One of the main functions that we can enjoy thanks to the tecnología blockchain is to make payments with cryptocurrencies in a totally decentralized way and without trust in third parties. Thanks to this, we can buy anything online and pay easily using a cryptocurrency payment gateway like the one offered by Bit2MeCommerce, or directly we can make payments from wallet to wallet using cryptocurrencies without major problems. In any case, cryptocurrencies and their potential to make payments anywhere in the world, at any time and with very low commissions, have redefined the way in which they can be made, coming to compete with giants such as Paypal or Stripe.
But how does all this work? What is it that makes it possible to send a payment to the ends of the world in seconds, with total security and confidence using cryptocurrencies? Next we tell you everything you need to know about cryptocurrency payments and the different alternatives that exist.
Cryptocurrency payments: a fast and secure way to make payments
Payments with cryptocurrencies are possible, first of all, thanks to the blockchain technology. This technology is responsible for the computer networks of a cryptocurrency being able to maintain a detailed log of all operations carried out on the network. A record that includes data such as the sender's address, the recipient's address, the amount of coins to be mobilized, the change in the operation, the payment identifier or TXID, the payment schedule (since payments in cryptocurrencies can be scheduled with special options) between other valuable data that we can add to the operation.
Not only that, but along with this data is included cryptographic guarantees and means of verification that allow us to ensure the operation, audit it and verify it completely. It is even possible to trace the very origin of cryptocurrencies to their date of creation, with which we have a "historical chain" of the operations carried out with said cryptocurrencies from their genesis to the present moment in which we review them. All this thanks to a technology such as blockchain, its decentralized operation and P2P, in addition to its incredible ability to maintain and protect this data in an unalterable way in thousands of nodes deployed around the world.
The blockchain and the entire technological stack that makes it possible (eg: cryptography, P2P, consensus protocols, among others) are the technologies that allow us to enable payments with cryptocurrencies in a way fast and safe, no matter where in the world we are.
Key pieces in crypto payments
Purses: the first piece of the puzzle
All this technology already mentioned is useless if we do not have a easy way to send and receive payments and, it is precisely that, what the cryptocurrency wallets. A purse is nothing more than a software that allows us to send and receive payments of a certain cryptocurrency. Generally, cryptocurrency node software has functions to serve as wallets, but the most common is that wallets that are much easier to use and with greater accessibility features are used.
For example, Bitcoin Core, the official Bitcoin software for its nodes, has the ability to handle a Bitcoin wallet. In other words, Bitcoin Core can send and receive payments in Bitcoin in a completely decentralized way, but it has one drawback: it is complex to handle for many people and can only be used on a personal computer. To fill these gaps, there are purses like Bit2Me Wallet, that allow you to send and receive payments from your smartphone or any device that you can use to access the Internet, which makes it easy for you to send and receive payments with cryptocurrencies.
In the end, using one or another tool as a cryptocurrency wallet is a matter of personal decision, but it is clear that these are the element that allows us to send or receive those payments without so many complications.
The second piece: a network with a global reach
The second piece of the puzzle for payments with cryptocurrencies is precisely the generation of P2P networks that allow a cryptocurrency to function. For example, in Bitcoin, the network not only includes the miners (who are in charge of validating the operations, creating the new blocks and generating new coins) but also the nodes. that allow us to ensure all this operation and that are also working throughout the world.
How big is your reach? Well, Bitcoin currently exceeds 39 thousand nodes spread all over the world. In fact, you can also create a bitcoin node and being part of this huge global network, with what you gain in security, you have the possibility of accessing network services without intermediaries and at the same time, you help others to enjoy a more secure and accessible network.
The same situation is also repeated in other cryptocurrencies. For example, Ethereum with its switch to PoS now has a total of more than 7 nodes spread around the world, although the vast majority of them are located in the United States and Germany.
Even slightly smaller nets, like Monero, they have a large number of nodes that exceeds 2000 of them worldwide, at least the known ones. The generation of P2P networks with a greater number of nodes, endpoints and gateways to connect to their networks guarantees its users that we can make payments from anywhere in the world, even without having to have an active Internet service at all times.
Ways to make payments with cryptocurrencies
Now that we know the people in charge that allow us to make payments with cryptocurrencies, we will analyze and review the different specific ways in which these payments can be made.
