Cryptocurrencies are getting more mainstream. More than 10% of the households in the US and Europe hold cryptocurrencies, and large corporations like Microsoft, Twitch, and Virgin Airlines accept crypto payments. We look at what crypto payments are and answer frequently asked questions.
The crypto revolution started with one of the most famous whitepapers of all time
– Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto –
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
Bitcoin, and the underlying technology blockchain, created the foundations of a decentralized digital form of money with built-in privacy, and security, without the need for a third party to safely send digital funds anywhere in the world. These principles are fundamental for all cryptocurrencies and make new forms of payment possible.
But what are crypto payments?
We answer the most frequently asked questions:
What is a crypto payment?
A crypto payment is the transfer of a digital asset like Bitcoin from one public crypto address to another. Each cryptocurrency has its own decentralized network and specific addresses. With a crypto payment, you pay for goods or services via the internet, like you would with any traditional payment.
How do I receive or send a payment through crypto?
To receive payments, you need to share your public address with the other user, copy the address, and share it with the counterparty, and the counterparty will send the funds to your public address. The transaction is made directly from one address to another address (P2P payment) without an intermediary. You need a wallet where you can safely store your crypto (more on that later).
While there is no need for an intermediary to settle the transaction, there are a few things to consider when using a P2P crypto payment. First, it is not uncommon for users to make mistakes, such as sending crypto to the wrong address or network or sending more crypto than the fiat currency equivalent value. Secondly, you need to know, and trust, the person or company to which you send the crypto.
A crypto transaction is irreversible, and sending them to the wrong address, network, or (fraudulent) person can lead to significant losses.
A more user-friendly way to pay and receive payments is to use a crypto payment gateway. Crypto payment gateways integrate crypto payments into merchant e-commerce websites, making the process of paying with crypto a lot easier and safer for the consumer.
What is a crypto wallet?
You can compare a crypto wallet to a bank account, with an account number. Crypto wallets allow consumers to send cryptocurrencies to another user; this can be any user or merchant. By sending crypto to the merchant wallet, you pay for the goods or services.
As mentioned above, you can send cryptocurrency directly from one address to another (P2P), but a crypto payment gateway makes the process a lot more user-friendly and safe.
NEXUS offers native wallet infrastructure for most used cryptocurrencies for payments, including Bitcoin, Bitcoin Cash, Litecoin, Ethereum, Stellar, Algorand, and Ripple.
Which crypto is most used for payments?
Cryptocurrency news outlet Coindesk keeps an up-to-date list of the most popular cryptocurrencies. These are the most popular cryptocurrencies for payments.
Bitcoin is the first and most well-known cryptocurrency commonly used for crypto payments. The advantage is that many users already have Bitcoin, making it an excellent asset for payments. The disadvantages of Bitcoin are the higher network fees, price volatility and the settlement speed varies greatly.
Ethereum is an open-source cryptocurrency used to power many Defi projects. Many developers use Ether (ETH) to build apps and other cryptocurrencies. However, when using ETH in Ethereum applications, you’ll pay a fee to use the network. Ethereum fees are referred to as gas fees. Ethereum gas fees are generally high compared to other cryptocurrencies.
Tether is a Stablecoin that keeps its value stable and is pegged to a fiat currency like the US dollar (USDT) or Euro (EURt). It is the third cryptocurrency by market capitalization. Because of the price stability, it offers consumers and merchants a low-volatility option to pay for goods or services.
Litecoin enables instant, near-zero cost payments to anyone in the world. In addition, Litecoin features faster transaction confirmation times and improved storage efficiency compared to other cryptocurrencies like Bitcoin.
Fun faq: According to Coinmarketcap, there are, at the moment of writing – July 2022 – 9952 cryptocurrencies. The top 10 cryptocurrencies make up 88% of the total market value.
Is crypto the future of payments?
Crypto payments offer many advantages compared to traditional payments. Most notable are; low fees, global payments and payouts, instant settlement, and no remittance fees. In addition, it offers merchants a solution for high-risk payments, preventing chargebacks.
Cryptocurrencies are increasingly regulated, companies that process crypto payments need to comply with legislation such as anti-fraud, money laundering, and terrorist financing. As a result, companies that accept cryptocurrency outsource these gate watcher’s roles to a crypto payment gateway provider.
How many people and businesses use crypto?
According to cryptocurrency statistics, in 2022, it is estimated that the average ownership rate of cryptocurrency was 3.9%, which means that there are more than 300 million people using cryptocurrency around the world. Furthermore, it is estimated that more than 18,000 companies accept cryptocurrency as payment for their product or service.
Are cryptocurrencies a legal form of payment?
While the legal status varies per country, from being illegal in China to being legal tender in El Salvador, in the European Union and the US, cryptocurrencies are a legal form of payment. The legality of cryptocurrency by country or territory.
Can cryptocurrency be converted to cash?
Yes, cryptocurrency can be converted to cash via a regulated crypto exchange or brokerage. The amount of crypto is converted to the fiat equivalent, and the money is sent to your bank account, minus network and handling fees.
How to accept crypto payments?
If your company wants to accept crypto payments, we can help you. Our NEXUS crypto platform has been operational since 2015 and has processed millions of transactions.
We believe in the crypto revolution and that cryptocurrencies should be available for all types and sizes of businesses. Check out our solutions for payment service providers (PSPs) and high-risk merchants.
If you are an individual business owner and don’t have the resources to implement a crypto payment gateway, we can introduce you to our NEXUS channel partners. Our partners are licensed VASPs (Virtual Asset Service Providers) that can help you to integrate crypto payments and fiat to crypto on-ramp services.
If you consider accepting crypto payments, contact us to discuss your business case.