Can Cryptocurrency Be Used as a Payment Method?

Cryptocurrency is increasingly being accepted as a form of payment, similar to credit cards, in many businesses. The bitcoin payment service instantly converts the bitcoins received into the currency of your choice, eliminating the risk of volatility. As with many online payment systems, bitcoin users can pay for their bitcoins anywhere they have access to the internet. This means that buyers do not have to travel to a bank or shop to purchase a product. Unlike online payments made with US bank accounts or credit cards, personal information is not required to complete any transaction.

Part of the attraction seems to be that, like gold, the supply of most cryptocurrencies is tightly controlled (by the software that manages them). For example, some 18.5 million bitcoins have been created so far, and eventually there will be a maximum of 21 million bitcoins. This is a cap set by the software that manages the supply of the currency. While Warren Buffett has compared cryptocurrencies to the 17th century Dutch tulip craze and Bank of England Governor Andrew Bailey warned people to “buy them only if you are prepared to lose all your money”, economist Nouriel Roubini called bitcoin “the mother or father of all scams” and even criticised its underlying technology. Some companies use cryptocurrencies only to facilitate payments. One of the ways to do this is simply to convert crypto into fiat currency to receive or make payments without actually touching it.

In other words, the company is adopting a “hands-off approach that keeps crypto off the books”.Bitcoin has failed in its mission to become a new currency, but experts say there are other cryptocurrencies that are better for transactions. A frequent question is whether bitcoin (or cryptocurrencies in general) can be defined as “money”. In cases where lots are listed as payments in cryptocurrencies, the auction house will accept both Bitcoin and Ether as payment. If other cryptocurrencies are used, it may be some years before they can be easily used for online payments. In recent times, small businesses and individuals have also started to use the cryptocurrency blockchain for overseas remittances.

Even on a quieter, more typical day, the value of a major cryptocurrency like Ethereum can fluctuate by 10% or more, making it too unstable to be practical. Dogecoin and other such cryptocurrencies, built simply around memes (Dogecoin, with its mascot the Shiba Inu dog, refers to the “dog meme”), do not even pretend to be usable in financial transactions. However, two main advantages of cryptocurrency use are its peer-to-peer approach which eliminates intermediaries and its pseudonymous design which eliminates the need for identifying information for both parties. Activity in cryptocurrency markets has increased significantly and cryptocurrency prices have risen rapidly. There are also reports of informal cross-border remittance services using cryptocurrencies, with customers accessing brokers through messaging platforms such as WhatsApp. If you choose to trade or use cryptocurrencies, you may be taking a risk for which there is no recourse. Bitcoin's technology seems antiquated compared to some of the newer cryptocurrencies that allow greater anonymity for users, faster transaction processing and more sophisticated technical features that facilitate automated processing of complex financial transactions. Some companies may be looking to cash in on the latest fad or participate in the novelty of a new form of payment while others believe that cryptocurrency is the way of the future.

While hacks have been reported on cryptocurrency exchanges, the Bitcoin exchange has remained immune to such breaches. The technology behind cryptocurrency has potential for many practical applications and is likely to contribute to the continued shift away from cash payments.

Faisal Abdul
Faisal Abdul

Extreme internet specialist. Wannabe twitter junkie. Friendly zombie geek. Freelance twitter buff. Professional student. Passionate tv evangelist.

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