Cryptocurrencies have reached mainstream adoption worldwide. The benefits of the underlying blockchain mechanisms have been established across multiple industrial domains. The BFSI sector has witnessed the most integration. In less than 10 years, the digital asset economy has crossed a trillion dollars of market capitalization. A crypto payment processor facilitates enterprises to leverage business growth opportunities that stem from the rising popularity of digital assets.
To figure out what crypto payment processors do, it is necessary to understand what cryptocurrencies are. In short, a cryptocurrency is a digital currency having no physical existence. Crypto transactions are verified using cryptography and stored in a decentralized ledger having no central authority. Bitcoin is the most popular cryptocurrency, followed by Ethereum.
Crypto payment processors are blockchain-powered software solutions that allow users to process digital asset transactions across a website. The technological product facilitates crypto asset transfer between two parties in return for negligible processing fees. Crypto payment processors are generally categorized into two types: Custodial and Non-Custodial.
Several crypto payment processors offer additional preference features such as choosing the local fiat currency if needed. Both the sender and the recipient conduct the transaction in cryptocurrencies. The receiver can convert his crypto assets afterward to fiat denominations.
2021 has been a historic year for cryptocurrencies with Bitcoin and Ethereum setting new highs above $69k and $4.7 k respectively. In addition, the year also witnessed cryptocurrencies gaining legal status across multiple nations that witnessed their potential as investment tools. Major financial institutions and banking corporations all around the world have already invested significantly in crypto assets, driving their market capitalization to a peak of nearly $3.0 trillion.
Nations like El Salvador made headlines by anointing legal tender status to Bitcoins, in addition to the US Dollar. The event put the spotlight on a previously neglected aspect of crypto adoption, triggering a financial revolution with both countries and influential global organizations taking notice. Notable examples include Tesla, Visa, MasterCard, PayPal, and more.
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Business enterprises and entrepreneurs willing to transact in crypto for competitive advantage may get confused between crypto payment processors and gateways. After all, both allow merchants to receive payments in crypto for products sold or services rendered. However, there is a subtle difference between the two.
A crypto payment processor facilitates transactions between the customer and the seller merchants directly. An example may include e-commerce websites accepting crypto payments. On the other hand, a crypto payment gateway offers merchants a platform to receive digital asset payments.
Once the necessity of a crypto payment processor is substantiated, it is essential to draw out the pros, cons, and customs requirements of the product (if any). Research is a critical step prior to any investment, and the following parameters must be considered before closing in on the purchase.
The relatively short age of cryptocurrencies contributes heavily to their volatility. It is common knowledge that crypto asset valuations are susceptible to influencer shoutouts and dumping by large-scale investors. The volatility plays a significant role during crypto payment transfers. To prevent wild-swinging crypto valuations, it is better to complete all payment processing as early as possible.
As countries around the world race to complete their crypto regulatory framework, taxation remains a significant issue. Some nations are debating the ideal tax amount, while others are busy setting the groundwork for crypto taxation. The associated earnings amount to a fractional commission, but it is essential that one’s assets remain uncompromised.
As explained above, blockchain powers crypto payment processors, offering its inherent decentralization features that allow a user to safeguard their assets in secure crypt wallets, away from prying gaze. It must be realized that the keys are a crucial cog in the crypto payment transfer process, where the funds transferred remain uninsured. Payments in crypto are final in nature.
After all, cryptocurrency was developed to be a working alternative to the existing central bank-backed fiat currency system following the Great American Depression of 2008-09. The global increase in crypto adoption has also contributed to a surge in cybercriminal activities. Hackers often target small or medium-sized network projects, extorting and stealing huge amounts of user funds. Popular blockchain networks like Bitcoin and Ethereum are still somehow traceable, evident from how law enforcement agencies recovered stolen ransomware in the Colonial Gas Pipeline incident and the FancyCat Saga.
Crypto transactions have become an efficient method of payment settlement between merchants and their customers, especially online. An eCommerce merchant will find crypto transactions convenient, swift, secure, and profitable- with processing charges much lower than the traditional bank methods. The best suggestion would be to opt for the reputed global names in crypto payment processors and other blockchain solutions such as HashCash Consultants to rest assured in terms of high-performance, security and hassle-free transactions.