How To Pay With Bitcoin

Bitcoin is the world’s primary cryptocurrency, with over $18 billion traded daily. BTC, as it is commonly referred to on exchanges and trading platforms, has simplified the way people pay and buy, by using technology to bypass antiquated processes. Due to its speculative features, Bitcoin, along with numerous Altcoins, started being traded aggressively on online platforms. As a result, Bitcoin’s payment potential has not been given as much attention as it deserves.

How does Bitcoin Payment Work?

Before a Bitcoin payment can take place, the seller must inform potential customers that the cryptocurrency is accepted. This step might sound obvious but without it, no BTC payment is likely to happen. Next, the following steps need to take place:

1. After adding products or services to the checkout counter, the buyer visits the checkout page
2. On the checkout page, the seller puts the QR code (or full address) of his/her Bitcoin wallet
3. The buyer inputs the seller’s address, either by scanning the QR code or pasting the entire address
4. Depending on the seller’s system, the QR code might also contain the value in BTC, alternatively, the buyer would need to input this manually
5. The funds are sent
6. The buyer’s wallet signs the transaction using the buyer’s private key
7. The transaction is propagated and validated by the network nodes
8. Miners include the transaction in the next block to the mined
9. The block is mined, based on the hashing power
10. The miner or mining pool responsible for solving the Proof of Work algorithm adds the new block to the Bitcoin Blockchain
11. The nodes verify the result and update the ledgers across the chain
12. The seller receives the first confirmation of the transaction
13. The seller receives additional confirmations with each newly created block

The time taken for a Bitcoin transaction varies considerably based on network volume and transaction fees. The more transactions in the queue, the longer some will take to be confirmed. Miners prioritise transactions based on the reward, so transactions which carry a higher reward are likely to be processed first. Generally, however, Bitcoin transactions can receive their first confirmation within a few hours, making them significantly faster than Swift or even SEPA payments.

Why Choose Bitcoin as your Method of Payment?

As an online merchant, you have probably asked yourself whether accepting Bitcoin as a method of payment is a good idea. The answer very much depends on your business activity and the needs of your clients. Here are a few considerations you should be aware of:

Significant Merchants

Several top brands and companies have jumped on the Blockchain bandwagon whilst even more have started accepting Bitcoin payments. In the list of the largest organisations which accept Bitcoin payments, you will find Microsoft, Expedia, and KFC Canada. Furthermore, non-profit site, Wikipedia also accepts donations in BTC.

Cater to Niche Markets

Although Bitcoin is not yet the mainstream currency for payments, it is still used by millions of people across the world. Some of these people don’t have access to traditional banking products, such as cards, so paying online with cryptocurrency is their only solution.

Lower Fees

Accepting card payments or PayPal can be expensive, with total transaction fees often surpassing 2%. Generally, Bitcoin payment fees are less than 1%, a significant saving if you accept numerous online payments.

Pros and Cons of Paying with Bitcoin

Both buyers and seller stand to gain from paying with Bitcoin, but you must also be aware of certain drawbacks.

Pros

Bitcoin payments are not reversible, so there is no risk of chargebacks. This ensures that if a payment is processed there is no chance that it gets reversed, as is currently the case with most credit card payments. In fact, Bitcoin transactions have no intermediaries, offering users a certain degree of anonymity. This was the vision which Satoshi Nakamoto had to create Bitcoin.

When making Bitcoin payments you can determine the associated fees. Transactions with higher fees are normally verified first, but even transactions with lower associated fees are normally verified faster than traditional bank-to-bank payments. You could also set no fees for a transaction, but in such a case it could take days for it to be verified.

Cons

Due to Bitcoin’s speculative characteristics, it is extremely volatile, often changing its value by multiple percentage points in a single day. This means that the euro value of Bitcoin you pay with in the morning can be much higher or lower in the afternoon. As a result, either the buyer or the seller might regret the transaction, as had happened to Laszlo Hanyecz, who in 2010 paid $80 million for two pizzas.

Bitcoin payments can be slow sometimes, especially when compared to card payments. This has led to the creation of several alternatives, such as Bitcoin Cash and Litecoin.

Who Accepts Bitcoin Payment?

The number of online merchants which accept Bitcoin payments is on the increase. Before you can start to pay with Bitcoin you need to own some. To do this you should:

1. Obtain a Bitcoin wallet address by buying a hardware wallet or using a digital one
2. Open an account with one or more of the most reputable cryptocurrency exchanges available to you
3. Buy Bitcoin using a payment method which is supported by the exchange

Once you have exchange your fiat currency or another cryptocurrency to Bitcoin, you can start paying with it. Amongst the many stores who accept Bitcoin payments you will find:

• Bitcoin casinos – you can use Bitcoin to fund your online casino account, resulting in faster funding options and lower or no withdrawal fees
• Video games – several online multiplayer and single-player video games allow you to use Bitcoin to make payments
• Home & leisure – you can now furnish your home and buy your favourite electronics using Bitcoin and other cryptocurrencies
• Flights & accommodation – find exclusive cheap flights and holidays and secure them buy paying in BTC
• Online marketplaces – through third party platforms you can now use Bitcoin to pay for items purchased on Amazon and other online marketplaces

Concluding Thoughts

There is no doubt that there is still a long way to go for Bitcoin payments to become mainstream. However, the necessary processes have begun, and an increasing number of websites support this innovative payment method. In addition, the availability of Bitcoin ATMs and debit cards, such as the Coinbase Visa, help make this digital currency more accessible and useful across the world.