Even in 2020, when we talk about cryptocurrencies and bitcoin, some people still react as if it’s a dangerous alien from Mars. That also means that cryptocurrencies are probably still hostages away from becoming the mainstream currency.
Bitcoin payments can still make your life easier, though.
The problem of getting started
Cryptocurrency have been off-stream since their inception. It is still difficult for many to grasp the use of bitcoin as a means of payment, not just for speculation. But since you are here, that is likely not your problem.
Also, a lot of crypto software doesn’t feel safe, and indeed there have been hacks. In this article we’ll point you to tools and resources to learn how to pay with bitcoin safely.
Bitcoin for digital purchase
Bitcoin does facilitate the purpose of online money. In the tech sector, you can already quite commonly buy products or get services from the internet by paying with Bitcoin. Services like VPN, cloud hosting or sysadmin tools will these days typically list bitcoin payments alongside the more common ways to pay, such as Paypal or credit card.
In some cases, paying in crypto will come cheaper than paying directly the current USD price.
Another advantage that you get as a customer is your full control over billing cycles. Paying with a credit card or Paypal, service providers will typically require you to authorize regular payments. If you subscribe to a service for one year, you stop using it and forget about it, the next year you will still be charged automatically.
With cryptocurrencies, you as the private key owner need to manually sign each single transaction. Recurrent billing is therefore not possible. A vendor might send you an email with an invoice, but you can simply choose not to send another bitcoin payment. In time your service will be cancelled and if you didn’t do full KYC, it wouldn’t even be possible to fine you for not paying.
It is therefore not surprising that in one recent study, it has been seen that 13% of some 22000 have used bitcoins for payment and this number is a combined sample from 22 countries in the world. The craziest factor is that in the countries where the bitcoin is banned, there the spread of bitcoin is even more in the undergrounds.
Storing your bitcoin for when you need to pay
Bitcoin has been considered a highly speculative asset in the past 10 years.
The blame rises partly on the media that portrays the bitcoins as a means of payment strictly used for nefarious purposes. There is also an inherent conservative mistrust in Bitcoin, because it needs no centralized authority, unlike state-backed currencies.
Since Bitcoin is essentially a piece of software, the danger of hacking or a critical bug is relevant here, too. Millions of people are targeted to be hacked on a daily basis and many of these attempts are successful. This very reasonable fear of hacking also makes many stay away from crypto.
The answer here is to learn how to keep the bitcoins and cryptocurrencies safe.
First off, you will need a cryptocurrency wallet.
Then, a few recommendations from our crypto opsec section: You will need to keep your phone or laptop safe from malware if you have a crypto wallet on it, better yet you would have a separate device for these purposes. And you should have basic awareness of how you are being targeted by cyber criminals.
- The 101 of securing your Mac and iPhone
- Tiered device management for hot and cold cryptocurrency wallets
- Main security threats for crypto hodlers in 2020
Managing your value of transaction
Another common worrying factor would be the volatility of bitcoin. To people who are not traders, the dollar value of bitcoin drops and rises unnaturally without any warning.
The volatility for during the transaction is not such a big problem, though.
Consider that a bank transaction would require more time, plus some banks do not allow certain transactions because of international policies.
A good example is buying a property abroad - if you can find counterparty who accepts crypto payments, the overall process is even now already cheaper and less cumbersome than dealing with large fiat wires between countries.
Through bitcoin you can transfer any amount of money for lower fee and your transaction will always be cleared within 10 minutes.
The main problem to people seems to be managing the money spent as the Bitcoin price evolves in the long run. There are too many stories of people spending what would now be four of five figures USD to buy a geeky t-shirt with bitcoin.
The solution here, for someone who plans to make purchases with crypto, consists of two parts:
- Loosely follow the bitcoin price relative to your country’s fiat currency, and buy the dips. Store your crypto securely and keep track about your average purchase price per bitcoin.
- For larger purchases, you can wait until the market price of bitcoin will get over your purchase price. That way you will essentially exit the market in profit. For small purchases, you can simply buy back the amount you spent. In a bull market this will rise your average base price per coin, but less so than just spending without buying back.
Bitcoin as a Mainstream Mode of Payment
There are both advantages and disadvantages of paying through bitcoin.
One of the best things about bitcoin is that you do not have to wait over the weekend for your payment to clear. You can get or transfer your money at midnight or in holidays or in weekends.
One of the challenges is the security aspect and management of your crypto wallets.
Conclusion
It’s not enough to understood the value and the importance of bitcoins and cryptocurrencies. To start using bitcoin for payment it’s also necessary to know how to securely manage its storage. That is certainly a drawback when it comes to mass adoption, however with the rapid digitalization of trade and communication it should be less of a hurdle over time.