Bitcoin, a decentralized virtual currency that enables one to buy, sell, and exchange without intermediaries like banks. Bitcoin was invented in 2008 by an undisclosed person using the name Satoshi Nakamoto but its use started in 2009 after its implementation was declared an open-source software. The motive behind its invention was to provide “an electric payments system based on cryptographic proof instead of trust”. These transactions are calculational impractical to undo, thus protecting the seller from fraud and an escrow mechanism that comfortably protects the seller-buyer. With over 5,000 known cryptocurrencies, Bitcoin is the best-known cryptocurrency in existence today.
Bitcoin payments gateway is an online payment platform that permits merchants to accept or receive payments arrangement in bitcoin, most payment processors support the selling and buying of bitcoins. Since the cryptocurrency market is highly volatile, businesses are advised to liquidate all the payments made in bitcoin as soon as possible to avoid possible losses. In December 2017 the price of bitcoin fell from $ 20,000 down to a figure below $ 6,000 registering a 45% decrease. Payment processors provide a smooth immediate transfer of bitcoin into a fiat currency, they aid merchants in the automation of payments and provide a platform of other instruments to aid the entire process to be as convenient as possible.
Bitcoin payment processing consists of steps on how transactions happen from the spenders to receivers in exchange for goods and services. This means that anyone who registers for bitcoin merchant services can easily start receiving payments as bitcoin from customers through any transaction mediums available across the globe. The steps as follows:-
- The customer selects bitcoin as the mode of payment (on the web, in-app).
- They transact the amount with a fixed exchange rate that is applicable at that particular moment.
- The bitcoin payments gateway quickly converts the obtained bitcoin into a currency of choice avoiding the volatility risk. However, Merchants can decide to keep the bitcoin as they are instead of converting them to a fiat currency
- The changed currency gets credited to your preferred bank account at an agreed frequency when the account reaches its limits.
The bitcoin payments gateway sends all required information in a secure protocol to the blockchain network so that the transaction can be verified and documented on the public ledger. Verification is made by miners who add the transaction to the blockchain, the miner is rewarded with a bitcoin miner fee. Most bitcoin wallet has a bitcoin miner in every outgoing transaction, the bitcoin miner rate might be high due to rise in the bitcoin network and little bitcoin network space. Bitcoin has brought a new face in online business and payments, some of these merits are:-
- Has a lower transaction rate compared to standard credit card payments?
- It provide a borderless payment system, which has enabled the flawless transfer of bitcoin from any place across the world, its availability on both computers and phones has made it acceptable by merchants in many countries in their convenient currencies
- Its payment gateway system maintains a transparent exchange rate between bitcoin and fiat currency.
- Its services provide merchants with the opportunity to trade globally, creating the reliability and authenticity of bitcoin for it is safer, more transparent, and highly dependable for payment.
- Bitcoin payment gateway system has an end-to-end focus, this means that one can send and receive payments from any place and network in the globe without the need for approval from external sources/ authority.
- Bitcoin transactions are discreet, unless a bitcoin user agrees to share or publish his transactions, his transactions are never connected to his identity. This is unlike other online payments where one is traced back to him.