Digital wallets are a rage today making carrying cash or a cheque book when you go shopping ancient history. Credit and debit cards have all but replaced paper money when it comes to transacting in large amounts or for shopping online. Another novel way to make or receive payments is by using cryptocurrencies.
What are Cryptocurrencies?
Investopedia defines a cryptocurrency as “a digital or virtual currency that uses cryptography for security”. The cryptographic protocol is basically an uncrackable code that is used to track transfers and purchases of cryptocurrencies. These currencies are almost impossible to duplicate or counterfeit.
The transfers of these currencies are enabled through secure processing keys, with minimal processing fees – unlike the fee charged by banks and other financial institutions for transactions made using regular currencies, or fiat money.
Since these currencies are essentially “digital” in nature, they cannot be regulated by governments or central banking systems. Instead, their supply and value, are controlled by complex mathematical protocols and user activity.
Most cryptocurrencies have a cap on the amount that can be generated, thus keeping their values high, unlike government issue currencies (where governments can print some more). Cryptocurrencies can also be traded on special exchanges for fiat money.
Famous Crypto Currencies
Bitcoin
Bitcoin was launched in 2009, this one’s the most famous of the lot. Adding to its immense popularity is the mysterious Satoshi Nakamoto, the inventor – an individual (or group of individuals) unidentified to date! The value of bitcoin has risen since its creation. On March 2, 2017, the value its value reached an unprecedented high of $1,268 per unit making its trading price higher than that of an ounce of gold.
Ethereum
A tradable cryptocurrency, ethereum, was invented by Vitalik Buterin. It utilizes “smart contracts” technology that ensures parties do not default on their agreements.
Litecoin
Litecoin is another popular cryptocurrency. Released in 2011, its concept is similar to that of Bitcoin and it has since become an extremely popular cryptocurrency that is traded on the markets.
How to Use Crypto Currency
Cryptocurrencies can be used pretty much like regular money (wherever they are accepted) save for the fact that there are no physical forms of it. Transactions are recorded on digital public ledgers called “blockchains” that comprise of units known as blocks. They are generated through a process called “mining” (whereby miners earn tokens of the currency by solving computational puzzles).
Alternatively, cryptocurrencies can be bought using fiat money like dollars, euros, yen, etc. A private key (akin to an ATM pin) is assigned to each person, which is then used during transactions.
There are different types of wallets that are used to store cryptocurrencies:
- Desktop wallets
- Online wallets
- Mobile wallets
- Paper wallets using QR codes printed on paper
- Hardware wallets
Why e-Commerce Businesses Should Use Crypto Currencies
Apart from offering customers an alternative form of payment, cryptocurrencies offer businesses plenty of benefits as well.
Attracting New Customers
e-Commerce businesses that accept cryptocurrencies have the ability to attract the evolving market of customers who are actively looking for places to spend their newly-mined cryptocurrencies.
Low Fees
Since cryptocurrencies are not controlled by any single entity, the hefty transaction fees that banks and credit card companies charge for verifying payments, are eliminated. Cryptocurrency fees are less than 1% of the transaction value compared to the (approximately) 3% that is charged by credit card companies.
International Transactions
Since the currencies are digital, international and domestic transactions are treated alike. No money is lost on conversion rates and international credit card processing fees (that can be up to 15%) do not apply!
Protection Against Fraud
As one can spend only from the amount of cryptocurrency they have earned, there are no chances of chargebacks. Payments cannot be reversed either, making it extremely difficult to be defrauded.
Works as an Investment
As mentioned earlier, cryptocurrencies are traded on special markets. Holding on to some of the payments you receive from customers can work as a good investment as the demand for these currencies increases, and the supply remains limited. However, the market for these currencies can be volatile (as is the case with any investment).
How to Start Accepting Crypto Currency Payments
A reliable e-Commerce solutions provider can help you integrate a cryptocurrency payment option into your retail website. Merchant solutions like Coinbase and Bitpay provide plugins that can be integrated into your system, thus allowing you to accept payments in the form of cryptocurrency. You can also get an SSL certificate installed to safeguard your customers’ data so that they feel secure while using your site.
QualDev can help you with all your e-Commerce needs – from web designing to animation, search engine optimization to the integration of various payment options. QualDev works with industry-leading merchant solutions and has several years of experience delivering services that help e-Commerce businesses work more efficiently and profitably. Contact us to see how we can help you with your foray into cryptocurrencies.