With time, cryptocurrencies are being accepted more and more in this world. These days, we use cryptocurrencies to invest, purchase or sell groceries, gas, and other products and services, and even pay our bills. One of the major drivers for the creation of cryptocurrencies was anonymous transactions and payments.
Bitcoin (BTC) was the first decentralized cryptocurrency that came into existence. The developer, Satoshi Nakamoto, referred to it as “a peer-to-peer electronic cash system .”The white paper of Bitcoin states that one party can make direct online payments to the other party. They would no longer have to go to any banking institution with the advent of this P2P version of electronic cash.
This article will discuss how you can pay bills in terms of cryptocurrency and how you use Bitcoin to carry out your day-to-day purchases. You will also learn how to utilize cryptocurrencies to pay bills like cell phones, groceries, or gas bills.
Stating the obvious, you need to own a crypto asset like Bitcoin, Dogecoin, etc., before you start making payments. You can get hold of these cryptocurrencies through crypto exchange platforms like Coinbase, Binance, Kraken, and Kucoin.
Via these exchanges, you can convert (exchange) your fiat currency into the cryptocurrency of your choice (and vice-versa). However, self-custody might be an option if you do not trust third parties for your private keys.
Once on these platforms, you must sign up for a crypto wallet according to your requirement. You can choose from a variety of available wallets. There are hardware and software wallets; some are web-based wallets, while others are paper wallets.
You can also get wallets from cryptocurrency exchanges that offer wallets to store private keys on behalf of their users. However, one thing you must keep in mind is that the wallet you pick should be compatible with the cryptocurrencies you plan to deal with.
Once everything is in place, you can check with your utility merchant if they accept cryptocurrencies as a means of payment. Over the past few years, the popularity of cryptocurrencies has significantly increased, and more and more merchants are adopting blockchain technology.
With this, several businesses have added cryptocurrencies as a means of payment. One such example is Amazon. The e-commerce giant supports Cardano Bitcoin and Ether payments. Organizations and companies can open a business account through a payment processor (online crypto payment gateway). They can then use the application to receive payments in cryptocurrencies like Ethereum.
Via cryptocurrencies, you can meet several requirements. For instance, you can make mortgage or rental payments and pay for bills of mobile phones, internet, gas, electricity, etc. With the crypto debit cards the payment processors provide, you can convert cryptocurrencies into fiat money to pay the mortgage. This applies to cases when banks do not accept cryptocurrencies as payment methods.
These days, several companies have started accepting cryptocurrencies as a payment method for mobile phone bills. Municipalities also allow users to pay via crypto assets like ETH, BTC, etc.
Apart from this, you can also use your crypto wallet or debit card to pay for gym membership, electricity, credit card bills, student loans, and many more.
Before you think of making payments through cryptocurrencies, make sure you check whether your jurisdiction has legalized cryptocurrencies as a means of payment. While countries like the United States, Germany, the United Kingdom, Denmark, Switzerland, and El Salvador have legalized cryptocurrencies, several other countries have different stands on this matter.
Cryptocurrencies are unregulated in countries like India, Nicaragua, and Ireland. Bahrain, Kuwait, Maldives, Zimbabwe, and other such countries have implicitly banned cryptocurrencies. Then there are countries like China, Egypt, Morocco, Nepal Iraq, etc. have levied an absolute ban on the use of cryptocurrencies.
Some countries have allowed the trading of crypto assets but do not allow the use of cryptocurrencies as a means of payment or banking. Thus, it would be best to avoid making transactions in cryptocurrencies if your country does not consider it a legitimate means of banking or payments.
Several business organizations- big and small have started to adopt cryptocurrencies as a means of payment and transactions. Various giants like Microsoft, Wikipedia, Travala, Shopify, Starbucks, and Amazon readily accept Bitcoin from their users. For instance, if you wish to purchase Xbox gift cards from Microsoft, you can purchase them using Bitcoins.
Let’s take a look at some types of crypto-based payment methods that you can use to make any transaction.
Bitcoin Debit Cards
Bitcoin debit cards work just like any prepaid debit card issued via banks. You can pre-load these cards with cryptocurrencies and pay bills. If you have to use this Bitcoin debit card at a merchant’s location, the Bitcoin or other cryptocurrency in your card (account) will be converted into the required fiat currency to carry out crypto-based payments for shopping.
