What Is a Bitcoins Payment Processor?
If the above two questions and replies to sound as if you, than you’re making a major mistake. You really ought to immediately begin accepting only Bitcoin as a means of payment. For the uninitiated, Bitcoin IS the widely accepted currency of the web, and it’s rapidly gaining wide acceptance worldwide. But most importantly, it’s fast becoming the only viable payment bitcoin payment processor mode on the net. Not only because of its overall reliability, security, speed, and low costs, but mainly because it is a completely transparent system, the only one with complete fungibility and the only one able to be traced across the globe by law.
But you probably aren’t well versed with how your personal and business finances work. That’s fine. I’ve been through the whole learning curve, too, all those years ago when I first got involved in online investment and trading. The one thing I didn’t know then was that there were several different ways to make secure, safe, instant transactions at the click of a mouse, including PayPal and even bank account debit cards. And just a few short months ago, we discovered the most revolutionary new technological innovation to come along in decades: the bitcoin wallet.
At the time I’m telling you this, I suppose I shouldn’t be surprised. After all, if you haven’t heard of the bitcoin revolution, you’re living life under a rock. But let’s fast forward to the present, where several prominent financial figures, from Jamie Dimon, Warren Buffet, Peter Thiel and others are starting to realize just how convenient, secure, speedy and cost-effective accepting payments via bitcoins is going to be for businesses both large and small.
So what’s so special about accepting payments via bitcoins? In fact, it’s rather simple. First of all, the entire infrastructure for doing so is already in place, although it’s taken some time for it to get here. That includes a variety of companies that function as merchant account providers that help make the whole process work.
The way it works is simple enough. What happens is that merchants who want to start accepting bitcoins must first open up an account with a special type of virtual payment processor called a bitcoin payment gateway. A payment processor will perform all the background work for both parties, protecting both sides of the transaction from hackers (who would try to break into the account) and ensuring that both parties can agree on a fixed exchange rate for the transfer of funds.
Once that’s done, the merchant has the option of either going through a private network called an alfacoin (also called a Litecoin) or through the main bitcoin network. He then gives his users — who have come to him via his website — an account number or an account name. When they wish to buy alfacoins or transfer them to their local wallets, they simply provide this information and a series of other variables which will be transformed into actual money by the payment processor. At that point, the transaction fee, which applies to all transactions, the buyer’s transaction fee plus the seller’s transaction fee will apply. This is done on a regular basis until all coins in a given account are sold.
The advantage of these bitcoins is two-fold. First, they are not widely used yet and there are plenty of companies working on developing better alternatives. Second, since the prices are unstable and subject to change every day, the prices of bitcoins are slowly but surely converging with those of traditional money like US dollars. This is where the major difference comes in for merchants. With a traditional payment processor, they have to worry about how one currency is going to do against another in the future. They have no such worries when they use an bitcoins based merchant account.
However, even though bitcoins are slowly becoming more common, they are still not widely accepted everywhere. There are still countries like Russia and China, which don’t accept any kind of payments based on bitcoins. This is why a lot of companies are still accepting US dollars as their only form of online business transactions. But as more businesses see the advantages offered by using a gateway to receive money from an internet transaction, the trend to go with a bitcoins based system is growing. For merchants that decide to go with this solution, they will be able to reduce their risk by accepting only unconfirmed transactions from a trusted source. This gives them better peace of mind that they can carry on making good business transactions without much interruption.