Bitcoins are primarily acquired for their potential investment returns, but along the way, we lost sight of why the cryptocurrencies were developed in the first place: to be used and make anonymous payments. With bitcoins and crypto now being everywhere, with people focusing on their price fluctuation and buying and selling accordingly, the future offers potential for these cryptocurrencies to be the secure and popular payment method. Bitcoin is the cryptocurrency that paved the way for the other cryptocurrencies. Since its inception in 2009, it is still ranked as the most popular cryptocurrency with a market capitalization of 3.02 trillion USD, which is 57.22% of the cryptocurrency market cap. Through this article, we will explore how to use bitcoins for online payments and transactions.
How to use Bitcoin to make payments?
The process of sending and receiving bitcoin is a comparatively simpler process than the early details, where in order to send a cryptocurrency, you have to engage with command-line interface programming for transaction development. But it’s all in the past now; you can make payments using bitcoins just like you make a bank transfer. Consider using a Web3 username while making transactions using bitcoins or any other cryptocurrency.
Using the web3 username is not necessarily a required step for transactions, but having a web3 username will provide you with a unique identifier that you can choose that serves as an alternative to your wallet address, making it more secure. The username in Web3 will be similar to the domain name services (DNS) that are used on the internet currently. While using these usernames, instead of an IP address, it will let you type in a.com address. Using these usernames will provide you with convenience; in order to make a transfer, you just have to give them your Web3 username instead of the sixteen-bit numbers.
Step 1: Acquire a bitcoin
To begin with, to make the payment, you need to acquire Bitcoin first. There are four methods to acquire bitcoin mentioned below.
Cryptocurrency exchanges
The most commonly used way to acquire Bitcoin is through buying it on cryptocurrency exchanges. It is not mandatory to have an account in an exchange, but it is an easy and safe way to get one. Cryptocurrency exchanges are digital markets through which you can buy Bitcoin using fiat money such as the US dollar or euro. Examples of some popular cryptocurrency exchanges are Coinbase, Kraken, Binance, Gemini, Bingx, and crypto.com. There are options for you to obtain portions of Bitcoin for making payments.
Peer to peer (P2P)
Peer-to-peer platforms are platforms that connect people with each other to buy and sell cryptocurrencies. Some examples of P2P platforms are Faircent, LenDenClub, NEO Finance, and Funding Circle. While these platforms offer expanded payment method flexibility, they also pose increased risks. It is essential to exercise caution and thoroughly research before proceeding.
Bitcoin ATMs
Bitcoin ATMs are the most convenient way to acquire a bitcoin, but they are available in some regions exclusively. Through these ATMs, you can exchange fiat cash for bitcoin. The number of Bitcoin ATMs will increase all over the world in the coming years. According to a survey, the number of Bitcoin ATMs in cities around the world is given below.
- Los Angeles 1,710
- Houston, Texas 1,339
- Chicago, Illinois 1,120
- Sydney, Australia 242
- Hong Kong 171
- Tbilisi, Georgia 114
- Warsaw, Poland 86
- Bucharest, Romania 75
- Vienna, Austria 51
- Madrid, Spain 51
Bitcoin Mining
Bitcoin mining is how bitcoin is created; you can directly earn bitcoin by solving a complicated mathematical equation, which is meant for advanced people who are very competitive to generate a cryptographic number that is the same or less than the number set by the algorithm by using hardware and software.
Once you have acquired Bitcoin through any of these ways, the next step is to safeguard the Bitcoin now you own.
Step 2: Select a bitcoin wallet.
The purpose of a Bitcoin wallet is to secretly store, transmit, and receive the bitcoins. Bitcoin wallets can be downloaded on your mobile device and computer, which will act as an intermediary and safeguard the Bitcoin. The Bitcoin wallet doesn’t actually hold the Bitcoin; your wallet will store the key you will require to get access into your wallet, called the private keys. There are hundreds of wallets available. There are addresses for your wallet, just email addresses that will be used while making a transaction through these wallets. There are four types of wallets to store Bitcoin in:
Software wallet
Software wallets are a program-based wallet that gives you access to your wallet through its developed application or a program that can be installed on your computer or mobile phone. An example of a desktop wallet is Electrum, and another example of a mobile wallet is a trust wallet.
