Cryptocurrency is a digital form of payment that uses virtual coins or tokens. The best-known example is Bitcoin, but there are now many other types of crypto such as Ethereum and Litecoin.
In recent years there has been much more of a buzz around cryptocurrency and lots of attention in the media. There are a growing number of people investing in crypto and more companies are beginning to accept it as a payment method.
For example, some online casino sites now accept cryptocurrency payments, and players and casinos using this method see it as a secure and convenient way for players to submit their deposits to the casino account or withdraw their winnings.
However, cryptocurrencies are yet to be widely accepted across the majority of online casinos or other types of online businesses and retailers. Site operators and consumers accept that there are both advantages and disadvantages or risks to using it.
What are Some of the Biggest Advantages of Using Crypto Payments?
▶ Less Expensive Transaction Fees
Using the blockchain, cryptocurrency allows vendors to cut out the use of intermediaries such as banks. Banks and third-party payment providers like PayPal charge a transaction fee for each payment, this is usually a percentage such as 4 percent.
While some cryptocurrency providers may charge their own transaction fees, these are generally much lower than what a bank or other intermediary would charge. This saves the business a significant amount of money over time and they may choose to pass this benefit on to customers through competitive pricing and generous promotional offers.
▶ Quick and Straightforward Process
Cutting out these intermediaries can also help make the transaction process quicker and simpler. When making a crypto payment using a currency like Bitcoin, the individual or business transfers the digital currency from one digital wallet to another.
To do this no special equipment is required, just the smartphone or computer device they usually use to go online. The benefit of this for online businesses is that less customers will abandon their purchase or transaction during the checkout process, this can happen when a customer runs out of time or faces difficulties filling out the information required.
▶ Possible to Trace the History of Blockchain Transactions
When using Bitcoin, every cryptocurrency transaction is recorded on a sort of public list known as the blockchain. This means that there is the possibility of tracing the history of the currency to ensure it isn’t being used by someone that it doesn’t actually belong to.
This gives the customer and business some reassurance and acts as a deterrent against criminal activity such as theft or fraud. While different cryptocurrencies work using different processes, businesses can always select which type of crypto payments they will accept and stick to those using blockchain technology like Bitcoin.
That being said, the use of crypto payments also gives the individual some level of anonymity. Using a digital wallet does not require handing over so many personal details and means the bank cannot see a record of the transactions you have made with this type of payment method.
This is appealing to those that wish to preserve their privacy or do not trust how other intermediaries will use their sensitive data.
What are some of the biggest disadvantages or risks of using crypto payments?
▶ High Volatility Can Lead to High Losses
Volatility can in fact be seen as both a positive and a negative from a financial investment point of view. On the one hand, high volatility can mean you make a large loss if the value of the crypto coin drops significantly while in your possession. It can be hard to predict the crypto market.
However, on the flip side, if the value increases there is the potential to make great profit from accepting crypto payments. It is all about how much risk you are willing and able to accept and what contingencies you have in place if the market isn’t what you expected.
When storing the cryptocurrency remotely there is the risk that the coins could be stolen from the digital wallet or the provider could be breached by criminal cyber gangs. You do not have the same amount of protection you receive when your funds are stored securely in the bank.
Although, credit and debit card theft and fraud is still prevalent so there is no real way of completely mitigating this risk.
▶ Vulnerable to Scam ‘investments’
There are scam sites and social media pages out there that convince their followers to invest in scams that do not provide the returns that they boast about. This is a particular issue for those with little understanding of crypto and those unable to spot internet scams where they exist.
▶ Lack of Widespread Acceptance
Lastly, not many mainstream sites accept crypto yet so if you only wish to use this payment method you could be limiting yourself, at least for the time being.