Crypto Doesn’t Have to be Cryptic
Are you interested in accepting cryptocurrency payments for your business, but aren’t sure if it’s the right choice?
Often, the reason we choose not to do something is because of the fear of the unknown. You probably wouldn’t stick your arm in a dark hole in the side of a cave or jump into deep, murky waters for fear of what may be waiting for you. And we certainly wouldn’t either. So today, we’re taking the unknown out of cryptocurrency processing. Read on to learn more about how crypto transactions work and how Electronic Merchant Systems can help take your business to the next level.
Table of Contents
What is Cryptocurrency?
Cryptocurrency is a digital or virtual currency designed to be used as a form of payment. Other than the fact that it is digital, crypto works a lot like a credit or debit card. The main difference between the two is that instead of a bank or other third-party issuing and tracking currency, the ledger is kept by an algorithm.
Crypto uses cryptography to secure and verify transactions, and is a limited entry in a database that no one can change unless specific conditions are met. Cryptocurrencies are then supported on a file called a blockchain, which contains a record of all transactions that have taken place with that cryptocurrency. Picture it as an actual “chain of blocks” which represent data and are held together in a particular order. Each block in the chain represents a new transaction. You could also think of it as a decentralized bank ledger, if you’re more familiar with financial jargon. There are nearly 1,600 different cryptocurrencies available, the top three being Bitcoin, Ethereum, and Litecoin.
These digital currencies were invented to allow people to exchange money without the need for a third party, such as a credit card company. It’s a democratic financial system powered by millions of computers. Users enjoy freedom from the interest rates and fees charged by banks, and don’t have to deal with inflation or account freezing.
How Does Crypto Work?
Anyone can invest in cryptocurrency. To use it, a consumer must first purchase a crypto amount. Let’s use Bitcoin as an example. The current cost for 1 Bitcoin is about $11,000. If you accept crypto payments, a consumer can purchase a Bitcoin at that amount, and then sell a fraction of it when they want to make a purchase at your store. For example, if they had purchased one Bitcoin at $11,000 and wanted to use it to make a $100 purchase at your store, they would need to sell 1/110 of that coin to make their purchase with you.
Bitcoins or other cryptocurrencies are securely stored in a digital wallet that is protected with a secret key. Everyone has two keys, one public and the other private. The public key can be shared with others so they can send you Bitcoin, while the private key is what you would use to send a payment. If someone else discovers your private key, your Bitcoin are at risk of being stolen. Therefore, make sure your private key is safely stored at all times.
When a payment is made it is first encrypted, then broadcast to the cryptocurrency’s network and prepared to be added to the public ledger. Next, transactions are recorded on the public ledger using a process called “mining”. Anyone who uses a certain cryptocurrency (such as Bitcoin) can access the full ledger if they choose. The amounts paid for each transaction are public, but sender information is encrypted. Many transactions are posted at the same time and added in sequence to the ledger.
Accept Bitcoin and Other Cryptocurrencies
If this seems complicated, don’t worry. All of the work and any of the risk associated with a transaction like this is the responsibility of the consumer. Accepting crypto payments with Electronic Merchant Systems simply means you’re giving your customers an additional way to pay. We’ll take care of processing their payment and will fund you the money in cold hard cash.
Other than the obvious customer convenience factor, there are unique benefits to accepting crypto payments for your business.
- Forget About Fraud and Chargebacks
Crypto transactions are virtually fraud-proof and eliminate chargeback risks for merchants. Purchases made with cryptocurrency are exact and final (unless you choose to process a refund). You are in complete control of the cash you receive. Check out The Truth About Cryptocurrency Processing for more information.
- Encourage Innovation
Gain a competitive advantage by being one of the first to offer this alternative payment method and cater to digital wallet users.
- Speed Up the Process
Payments move more quickly, which helps you to avoid the traditional wait time associated with global transactions.
- Make International Payments Easy
Simplify international payments by eliminating foreign transaction fees and currency conversions.
We hope that this post has helped to make the unknown about cryptocurrency, known. To read more about the innovative payment solutions and merchant services options available for business like yours, check out these blog posts: