The 21st century is marked by the emergence of new methods of payment, thanks to the rapid development of digital technology. As the technology enables people to pay transactions faster than before, certain methods such as the crypto payment finally took off as the internet gives people the opportunity to do so. In modern banking and other finance-related activities, a gateway is a term that we might see at times. In short, a gateway is a “tunnel” that connects your bank account to the payee of the money transfer process.
Since gateways can instantly secure your transactions, many people use gateways as a method to ensure that their transactions are safe and efficient. As a result, many companies are using gateways for debit and credit card transactions to make sure all of them are safe.
In this regard, cryptocurrency payment uses a certain gateway that is not too dissimilar to the one seen in gateways that digital payments use. During a transaction process, cryptocurrency gateways enable users to accept digital payments and earn fiat currency in exchange for the payment.
How Cryptocurrency Payment Gateways Work
Now that we know the basic definition of cryptocurrency payment, how does it work, then? To do that, you need to do the following steps:
- 1. Choose the cryptocurrency option as the payment method during the transaction check-out (can be found in-store, on the web, or in-app).
- 2. Pay a monetary amount similar to the digital currency’s latest fair market value (be sure to check the value’s current amount on the internet).
- 3. Once paid, the payment service will instantly convert the payment into the payment currency you chose before.
- 4. After conversion, the money will be added by the provider to your account. The money is deposited to your bank account in intervals as decided in your service contract.
When doing a payment transaction, remember that the provider will include fees that you need to pay to validate the transaction. By paying the fees, transaction validators will then verify the transactions and blocks in the blockchain technology. You need to pay the fees because the services require a certain amount of computational energy to work (much like other cryptocurrency systems). By paying them, you can help them to keep running.
Advantages and Disadvantages of Cryptocurrency Payment
Much like all pieces of modern technology, there are upsides and downsides to using cryptocurrency payment as your payment method during a transaction. While cryptocurrency payment is designed to be anonymous and decentralized so that everyone can use it, it can cause doubt in people who do not understand how cryptocurrency payment works.
To understand cryptocurrency payment better, take a look at the advantages and disadvantages of a cryptocurrency payment.
1. Able to remove anonymity
Commonly, people who use the crypto payment to do transactions are able to keep themselves anonymous so that other people will not have any idea who is involved in the transaction. However, since cryptocurrency payment demands people to know who their counterparts are, they can remove their anonymity to prevent fraud and other criminal actions.
2. Worldwide access
Much like other payment methods like credit cards, cryptocurrency payment that uses Bitcoin (BTC) and other currencies is now doable all over the world. Thanks to that, you don’t have to be afraid of whether your payment in any kind of cryptocurrency is acceptable or not.
3. No need for detailed knowledge of cryptocurrency
The seemingly complex world of cryptocurrency makes it hard for some people to use it as the payment method of the modern era. Luckily, payment gateways will handle the rest of the transaction process, while you only have to choose a cryptocurrency of your liking without having to entirely understand the process.
4. Reduction in volatility risk
Volatility risk, or the risk of losing cryptocurrency value while waiting for the payment’s verification, can be a huge turn-off for starters in cryptocurrency. To prevent that risk, the gateways will pay you with the token’s market rate at the same time as the transaction.
5. Contact support
Because the gateways are services staffed by technical support who are proficient in their jobs, you have people to contact if you have problems with the transaction. By having contact support, you can prevent the risk of misunderstanding when dealing with problems related to the payment method.
6. Quick transaction
While it depends on the payment provider, all transactions can actually be done almost instantly. This will be good news if you hate the waiting part in the transaction and you want the money to be transferred immediately.
1. Reliance on uninterrupted services
While uninterrupted service is the norm of cryptocurrency payment, the payment can sometimes have lags and interruptions. This is due to the different time zones around the world that may affect the payee’s active hours.
2. Risks of hackers
Hackers continue to be the bane of all digital communications, including cryptocurrency payments. If the gateway is somehow hacked, you may lose all funds that you spent to pay the transaction.
3. Transaction fees
Unfortunately, like conventional payment methods, cryptocurrency payment gateways come with their own service fees necessary for sustainability. This can be frustrating if you originally used cryptocurrency payment to avoid transaction fees in the first place.
5. Potential overreliance on gateways
Using payment gateways all the time can make you think that you need always to use them for the sake of practicality when in reality, you do not even have to.
6. Less control of your own wallet
An upside of using cryptocurrency as a payment method is the freedom of managing your own wallet without external intervention. However, using payment gateways will result in someone else managing your crypto wallet instead of yourself.
Are There Many Users of Cryptocurrency Payment?
As of 2021, the total estimation of cryptocurrency users around the world has reached over 300 million users and 18,000 businesses worldwide. The majority of the users hail from Asia (160 million), followed by Europe (38 million), Africa (32 million), North America (28 million), and so on.
This estimation illustrates the high number of users who are highly likely to use cryptocurrency as their primary method of payment. To accommodate such numbers, Coinbase, the largest bitcoin crypto exchange in the United
States and one of the largest crypto global exchanges, is founded to adhere to this particular payment method. Capable of working as a payment gateway and a normal exchange, Coinbase can accommodate the conversion of currency into fiat currency without any need for merchants to facilitate it.
Cryptocurrency Payment as the Future
As the number of crypto users worldwide continues to increase, crypto payment will maintain its existence as a viable payment method for its users. Not to mention, payment gateway providers are emerging one by one to facilitate such payment methods. As always, be wise in doing your own cryptocurrency payments!
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