For decades, researchers had been striving to create a reliable digital currency that could function independently without the need for a central intermediary. Satoshi Nakamoto’s publication of the Bitcoin whitepaper in 2008 marked the first successful implementation of cryptocurrency as a peer-to-peer electronic cash system. Since then, blockchain technology has evolved to encompass a wider range of use cases, including smart contracts platforms like Ethereum.
The increasing popularity of digital currency has led to the development of central bank digital currency projects, which aim to provide governments with an alternative to physical money. Besides governments and central banks, cryptocurrency payment gateways are becoming increasingly more integrated in the banking industry, e-commerce checkouts and day-to-day transactions between common people.
Cryptocurrency Payments Come with Many Advantages
Cryptocurrency payments offer a significant advantage in that they operate on a peer-to-peer basis, eliminating the requirement for intermediaries and resulting in reduced transaction costs. In contrast, credit card providers often charge fees as high as 3.5%, while utilizing blockchain technology allows for transactions to be conducted at a fraction of that cost.
The removal of intermediaries enables the swift settlement of payments via blockchain, with transactions taking mere minutes or even seconds. This is a significant improvement compared to the protracted processing times associated with traditional retail fiat payments, which can often take days or even weeks to be finalized.
This increased benefit is why more online casinos continue to integrate cryptocurrencies in their payment scheme, and one of the reasons why the online gambling industry has soared to the multi-billion dollar industry that it is today. Traditionally, online casinos have relied on credit cards as the main payment gateway. The issue is, new members can’t use credit cards right away in an effort to prevent fraudulent activities. Furthermore, not every bank supports online casinos, so there is no guarantee that their credit or debit card payments will be honored at online casinos.
Also, to use credit cards, you need a bank account. Moreover, the absence of middlemen allows individuals to avoid the necessity of holding accounts with financial establishments. As per the FDIC, a significant number of individuals in the United States alone opt not to possess a bank account due to the overall lack of confidence in banks, exorbitant fees, concerns regarding privacy, or simply because they may not possess sufficient funds to meet the minimum requirements for an account.
Outside of funding a crypto wallet, cryptocurrency doesn’t need a financial institution, and the transactions exhibit a high level of security as they are verified by a global network of computers known as nodes, and their details are permanently recorded on the blockchain’s ledger. The decentralized nature of the node network also serves as a safeguard against potential hacks and malicious attacks that could compromise transactions or personal information.
How Crypto Payment Gateways Work
There are two choices available for merchants who wish to accept cryptocurrencies. The first option is to establish a wallet for managing payments manually, which is the most cost-effective method but requires some level of expertise and complexity. The merchant may have to take responsibility for safeguarding their own crypto, which may necessitate the use of several wallets and the maintenance of appropriate private key security. Furthermore, this approach necessitates the use of an exchange or other third-party to convert crypto into fiat if necessary.
Payment gateways have become a viable solution for merchants to accept cryptocurrencies and address the difficulties associated with handling payments directly. By paying a fee, merchants can utilize payment gateways like BitPay, Coingate, or Coinbase Commerce, which provide them with a crypto address for their payment portal. These gateways can also facilitate conversions into fiat currency and even offer custody services for merchants who opt to accept digital currency payments. Furthermore, payment gateways frequently extend their assistance to merchants by providing additional support in administrative tasks like invoicing and tax reporting.