Hardware wallet
A hardware wallet, as the name suggests, is the actual hardware that helps you keep your Bitcoin safe offline, which is a much more secure way than keeping it online. Some of the popular hardware wallets are Ledger Nano S and Trezor wallets.
Paper wallets
Paper wallets are actual paper copies with records of the Bitcoin address and private key information known as the paper wallet. As it is on paper, it is highly secure against cyber attacks, but keeping it in a secure and accessible location is the only challenge while using this wallet.
Online wallets
There are online wallets that some cryptocurrency exchanges provide as their service. It is very convenient to use, but it can be highly vulnerable to cyber-attacks and is not recommended for an extended period of time to use as a wallet.
Choose one among the wallets from the above according to your convenience and depending on your requirements and the time period you plan to store the Bitcoin.
Step 3: Make payment using bitcoin.
Once you have added your Bitcoin into the wallet, you are all set to make the payment.
Make payments using Bitcoin while online shopping.
If it is online shopping, many online shops and enterprises are accepting Bitcoin as a payment method. Choose cryptocurrency, then select Bitcoin as the payment method in the payment section. You will be asked to provide your Bitcoin address or will be provided with a QR code for you to scan. Either give your Bitcoin address or scan the code to receive a request to your wallet and make the transaction.
Make in-person payments using bitcoin
If it is a direct in-person transaction, some offline retailers accept Bitcoin as a mode of payment. Open the wallet on your mobile phone and scan the QR code provided by the retailer to make the transaction. Send the Bitcoin after checking the amount and confirming the payment.
Peer-to-peer transactions while using Bitcoin
If it is a peer-to-peer transaction, then open your wallet and choose from the send or transfer option. Enter the receiver’s Bitcoin address and set the amount to be sent. Make sure the Bitcoin address is right before sending the amount.
Payment requests in the form of invoices
There will be requests sent to you in the form of invoices; these invoices consist of a Bitcoin address along with the sum of the amount to be paid. You can make the payment by scanning the QR code or by adding the provided Bitcoin address as the receiver’s Bitcoin address and continuing the payment just like the peer-to-peer transaction while using Bitcoin.
Step 4: confirm and track the payments.
Following the initialization of the payment, you should verify the status of the payment. The transactions made by bitcoins are kept in the blockchain or the public ledger. You can get access to this blockchain using Blockchain Explorer websites or applications. To track the status of your transactions, you can go to the blockchain explorer and enter the Bitcoin transaction ID or the address of the wallet you have made the payment through. You will be able to access the transaction status and confirmation of the payment if the payment. After this process, the payment will be transferred. If the block is added to your blockchain, it means the payment is confirmed, and now you can’t take back the transaction. In most cases, there will be certain times of number confirmation required before the payment becomes successful.
Step 5: identify the transaction fee.
There are transaction fees charged from transactions for paying it to the miners who mine the bitcoin by solving the mathematical problems. The transaction costs are determined by a number of factors, including the transaction’s size, network congestion, and urgency. You have to pay a higher charge if you want your transaction to be a priority with swift payment; the regular payments could be done at a much cheaper rate as it is not time-critical, and this might cause delays and failed payments.
Conclusion
In summary, making payments using Bitcoin online can be convenient, secure, and faster. Make sure that your wallets and private keys are safe by using two-factor authentication, and keep on updating to the latest software possible. You should also keep a backup of your wallet’s recovery seeds or private key for a just-in-case scenario. Always Try to stay informed on the news on bitcoin trends and market prices. The future of Bitcoin as a method of payment is increasing day by day.