How to Make Payments with Cryptocurrency
Cryptocurrencies were initially developed for anonymous payments, but this purpose often gets overshadowed by the focus on price fluctuations. Understanding how to make payments with cryptocurrency is crucial due to its increasing traction and popularity. This article provides a step-by-step guide on how and where to pay with crypto.
Key Takeaways:
Cryptocurrency can be purchased with fiat money on cryptocurrency exchanges.
Payments are sent and received using a cryptocurrency wallet.
Various wallets are compatible with different cryptocurrencies.
A growing number of online retailers and physical stores accept cryptocurrency as payment.
Making a Payment with Cryptocurrency:
Previously, sending cryptocurrency involved complex technical processes, but it has now become much simpler, resembling using an app to transfer funds. While the specific steps may vary based on the chosen application, here is a general overview:
Acquire a Cryptocurrency:
You can obtain cryptocurrency by exchanging fiat money through regulated cryptocurrency exchanges like Coinbase, Binance.US, Kraken, or Gemini. These platforms provide additional features such as storing private keys or offering technical assistance.
Wallet:
To make a payment with cryptocurrency, you'll need a wallet application that acts as an interface to access your crypto. Wallets store your private keys required to access your funds. Numerous wallets are available, offering various features and compatibility with different cryptocurrencies. Popular options include Exodus, Electrum, or Mycellium.
Sending and Receiving Payments:
Each wallet may have a unique interface, but the general process remains consistent. Using the example of Coinbase wallet:
To make a payment:
Open your wallet app.
Click on the "Send Payment" or a similar button.
Enter the desired amount.
Enter the recipient's wallet address or scan their QR code.
Click "Send" or a similar button.
To receive a payment:
Open your wallet app.
Tap on the "Receive Payment" or similar button.
Tap "Share Address" or a similar button.
Accept the payment when it appears in your wallet.
Where Can You Pay with Cryptocurrency?
Although cryptocurrency is still in its early stages, the number of places accepting it as a payment method is steadily growing. Many businesses accept crypto through cryptocurrency payment gateways, ensuring real-time conversion to fiat currency. Some notable companies that accept cryptocurrency directly or through service providers are Microsoft, PayPal, Overstock, Starbucks, Newegg, AMC Theaters, and AT&T. Brick-and-mortar retailers also join this trend, displaying signs indicating the accepted cryptocurrencies.
Pros and Cons of Paying with Cryptocurrency:
Pros:
Anonymity/Pseudonymity: Cryptocurrency transactions are decentralized and often do not require user identification.
Peer-to-Peer: Cryptocurrency enables direct transactions between parties, eliminating intermediaries.
Fewer Fees: Compared to traditional financial services, cryptocurrency transactions generally involve lower fees.
Pay from Anywhere: Cryptocurrency payments can be made from anywhere with an internet connection.
Available to Everyone: Cryptocurrency opens financial services to those without access to traditional banking.
Cons:
Transaction Fees: Cryptocurrency transactions may involve network fees, which can fluctuate and occasionally be high.
Price Volatility: Cryptocurrency values are known for their volatility, potentially affecting the cost of transactions.
Not Regulated: Cryptocurrencies lack regulatory oversight or guarantees, leaving users vulnerable to scams or exchange failures.
Not Reversible: Completed cryptocurrency transactions are irreversible, necessitating caution to avoid errors.
Risk of Loss: Loss of private keys or falling prices can lead to the loss of cryptocurrency.