For some people, digital payment is a scary idea. They worry that someone may take their card information or track their online spending. Are you one of them? Are you scared to use any kind of digital payment? However, digital payment is not as dangerous as it seems. And Cryptocurrency is proving to be more secure than any digital payment. So, Can it be the future of digital payment?
The digital transformation of businesses continues to accelerate, and new technology is challenging the way things are done. The world is going cashless at a rapid pace with mobile payments on the rise. In this scenario, there is another category of digital payment that’s catching attention – cryptocurrency. The term ‘crypto’ comes from the word cryptography, which is the science of hiding information so that it can be revealed only to those who need to see it. Crypto also refers to any type of currency that uses cryptography for security. And yes, cryptocurrency is one kind of crypto-currency or token that uses blockchain technology as a payment mechanism.
What is Blockchain?
The blockchain is the underlying technology that allows cryptocurrencies to be decentralized and secure. You can imagine it as a digital spreadsheet that records transactions and shares the information across a network of computers. The blockchain records every transaction and keeps a public record of all the wallets that own the coins. This public ledger ensures transparency and prevents anyone from spending coins twice, as all of the details are recorded and verified. There are many advantages to blockchain technology, but the most significant advantages include control, security, and ease of use. What this translates to is that blockchain technology gives users control over their money, no matter where they are in the world. And if something goes wrong, users can quickly report the issue and have the problem resolved.
Why is blockchain important?
The blockchain is essentially a ledger which records transactions and stores data. The data is then made public so that anyone can verify it. What makes the blockchain different from other ledgers is that it’s decentralized. This means it isn’t stored in one place. Instead, it’s distributed across networks and computers, which means it’s extremely difficult to hack. Each blockchain has a “crypto-asset” associated with it, such as Bitcoin or Ethereum. You can trade these assets just like stocks, but they are much less liquid. A blockchain network is only as strong as its weakest node, which makes security an important consideration when implementing the technology.
Read some of my other blog posts to learn more about Blockchain and Crypto.
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How do you pay/accept cryptocurrency?
The first step is to create a cryptocurrency wallet. This is a digital account that you store your crypto tokens in. You’ll then need to pick which coins you want to use for payment or accept as payment. You don’t want to use just one type of coin because the risk is that it becomes unpopular or gets replaced by a better coin. You can find a list of cryptocurrencies on sites like CoinMarketCap and CryptoCompare.
Once you have your wallet and coins, you can pay by scanning QR code of the receiver or using their wallet address.
For accepting crypto you need to find a way to integrate the wallet into your business. There are a few options for accepting crypto from customers. You can install a crypto payment button on your website. Another option is to use a payment gateway. A payment gateway is a service that allows businesses to accept a wide range of digital payments, including cryptocurrency. A third option is to use a combination of a payment gateway and a button.
Pros of accepting cryptocurrency payments
- Fraud reduction: Since cryptocurrency transactions are irreversible, there is no way to charge backs or fake transactions. This has led to a huge reduction in credit card fraud.
- Convenience: There are no country restrictions, and transactions are fast.
- Transparent: Transactions are transparent and verified by the blockchain. This means there is no place for fraudulent activities.
- No minimum transaction: There is no minimum amount for cryptocurrency transactions. This is unlike credit card transactions where you need to have a certain amount in order to process a payment.
- Low fees: The transaction fees for cryptocurrency are very low in comparison to credit card transactions.
- No card information: Unlike credit card payments, you do not have your customers’ credit card information. This can reduce your risk of a data breach.
- Reduced cash flow costs: The cost of accepting credit cards is rising. This is especially in countries like the U.S. where interest rates are high. The transaction fees for cryptocurrencies are much less compared to credit card fees.
- Customer base expansion: Accepting cryptocurrency payments can open your business up to a new customer base.
- Easy to integrate: Compared to accepting other digital payments, accepting cryptocurrency is easy.
Cons of accepting cryptocurrency payments
- Risk of volatility: Cryptocurrencies are highly volatile in nature, and their prices can fluctuate significantly. If you accept a crypto payment, you might end up losing money if the value of the crypto decreases.
- Security: Keeping your crypto wallet secure can be challenging, especially if you are accepting payments manually. Hackers can hack into your system and steal the crypto.
- No chargeback: Unlike credit card transactions, there is no chargeback for crypto payments.
- Low adoption: Cryptocurrency adoption is still very low, which means you might have to start accepting it and then exchange it for cash. This can incur significant transaction and conversion fees.
- Slow transaction times: Cryptocurrency transactions take longer to be verified and recorded on the blockchain. This can be a problem if you have a customer who needs a quick refund.
Who accepts cryptocurrencies currently?
Although the number of merchants accepting crypto as a form of payment is still quite low, it’s growing each year. Some of the well-known companies that accept cryptocurrencies are Microsoft, Whole Foods, Dell, Overstock, Expedia, Shopify, Newegg, and many more. Hotels, travel agencies, and even local government agencies are accepting cryptocurrencies as payment. If a business accepts cryptocurrencies, then you can choose to pay for the products and services using a cryptocurrency. Some businesses that accept cryptocurrency have dedicated apps where you can make the payment conveniently.
Summary
The biggest danger in digital payment is that someone taking your card information and spending money without you knowing it. Your Internet service provider (ISP) can also track your activity on the Web, which can be an invasion of privacy. But there are ways to reduce the risk, like by using a virtual private network (VPN) when you log on to the Internet. A VPN encrypts all of your traffic, so no one can see what you’re doing online. It’s best to use a VPN when you’re browsing online or sending and receiving sensitive information such as bank account numbers and passwords.
One way you can help protect yourself against identity theft is to use cold hard cash whenever possible.
If you absolutely have to use a credit card, ensure that your PIN or some other security code is always confirmed before being used. With the growth in digital wallets, you don’t even have to carry your credit cards now, which reduces the risk of losing them.
Cryptocurrencies have gained a lot of popularity in recent times. And with the growing hype around blockchain technology, it’s obvious that many businesses are looking to accept crypto payments as a new way of doing business. Cryptocurrencies can be a great way to expand your customer base, but they come with their own set of risks. So, it’s important that you understand how they work and how to use them as payment.
The volatile nature of cryptocurrency prices does not make it good means of payment. And with prices declining to the lowest since last year, crypto is for sure not a reliable form of payment right now. But the technology itself has proven that it would be a better form of digital payment in the future. So let us see how the policies will be implemented to make use of technology and come up with the best secure way of digital payment using Crypto.
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