Do you know how to pay with crypto?
This year, we’ve seen major financial institutions and businesses acknowledging the growing power of crypto. Visa is developing Bitcoin-friendly APIs for traditional banks.
Elon Musk’s Tesla has bought $1.5 billion of Bitcoin with a possibility to start accepting it as payment in the future. After all, more than one-third of US small and medium-sized businesses accept cryptocurrency as payment for goods and services.
However, not many people are actually using the crypto payments option. In 2019, BitPay facilitated about $1 billion worth of cryptocurrency transactions, while Coinbase Commerce processed only $135 million worth of cryptocurrency payments.
Customers’ ignorance about crypto payments outside the crypto exchanges is one of the possible explanations for a small number of such transactions. Thus, we’re going to learn everything about making a purchase with crypto.
Step 1. Get a crypto wallet
You may trade cryptocurrencies at the exchange for as long as you wish, but if you’re going to spend some coins, you need to withdraw it to a digital wallet. A Bitcoin wallet stores your crypto and validates your transactions when you’re using it. Choosing between hardware and software wallets, you should keep your main purpose in mind. While hardware storage is safer and better for long-term use, software or ‘hot’ wallets are more convenient for quick transactions.
Therefore, many experienced crypto users have both variants. This way, you can transfer a necessary sum of crypto from a hardware wallet to the hot one right before the purchase. Thus, your main asset storage won’t get compromised. The best software bitcoin wallets selected by the Investopedia team include Exodus, Electrum, and Mycelium. Ledger Nano X, Trezor Model T, and Ledger Nano S are some of the top hardware wallets in the market. Of course, you can also use the wallet provided by a crypto exchange you prefer.
Step 2. Find out where you can pay with crypto
To begin with, you should realize which online and offline retailers or service providers accept cryptocurrencies. Thanks to the 99 Bitcoins website, there’s a comprehensive list of major companies and small businesses that accept crypto in 2021. You can also track local businesses that handle bitcoin payments at coinmap.org.
Step 3. Do the shopping
Select the goods you wish to buy from a chosen retailer (that must be the easiest step). Proceed to the checkout. In case of an online purchase, choose a delivery mode. Enter your address if necessary. Then look for the crypto payment option(s). If you’re buying something in person, inform the shop assistant you’re willing to pay with crypto.
Step 4. Receive the QR code for payment or a crypto address
Any crypto transaction is basically a transfer from one e-wallet to another. To perform this transaction, you may use the recipient’s wallet details. However, the deposit address is quite long and complex. For instance, the Bitcoin invoice address is an identifier of 26-35 alphanumeric characters, beginning with the number 1, 3, or bc1 that represents a possible destination for a bitcoin payment.
Therefore, most retailers would substitute that with a simple but unique QR code. You’ll have to scan it with your wallet app. If the seller provides the full wallet address, you’ll have to copy it or manually enter this data to make a transfer.
Step 5. Confirm the transaction
At this stage, the process may differ slightly depending on the type of crypto wallet you’re using. However, all of them would have some type of a “Send” form. If you’re lucky to get a QR code scanned, the amount and e-wallet address will be pre-filled. All you have to do is check the details and tap the Send button. If not, you fill it in, then check and send.
If the merchant you’re paying to is using Coinbase to accept crypto payments and you also have a funded Coinbase account, you can complete the checkout by simply signing in to your Coinbase account and confirming the order. The merchant will be immediately notified of your payment.