Cryptocurrency as a currency is gaining global popularity these days. Everyone is aware of the terms cryptocurrency and blockchain even though most do not understand the concept behind it.
But how does the payment of such currencies work?
Let us see how the payment methods of cryptocurrency have evolved over the years.
PC Based Program:
On the 12th January of 2009, the pseudonym Satoshi Nakamoto tested the newly-launched system of Bitcoin by sending 10 Bitcoins to the cryptocurrency pioneer, Late Hal Finney. This transaction took place via a PC-based program that was specifically developed to handle Bitcoin transactions. The method was similar to how we share a file on mail but using a more secure underlying network.
While the Bitcoin was moved between the early adopters of digital wallets, it wasn’t until 2010 that the first purchase occurred using Bitcoins. On 22 May 2010, early Bitcoin adapter Laszlo Hanyecz used 10,000 Bitcoins to get two Papa Johns Pizzas delivered to his home. These pizzas are considered the costliest pizzas to date with the 10,000 Bitcoins amounting to more than $58 million now. However, these valued only $40 at the time of this transaction.
This date is celebrated every year as the Bitcoin Pizza Day.
Cryptocurrency Payment Processors:
This method came into existence when we majorly required fiat currencies to buy cryptocurrencies. A payment processor similar to PayPal utilized e-commerce platforms and other online retailers to accept payments in Bitcoin and other cryptocurrencies.
One of the first payment processor still in use is BitPay. It is an American platform founded in the year 2011. Within a year of its inception, BitPay was able to get more than 1,000 retailers onboard. By signing up with BitPay, the merchants were able to add Bitcoins as a possible payment method for its customers.
Acceptance of Crypto Payment Benefits :
After BitPay, several new Payment Processors came into the market. These platforms accepted the numerous benefits over traditional payment methods that cryptocurrency payments offered. These benefits include the unparallelled security of cryptocurrencies that make it securer than other digital payment methods, lower transaction fees due to the usage of blockchain and a borderless capability that allowed payment throughout the global.
These features of cryptocurrency payment were widely accepted that became a part of the Crypto Payment Evolution.
Even after such features and capabilities, there was still suspicion and downright distrust among people about its risks and security. This perception was turned around by several known brands adopting it as a payment method.
Adoption by major companies
The first notable client for cryptocurrency payment was WordPress, which started accepting crypto payments by the end of 2012. It signed up with BitPay to add cryptocurrencies as a payment option. In 2014, Microsoft became the first company of its size to accept crypto payments for Xbox Games and Windows Apps.
Back in 2014, PayPal partnered with platforms like BitPay, GoCoin, and CoinBase to accept Bitcoin for selected digital commodities such as video games and music.
Today, however, it is common to see major online platforms accepting cryptocurrencies as a method of payment. After Bitcoin, several merchants have started accepting other cryptocurrencies like Ethereum and Litecoin as well.
The main challenge is to bring crypto payments to offline stores and merchants. Taking it as a challenge, various companies are working on innovations that will make payments in physical and offline stores easier and more adaptable.
In short, with the increasing adoption of Cryptocurrencies as a method of payment in online platforms, the day is not far when these will be used as a replacement of fiat currencies in our daily life.