Wallet to wallet, the simplest and freest way
The way more simple of making payments with cryptocurrencies is by the method purse to purse, and the dynamics of this method are quite simple. Imagine that Ana wants to pay Juan €100 in bitcoin for a repair to her smartphone. Ana and Juan know about cryptocurrencies and to make the payment they have both agreed to use Bitcoin. At this point, Ana asks Juan for his Bitcoin address, which she can scan via a QR with her smartphone. When scanning, Ana has her address, places the amount to pay and clicks "Send" inside her wallet.
At this time, Ana's purse generates a transaction which is sent to the network and is placed in the mempool. Once in the mempool, Bitcoin miners take the transaction along with other transactions that are waiting to be confirmed and begin to hash the new block using Proof of Work (PoW). Once the test is successfully completed, then this block goes to the rest of the network and its nodes to be verified and finally become part of the Bitcoin blockchain, and the process is repeated again.
Of course, Juan will receive the notice that a payment It has been made to him shortly after Ana sends it to him. The entire process described above takes approximately 10-15 minutes, which is the time it takes for Bitcoin to process and confirm a payment at least once. But once it is confirmed, Juan will have the certainty that his payment has been made and thus each new confirmation is one more guarantee that the payment has been made successfully and that this money is now completely his.
payment gateways
Another dynamic to make payments with cryptocurrencies is to use a gateway, something very common in physical or online stores because it facilitates the work of receiving payments with cryptocurrencies and keeping a correct accounting of the process. Services like Bit2MeCommerce allow this, thanks to the fact that the store simply takes care of activating the payment gateway service, and it automatically tracks the payment (to verify that it has been made correctly), maintains a database with the details of the operation, customer data, purchase order, taxes, and other relevant data for the business, as well as other additional options, such as the simple conversion of payments in cryptocurrencies to fiat or stablecoins, if the merchant so wishes to facilitate the accounting of its operations.
Payment gateways allow physical or virtual businesses to receive cryptocurrency payments very easily. Many of them include support for various cryptocurrencies if desired, and they can be deployed centrally or decentralized, so thanks to them you have the absolute freedom to operate at any time and place, in the conditions you want for you and your business.
Use Case Example
The dynamics in this case is a bit more extensive, but also easy to follow. Let's imagine that Luis wants to pay for his purchases at the supermarket with bitcoin, since he has this alternative in his supermarket. To do this, Luis prepares his wallet, while the cashier shows him the QR that you must scan to make the payment. Said QR has the Bitcoin address to which you will make the payment and also the exact amount in satoshis that you must pay for your purchase. In this case, the supermarket payment gateway is the one who decides the Bitcoin/fiat exchange rate that Luis must respect at all times. Once the QR has been scanned, Luis can review this data and if he agrees, he just has to click "Send" for his wallet to carry out the transaction and send it to the network.
Bifurcation of two-phase processing
At this point, payment processing begins on two fronts. The first is on the network, where the operation arrives in the mempool waiting for a miner to take it, include it in a block, mine the block, and finally be included in the Bitcoin blockchain history. The second front is in the payment gateway. In this case, the gateway will track the operation and the number of confirmations that the payment has been received.
Two things can happen here:
- The gateway blocks the payment in fiat, which will go from the service provider account to the supermarket account in order to honor the commercial activity generated. This happens in case the supermarket accepts payments in cryptocurrencies, but in reality just want to receive fiat for purchases made with this method. In that case, the gateway operator keeps all the crypto and releases the fiat payment to the supermarket.
- The gateway awaits the necessary confirmations to give it as completed, delivering the corresponding payment in cryptocurrencies to the supermarket.
In both cases, the gateway controls the payment process, either to release fiat or cryptocurrencies, as required by the business. It may even be the case that the gateway releases a percentage in fiat and the rest in crypto, all according to business requirements.
Commissions and other forms of payment
Of course, other dynamics also come into play here, since the gateway service charges the business A commission for all this payment processing. But do not be scared, these commissions are generally much lower than the percentages of platforms such as PayPal or even the banks themselves, who also charge businesses for the same service. The reason for this is that operating with cryptocurrencies is much less expensive and therefore this is also reflected in the cost of the services associated with them. For example, in PayPal it is not uncommon to see that they charge you up to 10% for a payment processing, but in cryptocurrencies those percentages can be as low as 1% and even free in certain situations.
The best thing about payment gateways is that they not only allow payments with crypto means (such as a wallet), but can also be adjusted for more common forms of payment, such as the case of a debit/credit card. Services like Bit2Me Card They allow this by using the possibilities of our platform and allowing people to make payments in cryptocurrencies, when in the end the business is only receiving fiat in a totally transparent way.