Satoshi Nakamoto developed the first decentralized cryptocurrency called Bitcoin (BTC) and called it a “peer-to-peer electronic money system”. According to Bitcoin’s white paper, online payments can be made directly from one party to another without going through a banking institution, a peer-to-peer version of electronic cash.
However, apart from being used as an investment vehicle or store of value, Bitcoin can be used to pay for goods and services. Similarly, other cryptocurrencies such as Dogecoin (DOGE) can be used to pay online with cryptocurrency.
This article will discuss how to pay in cryptocurrency, how to spend Bitcoin on everyday purchases, and different ways to use your cryptocurrencies to pay for your cell phone, gas, or groceries.
How to pay with cryptocurrency?
First, you need to get a cryptocurrency like Bitcoin to start paying with cryptocurrency. Exchanges like Coinbase and Binance allow users to exchange fiat currency for currency (or vice versa) and keep their private keys safe. However, if you don’t trust third parties for your private keys, self-control can be an alternative.
The next step is to register for the wallet of your choice to pay your bills directly from your crypto wallet. From hardware to software, and from the web to paper wallets, there are many options for sending payments in cryptocurrency. As mentioned above, cryptocurrency exchanges also offer wallets to store private keys on behalf of their users. However, make sure that the wallet you choose is compatible with your chosen cryptocurrencies.
Finally, check with your utility provider to see if you can use cryptocurrencies to pay your bills. As merchants embrace blockchain technology, many businesses have already begun accepting payments in cryptocurrencies. For example, Amazon Cardano (ADA) supports BTC and Ether (ETH) payments. Using a payment processor (ie, an online crypto payment gateway) like BitPay, companies can open a business account and start receiving ETH through its application.
What bills can I pay with crypto?
Users can use cryptocurrencies to pay for everything from mortgage or rent payments to phone, electricity and internet bills. For example, they can use crypto debit cards offered by payment processors to convert cryptocurrency to fiat to pay a mortgage, since most banks still don’t accept it as a payment method, so they won’t be able to pay rent or mortgage directly using cryptocurrencies.
Companies like AT&T allow customers to pay their mobile bills using cryptocurrencies. Similarly, some municipalities are also starting to accept payments in BTC, ETH and others. In addition, you can pay gym memberships, student loans, electricity and credit card bills directly using a crypto wallet or crypto debit card.
When choosing to pay in cryptocurrencies, it is important to check whether your jurisdiction of residence treats them legally or not. For example, Switzerland recognizes cryptocurrencies as an asset class, which means Swiss residents can transact with crypto. But, on the other hand, since 2019, China has officially banned cryptocurrency exchanges. That is, if it is not considered a legal form of payment in your country, avoid transactions with cryptocurrencies.
Can you pay bills with Bitcoin?
Many businesses accept BTC as a payment method, including Microsoft, Wikipedia, Travala, Shopify.com and others. For example, Xbox gift cards that can be used to shop online at the Microsoft Store, Windows, and Xbox can be purchased through Bitcoin platforms. There are several types of cryptocurrency-based payment methods for paying bills with cryptocurrency, as discussed in the subsections below:
Bitcoin debit cards
Bitcoin debit cards are like prepaid debit cards issued by a bank and can be loaded with cryptocurrency to pay bills. When using a Bitcoin card at a merchant location, stored BTC or other cryptocurrencies are converted to any fiat currency to complete crypto payments for purchases.
In addition, any fiat currency supported by the card can be withdrawn from ATMs using a Bitcoin debit card. To apply for a Bitcoin debit card, users must create an account with an exchange that issues such cards and register for a digital wallet. In addition, users must undergo a Know Your Customer (KYC) verification process to comply with Anti-Money Laundering (AML) regulations.
So where can you use a Bitcoin debit card? In cooperation with major credit card services such as Visa and Mastercard, Bitcoin debit cards are issued that can be used for both online and offline purchases. For example, the Shift Bitcoin Debit Card allows users to link their existing accounts and make purchases anywhere Visa is accepted, making BTC as simple as spending dollars and cents. Similarly, anywhere Mastercard is accepted, users can use their BitPay card to start paying bills with cryptocurrency.
In addition, some cards support cryptocurrencies as well as fiat currencies and charge cardholders to convert BTC (or any cryptocurrency) into a foreign fiat currency. Despite these perks, that’s not to say Bitcoin debit cards don’t have their downsides. For example, cyberattack risks arise when a debit card is transferred from a wallet to a service provider.
Bitcoin powered bill payment services
In addition to Bitcoin debit cards, payment companies such as Coinsfer in the US accept BTC to pay for subscriptions, accounts and products on behalf of their customers. Buyers need to send links to the products they want to buy using cryptocurrency, and then Coinsfer provides them with the full order value (including shipping). After Bitcoin payment by customers, Coinsfer pays for the order which they can track.
Direct Bitcoin payments
When shopping online or offline, ask merchants if they accept BTC or read their website to clarify. Various companies you can pay with Bitcoin include Microsoft, Whole Foods, Overstock, Virgin Airlines, and Save the Children, among others. Paying directly to merchants that accept BTC eliminates conversion and service costs. In addition, it reduces the steps one has to go through if choosing a bill payment service.
In addition, some US states, such as Colorado, have begun accepting BTC for tax payments via PayPal, allowing residents to make direct payments in Bitcoin. Also, after Bitcoin became legal tender in El Salvador, McDonald’s and Starbucks began accepting BTC as a form of payment.
Advantages of using cryptocurrency to pay bills
Due to the pseudonymous nature of cryptocurrencies, their finances can be managed without government control. However, if users choose to do so, the data can be accessed via the wallet address. Plus, you can pay their invoices directly using a peer-to-peer blockchain network, using cryptocurrencies (where applicable).
In addition, all you need is an active internet connection to pay with cryptocurrency anywhere in the world. In addition, unbanked or low-income people can buy crypto loans or make payments in BTC, ETH, DOGE and others on markets that support cryptocurrencies.
Disadvantages of using cryptocurrency to pay bills
Blockchain networks charge transaction fees for accepting and paying invoices in cryptocurrency, and one may want to avoid such costs. Moreover, in some countries, cryptocurrencies are not regulated, which means that if funds are lost, they cannot be reclaimed. In addition, since cryptocurrencies are highly volatile, users may have to pay large bills if prices rise or if prices fall, there may not be enough cryptocurrencies.
The private keys and keyphrases that provide access to users’ funds are their responsibility – if they misplace them, there’s no way to get them back. In addition to losing your keys, a drop in the price of your stored cryptocurrency can result in financial loss. Moreover, a trade completed using cryptocurrencies cannot be reversed as it is recorded on the blockchain except in scenarios such as a mistake or error and the buyer willingly wants to transfer the money back.