You can also use an ATM to withdraw any fiat currency that the Bitcoin debit card supports.
If you wish to apply for a Bitcoin Debit Card, check which crypto exchange platform offers such cards, and sign up for a digital wallet of that platform. The platform may require you to undergo a KYC (know your customer) verification process. This is to comply with the Anti-money-laundering regulations.
The platforms that issue Bitcoin debit cards have collaborated with major credit card services like Visa and Mastercard. Due to this collaboration, you can use these cards for both online and offline shopping purposes.
For instance, BitPay has entered into a collaboration with MasterCard. This ensures that the users can use this card wherever a Mastercard is accepted. Similarly, you can use a Shift Bitcoin Debit card wherever the merchants accept Visa.
To add to it, some providers also offer cards that support both cryptocurrencies and fiat currencies. They charge users to convert cryptocurrencies into foreign fiat currency. Keeping the privileges aside, crypto debit cards are not all highs. For example, if you transfer funds from your crypto wallet to the crypto debit card, the chance of a cyber attack relatively increases.
Bitcoin-powered Bill Pay Services
Some bill-pay companies accept Bitcoin from their customers, and on behalf of these users, they pay for subscriptions, bills, and other products and services. All you have to do is send the links to the product or service that you wish to purchase through your crypto assets.
After this, these bill-pay companies will give you the full order cost in return for your crypto asset. When you make the Bitcoin payment to the bill-pay companies, they will use the link you sent to pay for your order, and you can track them.
Direct Bitcoin Payments
Direct Bitcoin payments to crypto-friendly merchants are always one of the options you can use. When you decide to purchase a service or product, ask your merchant if they accept Bitcoin (or other cryptocurrencies) as a means of payment. You can also go through their website to know about this.
Several companies and organizations like Amazon, Starbucks, Microsoft, Shopify, Virgin Airlines, Whole Foods, Save the Children, and Overstock have started accepting Bitcoin as a means of payment.
If you use a direct payment method to pay BTC-accepting merchants, you can get rid of conversion and service charges. Moreover, you no longer would have to go through all those steps that choosing any bill pay service requires.
Some places across the world have started to accept Bitcoin as a means of payment for taxes too. Via PayPal, the residents of these states can make direct payments in the form of Bitcoin. Since El Salvador accepted Bitcoin as their legal tender, Starbucks and McDonald’s have started accepting Bitcoin as a means of payment.
Advantages of Using Cryptocurrency To Pay Bills
There are several benefits of using cryptocurrencies as a medium to pay your bills or make purchases.
- As cryptocurrencies are pseudonymous in nature, you can manage your finances while ensuring that nobody can regulate your money. If you are willing to make pieces of information available, it is possible via wallet addresses.
- You can directly make payments of bills via cryptocurrencies (if the merchant accepts it) using a P2P blockchain network. As a result, you can now keep your money in the form of cryptocurrencies. You no longer have an obligation to get it converted into fiat currencies.
- With cryptocurrencies as your payment medium, you only need an active internet connection to make payments anywhere in the world.
- At marketplaces that support crypto-based payments and banking, unbanked and low-income people can also receive crypto loans or make payments in BTC, ETH, etc.
Disadvantages of Using Cryptocurrency To Pay Bills
While there are several advantages to using cryptocurrencies as a mode of payment, it also comes with certain downsides. Some of the disadvantages of crypto-based payments include:
- If you decide to receive or pay bills in crypto, you will have to pay a transaction fee to the blockchain network, which might be an unnecessary expense for some.
- There are several countries in which cryptocurrencies are not regulated. This means that if you lose your funds in these countries, there is no way you can claim your money back.
- The crypto market is highly volatile. Thus, if the prices slump down, there can be times when you won’t have enough crypto available.
- If you misplace the private keys or seed phrase of your account, you will lose all your funds, and there is no way you will be able to get them back.
- You cannot undo a completed trade as it is recorded into the blockchain network. In case of scenarios where there is an error or a mistake, it is only possible to reverse it if the recipient of the crypto asset is willing to transfer your funds back.