As cryptocurrencies develop, people are increasingly realizing that they can be used not only for investments, but also as traditional money.
We’ll talk about cryptopayments, how they work and why they’re needed.
For starters: an explanation of cryptocurrency
It’s digital money that has no physical expression. Cryptocurrency is created on a blockchain and is not controlled by third parties. All crypto transactions are anonymous. That is, no one can identify your identity and find out if you have cryptocurrency, where you sent it and how much.
Cryptocurrency is protected from hacking by cryptography. Which makes it not only anonymous, but also safe. These characteristics make cryptocurrency a great source of payments.
Who uses cryptocurrency?
The uses of cryptocurrency now go far beyond just investing. Crypto-enthusiasts are using digital assets to make money on CeX and DeX. This includes passive earning through staking, mining, farming, and buying NFTs.
Cryptocurrency is also actively used by organizations to create tokenized shares. They work like traditional stocks, only in blockchain. They give holders the opportunity to receive dividends, interest, and a share of profits. Some projects allow participation in the management of the company.
What is crypto pay?
It is the ability to pay for goods in an online or offline store using cryptocurrency. Today, some big chains, such as Microsoft and Starbucks, accept payment in Bitcoin, Ethereum, BNB, and USDT.
How does it work?
- The user selects the item they want to buy.
- The recipient party (the store) generates a digital account through which the crypto payment will be processed.
- The buyer scans the QR code with a special app to confirm the payment.
- The cryptocurrency is deposited into the recipient’s account.
For more convenience, companies use payment gateways. With their help, cryptocurrency converted into fiat is credited to your account. In addition, they take the risk of crypto payments and use their cryptocurrency wallets to facilitate the receipt and transfer of assets.
This instant conversion helps eliminate the effect of fear due to the high volatility of the crypto market. That is, the seller receives the required amount of funds immediately and does not worry about the price of the asset falling.
But despite all the advantages. Cryptocurrency gateways have disadvantages.
- You need to be sure of the company’s honesty.
- Using gateways is more expensive than accepting payment in crypto without conversion.
- If the gateway gets hacked, you will lose money.
Advantages of crypto payments
- Security. Hacking the blockchain and gaining access to crypto-assets is more difficult than a bank card.
- Irreversibility. Crypto transactions are irreversible. That means fraudsters can’t intercept a payment or redirect it to another recipient.
- Low fees. Up to 1%.
The future of cryptocurrencies is just beginning. And we can already see how technology is evolving. It is likely that soon, crypto payments will become as traditional as fiat.