way traditional payment methods are used. Gift cards can also be bought using crypto to use at popular retailers that accept cryptocurrency.
Paying Using Cryptocurrency
The first step to making a transaction with cryptocurrency is to create an account with any of the platforms that enable the transaction of cryptocurrency. Funds can be deposited in the opened account to buy crypto which can be used to make payment.
Another important matter to be considered is the need for a self-custodial wallet. This helps in having full control over one’s cryptocurrency allowing one to manage one’s private keys which provides the investor the sole responsibility for the security and management of one’s assets.
There are various ways to make payments using cryptocurrency. Depending on the platforms selected like Binance or Coinbase, payment can be done with any balance in the crypto account. For that, an application linked to the crypto exchange needs to be opened and the option to pay needs to be selected after the sign-in.
The asset, which could be the various cryptocurrencies in the account, could be selected to submit the payment, Another option is to connect to the personal crypto wallet and pay the funds from there. The wallet doesn’t store the crypto, it holds the keys to access them which are the private keys. The public key is used for transactions; The public key acts as an email address that is used to send and receive payments.
There are many wallets available in the market, but certain features differ in each of them. Some of them are compatible with all cryptocurrencies while others may work only with certain crypto currencies. Many crypto exchanges provide a wallet for the users to transfer funds to other exchanges.
Certain wallets use the mobile phone camera to scan QR codes to create unique addresses for sending and receiving crypto; Some even have near-field communication(NFC) to make touchless payments in cryptocurrency
Steps Involved In Cryptocurrency Payment
The steps involved in sending and receiving payments depend on the choice of exchange/wallet. A prominent wallet known as Coinbase is used as an example to illustrate the steps involved in transferring funds.
- Open the wallet app
- Click the send payment button
- Enter the amount to be sent
- Enter the QR code or wallet address of the receiver or the recipient
- Click the send button
To Receive the Payment
- Open the wallet
- Press the Receive button
- Share the address or public key with the sender
- Accept the payment when prompted
As cryptocurrency payments at retailers are in their early stages, the places that accept payments in cryptocurrency are limited but growing. Most of the businesses that accept crypto payment use cryptocurrency payment gateway that generally guarantee cryptocurrency to fiat conversion at the time of the transaction to overcome the volatility associated with crypto and to minimize any losses
Some of the benefits of using cryptocurrency for payments include anonymity of the sender and the amount of transaction, peer-to-peer transaction, lower fees, and the ability to pay from anywhere
The disadvantages include transaction fees, price volatility, lack of regulation, and risk of loss.
At present some online retailers and some traditional stores allow payment with cryptocurrency wallets.
Conclusion
The advent of cryptocurrency has revolutionized the way we handle financial transactions. The simplicity, security, and low fees offered by crypto payments provide users autonomy and privacy.
Cryptocurrency can be used to pay for goods and services, transfer funds, and convert crypto into cash using debit cards. Cryptocurrency is expected to revolutionize the payment ecosystem and become an increasingly common payment method.
