Cryptocurrencies created a healthy alternative for sending and receiving payments through the internet. Previous to these digital cash options, we relied heavily on the banking industry, third party wire transfer providers like Western Union, and payment aggregators like PayPal.
The issue here is that by relying on such few options, these operators hold the master key to your money. Meaning, if for any reason they wish to freeze or withhold your funds indefinitely, they can do so. This complete authority over people’s funds is wildly unfair, especially when people depend on these funds to live every day.
For this reason, decentralized currencies like Bitcoin, Ethereum, etc. provide individuals a way to take back control of their finances. Nevertheless, the entire space is relatively new and still has a few kinks to work out.
Safety is probably one of the biggest selling points for cryptocurrencies. The underlying technology used to create them, called blockchain, has been widely acclaimed for its superior security protocols.
Without getting into too much detail, a blockchain is a hash-encrypted method of record-keeping that’s kept over a network of distributed nodes. In layman’s terms, it’s a secure way to keep an unmodifiable record, or ledger, of information.
Though it seems like a pretty specific solution, keeping a reliable record of information can be an invaluable asset to many sectors. With banking, for example, as money is moving in and out of the bank vault, it’s important to keep a record of who specifically is taking funds in and out so that it’s clear how much money is left in each person’s account.
This example is exactly the way cryptocurrencies work. Essentially, the only way to know how much money everyone has in their wallets is by keeping a record of all transactions. Consequently, when this information is kept on a central server (like with banks), it’s vulnerable to both physical and cyber attacks.
Thus, a decentralized network of nodes would make for a much safer method of storing this data. This is because in order to “hack” a network of nodes you’d need to modify the information on 51% of said nodes, which becomes infinitely difficult as your network of nodes grows from hundreds, to thousands, and so forth.
Lastly, to add to this security, when you create your own bitcoin wallet, you’re provided with keys that allow you to access your account. These include a public key, which is like a bank account number, and a private key, which is like a password to access your account.
What makes these private keys safer than traditional passwords (like your pet’s name or your birthday) is that these are a string of 64 random numbers and letters. Try hacking that! With today’s computers it might take thousands of years to brute-force a private key, if at all.
Even though modern computers wouldn’t be able to crack a private key, quantum computers might. That is, computers employing quantum mechanics. While describing how these computers work will be the content of other articles, this novel technology is still in its infancy. In principle it could out-perform modern computers at these sorts of tasks although we believe that fears about such technology are deeply premature.
Banks, payment aggregators, and other third parties that assist in payment transfers also provide security outside of their ledger. With cryptocurrency, there is a greater demand of users to make sure their systems are well-protected. While it does require some extra work, there are plenty of mainstream solutions like anti-virus scanners, firewalls, VPNs, secure wallets, and other tools that help users protect their assets.
As far as reliability in sending and receiving payments, yes. This is a very efficient system and can allow users to transfer funds across the world in less than an hour; some more efficient coins can even transfer funds instantly. Blockchain technology is also able to do this more cheaply than a traditional bank so the fees are often fractions what you would incur with a bank or third party solution.
However, the only real challenge with cryptocurrencies is that most people are still falling back on traditional methods of payment. Say, for example, you wanted to use these digital currencies exclusively, you would have to find a product or service that caters specifically to people that would be likely to have cryptocurrencies to begin with. While these solutions exist, there are obviously substantially more by using FIAT currencies and credit cards.
If you open an online store to sell shoes and only accept crypto payments, it’s unlikely that everyone who wants to purchase your shoes would know how to purchase crypto using their local cash currency. Therefore many businesses are opting to use FIAT-based payment gateways like Stripe, and cryptocurrency processors like Bitpay.
This is especially true because most governments are still wary of allowing people to use cryptocurrencies freely, as, theoretically, these digital currencies could pose a risk in terms of money laundering, tax evasion, and fraud.
Though relatively few people are actually using crypto payments on a daily basis, it still holds a lot of potential for the future. As the entire space continues to develop and more companies are allocating resources towards developing technologies that allow for crypto-implementation, we’ll see more widespread adoption.
For now, it’s still a new technology, but active cryptocurrency enthusiasts are pushing for the expansion of these payment options on a daily basis.
Nonetheless, this also poses a huge opportunity for early adopters. Anyone using crypto now will benefit greatly from the new influx of users that wish to learn more about this alternative method of currencies and payments.
There are community message boards and social media groups regularly asking how to acquire some service, or purchase some product and there are no alternatives available. Therefore businesses that are early to allow for this will have a greater potential to reach their sales targets.
You can already buy plane tickets, gift cards, groceries, software, services, and much more. Recently, Starbucks announced that they will be accepting cryptocurrency for accepted payments.
Are crypto payments a safe and reliable option for entrepreneurs? Yes, but take care to read up on some basic ways to better protect your devices.
Though the space is relatively new in the mainstream and many people haven’t adopted this alternative to cash, there’s huge potential in the space. Cryptocurrencies are just the tip of the iceberg for what blockchain technology can do. Therefore, companies will continue to increase the amount of funds they steer towards R&D to learn more about its potential.
Learning how to use cryptocurrencies now can prove to be an invaluable skill down the line.
If you’re an entrepreneur that’s setting up a new business and are considering accepting crypto payments, we highly recommend learning how to become compliant. Then, once you see the benefits, you will naturally begin convincing the people and companies in your network to also explore using and accepting crypto payments to speed up global mainstream adoption.