Сryptocurrency has recently gained immense popularity, and experts believe that the trend of virtual currency prevailing over real money will continue to develop.
“According to Bitcoin content website 99 Bitcoins, 17 credible news sources and celebrities have announced that Bitcoin is dead in 2022, with the latest article coming from American Left-based magazine Jacobin.
If the price of oil -another commodity- crashed by 55.55% in six months, would you say that oil is dead? Any reasonable stakeholder in the oil market would consider the fundamentals of the oil market, such as demand, supply, government policies, competing energy sources, and so on. If all of the factors turned out to be relatively positive, the price drop would begin to look like an opportunity.“
"Is Bitcoin Dead? Here Is What The Fundamentals Are Showing"
by Rufas Kamau, Forbes
Receiving cryptocurrency payments is an opportunity to offer customers more payment options, as well as to attract a new target audience, who, for various reasons, prefer to pay only in digital currency. And there are more and more such clients. So why are cryptocurrencies so popular and why should you consider implementing them in your store? Let's start with the basics.
What is cryptocurrency?
Cryptocurrency is a digital asset that has no physical expression. Currency is encrypted data that cannot be copied or counterfeited. Most cryptocurrencies, like fiat money, are a medium of exchange. They have value, are convertible into fiat money, and can be used to buy goods and services.
Cryptocurrency is convenient because it can be exchanged into fiat money, or it can be kept in your electronic wallet as an investment asset.
Most importantly, you are the only one in control of your money. There is no controlling authority in the system, which allows you to be free to dispose of the funds you have.
Cryptocurrency in e-commerce
The process of paying for goods and services online using cryptocurrency is called cryptoprocessing. This method is already available in a large number of e-commerce stores and has already proven its safety for both merchants and their customers. A recent example is the ability to accept crypto payments on Shopify. But what makes this payment method so attractive?
What are the benefits of cryptocurrency in e-commerce?
- International payments – it is much easier to implement the possibility to accept cryptocurrency payments from all over the world than to connect bank cards processing.
- Security – the blockchain of the system makes fraud more difficult. No one will be able to debit your funds without your permission as it happens with fraudsters who use banking systems for this purpose.
- Lower commissions – cryptocurrency transactions are much more affordable than bank ones. Depending on the blockchain used, transactions can cost less than a dollar or slightly more for larger transactions.
- Virtually no payment risks – payment systems do not block your funds for opening disputes on transactions and suspicion of fraud.
- Fast account opening – a virtual account is opened in seconds. No need to wait for approval as in the case of a bank. At any moment you can see your balance and history of transactions due to the open crypto transactions system.
But not everything is that smooth. There are downsides as well.
Disadvantages of payments in cryptocurrency
- Volatility – cryptocurrency markets are characterized by periods of volatility, which leads to fluctuations in assets. There is nothing wrong with that, as it also involves upward price movements. However, when prices fall, people who accept payments in bitcoins and other cryptocurrencies have a hard time.
- Tax implications — there are many nuances associated with the application of different tax laws regarding cryptocurrencies. Depending on the region in which you are located, receiving payment in cryptocurrency may mean special tax treaties on your income. Taxes may not be an issue for many, but they can be an inconvenience nonetheless.
- The inability to use virtual money in some countries because not all countries allow cryptocurrency transactions.
How to accept cryptocurrency payments?
If you want to accept crypto payments on the website, there are two options: a personal wallet or a third-party payment service provider.
Personal wallet for cryptocurrency payments
In this case, all you need is a virtual wallet. It is enough to have a phone or a computer to create it. Another option is a hardware wallet — a secure hardware device that allows you to store the user's private key.
The only thing you have to do is just leave a link to the wallet on your site. However, in this case, the transactions will not be tied to a specific product and you'll have trouble tracking transactions.
Cryptocyrrency payment provider
To pay for a product with digital currency, the customer clicks on a link to the payment page. The link is generated by the intermediary cryptocurrency service. The page specifies the amount in the selected currency. In most cases, there is limited time for the transaction. The reason is the high volatility of the crypto exchange rate.
The duration of the operation is from a few seconds to 60 minutes. Just to compare: the processing of a standard payment through Visa or MasterCard can take up to 24 hours.
What does the payment process look like for the user?
It's even easier than with a bank card:
- The user selects the desired product or service;
- At the checkout stage they choose cryptocurrency as a payment method;
- Then choose a specific cryptocurrency for payment;
- The customer receives the cryptocurrency wallet address to pay the amount of the order and transfers the funds.
Which cryptocurrencies to use?
There are now more than 1,500 types of assets on the cryptocurrency market. Yet connecting payments with the most in-demand digital currency option is safer. You can easily find them in the ratings of cryptocurrencies on the web.
Here's what you could allow in the store for payment:
Bitcoin (BTC)
Who hasn't heard of Bitcoin? It is the most popular and sought-after cryptocurrency that stands at the origins of blockchain. It's little known that making payments is the primary purpose of Bitcoin. Most importantly, Bitcoin is much more reliable than newly emerging cryptocurrencies.
Bitcoin Cash (BCH)
Just talked about Bitcoin and here's another one? Not actually.
Bitcoin Cash is a fork of Bitcoin, which was made to reduce the load on the network and speed up transactions. What makes BCH better? It's simple: transactions are faster, transaction fees are lower, and security is higher.
Ethereum (ETH)
Ethereum is the second most capitalized cryptocurrency after Bitcoin. As opposed to Bitcoin, Ethereum has a serious development team. The highlight of ETH is the ability to create smart contracts, which is an electronic algorithm or condition that allows parties to exchange money or other assets.
Litecoin (LTC)
Litecoin was positioned during its development as a more advanced version of Bitcoin. It also operates on the blockchain principle, but the speed of transactions is higher, as well as the security.
Ripple (XRP)
Many banks around the world are actively working with this cryptocurrency. Why?
In a nutshell, the creators of XRP originally set out to create a system for a free exchange of assets between users with almost instantaneous transactions. Ripple is considered a competing payment system for the famous SWIFT network.
The SWIFT system is quite slow. It takes 3-5 days to process international payments. This is incredibly long in the era of information technology.
On the other hand, Ripple is a game-changer with a fast and cheap international payment system, with transactions in this network taking 4 seconds.
This is the reason why many banks love this particular cryptocurrency. Here is just a small list of famous brands in the world of finance, which work with the Ripple network:
- Unicredit
- MoneyGram
- American Express
- Western Union
Tether (USDT)
A cryptocurrency that runs on the bitcoin blockchain and is pegged to fiat, the U.S. dollar. The peg is 1:1 - one Tether coin equals one dollar, according to the issuing company. The advantage of Tether is exchange rate stability (unless, of course, the dollar fluctuates), security, and easy exchange into fiat money.
If you plan to develop and attract a new target audience, you should introduce new payment methods to your store. And cryptocurrency payments are a very promising method.
Accepting cryptocurrency payments may seem like a complicated step in the beginning, but with the right approach, it can be of great benefit to the end user.
