Cryptocurrency payments are becoming more and more popular as people become more comfortable with the technology. Crypto is a secure, global, and versatile way to purchase goods and services, and it can also be traded for other cryptocurrencies, commodities, and fiat currencies.
But even with how popular cryptocurrency is these days, many people still do not know how crypto payments work and what is needed to process them. Continue reading to learn more about cryptocurrency and how a crypto payment API is useful in crypto payment processing.
What is Cryptocurrency?
Cryptocurrency is digital or virtual currency that uses cryptography to secure transactions and control the creation of new units. Bitcoin, the first and most well-known cryptocurrency, was created in 2009, and it has taken off in an explosion of use and popularity ever since.
Cryptocurrency is decentralized, meaning it is not subject to government or financial institution control. This makes it attractive to people who want more control over their finances and to avoid fees associated with traditional banking and payment systems. Cryptocurrency is also pseudonymous, meaning that the identities of the people involved in transactions are not revealed. This is another feature that appeals to people who want to keep their finances private.
Cryptocurrency is often traded on decentralized exchanges and can also be used to purchase goods and services. Because cryptocurrency is digital, it can be transferred easily and quickly between users. This makes it well suited for use as a form of payment.
Cryptocurrency is becoming more and more popular because it is increasing in value. In 2009, one Bitcoin was worth less than $0.10. In December 2017, one Bitcoin was worth more than $17,000. This volatility makes cryptocurrency a risky investment, but it also offers the potential for high returns.
How are Crypto Payments Processed?
Cryptocurrency payments are processed using a payment API gateway. A payment gateway is a service that allows businesses to accept payments online. The payment gateway connects to the business’s shopping cart or checkout system. Payment gateways that support cryptocurrency payments typically connect to popular cryptocurrencies such as Bitcoin and Ethereum. The payment gateway will convert the cryptocurrency into the currency of the destination country, and the funds will be transferred to the business’s bank account.
Within the payment API gateway, cryptocurrency payments are processed through a digital wallet. The digital wallet is a software program that stores your public and private keys and interacts with various blockchains to enable you to send and receive digital currency. When you want to make a payment, you simply scan the QR code of the recipient’s public key with your digital wallet to initiate the transfer. The recipient will then receive the payment in their digital wallet.
When a crypto payment is made, the recipient’s digital wallet address is automatically populated into the “To” field. The sender simply needs to enter the amount they want to send and hit “Send.” There is no need to enter any personal information, and the network will take care of securely transferring the funds. The entire process usually takes just a few minutes. The payment is then verified through a blockchain network. This network is made up of computers that use a software program to verify transactions. Once the payment is verified, it is added to a block, which is then added to the blockchain.
Cryptocurrency payments are a fast and convenient way to pay for goods and services. They are also a secure way to pay, as the payments are processed using cryptography. Cryptocurrency payments are growing in popularity, and as more people become familiar with the technology, it is likely that this type of payment will become even more common.