The Pros And Cons Of Paying With Cryptocurrency
Cryptocurrency is a virtual or digital currency, and all of them are based on blockchain technology. Cryptocurrencies are not distributed by central authorities, meaning they resist interference by the government.
Because of cryptography, the currency cannot easily be counterfeited. Cryptocurrencies are mostly systems that permit secure online payments using assets such as virtual tokens. These digital tokens are represented with ledger entries.
The word ‘crypto’ alludes to the different cryptography methods and encryption algorithms that work to secure the entries. A few examples include ‘hashing functions’ and ‘elliptic curve.’
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There are thousands of cryptocurrencies available, yet Bitcoin (the very first cryptocurrency) remains the most popular.
Unfortunately, paying for goods and services with cryptocurrency typically involves long delays for blockchain verification. Luckily, BlockCard lets you deposit the cryptocurrency and convert it into dollars to fund your account, so you can start spending immediately.
Because of the convenience and profitability, it’s essential to understand the pros and cons of paying with cryptocurrency.
Related: When is the Best Time to Buy Bitcoin
How Does Blockchain Work?
A blockchain refers to a ledger of transactions that are distributed and duplicated across the whole network of systems belonging to the blockchain. It’s a way to record info so that it’s impossible to hack, change, or trick the system. Every block contains a certain amount of transactions, and each time a new transaction takes place, it’s recorded on the ledger of every participant.
In short, blockchain is a kind of distributed ledger tech to record transactions, using what we call a ‘hash,’ which is a type of unchangeable cryptography signature.
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What Are The Pros of Paying With Cryptocurrency?
Over the last several years, cryptocurrency has grown in popularity, with new currencies cropping up all of the time. There are many benefits to gain from paying with cryptocurrency.
1. Reduced Transaction Fees
When you shop with a debit or credit card, these purchases can often involve fees. Sometimes an individual won’t even notice the fee until after the purchase is complete. Fees are implemented in the transactions because multiple parties are involved, and you’ll probably have noticed that transaction fees are higher when purchasing from abroad.
Cryptocurrencies have eliminated the third parties involved in a typical transaction, therefore, removing fee! Whether you’re making a payment to one of your freelancers or transferring money to a friend, cryptocurrency allows you to go about your business with zero commission.
2. Improved Autonomy
One of the most significant benefits of cryptocurrency is autonomy, as virtual currencies offer more independence in comparison to fiat currencies. With cryptocurrencies, you have full control over how you spend your cash, without the oversight or rules of banks or governments.
BlockCard makes it easy and convenient to use your cryptocurrency
3. Discreet Payments
When you pay with cryptocurrency, these payments are discreet because they are not associated with your personal identity. For example, when using bitcoin, users are allocated an anonymous address, which then changes with each transaction that they make. While bitcoin payments are not entirely untraceable in certain circumstances, they are far more discreet than conventional payment methods.
4. Data Protection
The top advantage of discrete payments is improved data protection. Credit institutions and banks collect personal info from account balances to home addresses, employment details, and assets. While banks take precautions to keep your data safe, in the event of a breach, your data could become compromised. When you pay with cryptocurrency, you protect yourself from identity theft and keep your private details safe and sound.
5. International Trade
Cryptocurrencies are not subject to interest rates, charges, exchange rates, or other restrictions that may be imposed with traditional payment methods. With cryptocurrency, you can use peer-to-peer transactions across borders without worrying about fluctuations or currency exchange.
6. Secure & Fast Transactions
Exchanges using cryptocurrency are much faster than conventional banking transactions. Because of the convenience, using cryptocurrency may be a particularly attractive option for businesses to improve productivity and efficiency. In addition to that, crypto payments offer enhanced security as a result of blockchain tracking.
What Are The Cons of Paying With Cryptocurrency?
1. Some Companies Do Not Accept Cryptocurrency
Cryptocurrency is not readily accepted everywhere, so you may not be able to use it to pay with various companies. The good news is that BlockCard offers a virtual debit card where you can deposit cryptocurrency, that’s then converted into TERN.
TERN is subsequently sold and converted into fiat currency, meaning you can make purchases anywhere that VISA is accepted. As time goes by, more and more companies are accepting cryptocurrency as a method of payment. Some of the top businesses that currently take cryptocurrency include Microsoft, Expedia, Twitch, Subway, and Virgin Atlantic.
We can expect an increased number of companies to adopt cryptocurrency payment options as the years go by.
2. Currency Fluctuation
Cryptocurrencies, like fiat currencies, tend to fluctuate in value. With cryptocurrency, the fluctuations can often be sporadic. Volatility is measured in traditional markets, and now it’s also measured for bitcoin, using a volatility index. Bitcoin’s value has been rather volatile in the past; for instance, in the three months following October 2017, the volatility price reached almost 8%. Several reasons account for bitcoin’s volatility, such as the value sways to large currency holders and suspected security vulnerabilities.
3. Zero Recovery
Cryptocurrency cannot be recovered if it is lost, as there are currently no systems in place to retrieve it. Some users choose to store bitcoins on a drive that is separate from the internet. With encryption, you’ll find that you can identify the currency, but you cannot identify the owner. The fact that cryptocurrency is irretrievable makes some individuals skeptical of using it.
It’s a wise idea to use a crypto wallet, which is a software program for private and public key storage. With a crypto wallet, you can interact with blockchains, monitor your balance, and receive digital currencies.
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Cryptocurrency appears to have a promising future with many benefits and an increasing amount of companies choosing to adopt it as a payment method. BlockCard can help users to make the best of their cryptocurrency by using a virtual debit card for swift exchange and payment.
Individuals seeking autonomy, discretion, eliminating transaction fees, and ease of international trade should consider cryptocurrency solutions. While fluctuation is a concern, this can also be said of many fiat currencies, particularly during a time when the economy is suffering.
With all the pros and cons of using cryptocurrency, it’s essential to weigh the risk and benefit to make an informed decision.
Related: How to Pay with Bitcoin
Ian Kane is the COO of Ternio, the startup dedicated to solving the issues related to blockchain scalability and payment utility of cryptocurrency.