Blockchain technology is a revolutionary technology that has enabled the borderless transaction of digital value through a new form of currency called cryptocurrencies, or crypto for short.
With this young technology entering into the market that clearly had its share of benefits over traditional forms of currency, it was only a matter of time before cryptos replaced fiat currencies, or so a lot of people believed.
However, this was not the case, and the rate of adoption of cryptos in the retail market was dramatically slower to what it was originally anticipated to be. This is because of some of the challenges that come with accepting cryptocurrencies as payment.
Although the rate of adoption of crypto as a payment method is slow in the retail market and there are some challenges to accepting crypto, some companies and online stores have started accepting the largest crypto by market cap, Bitcoin (BTC).
What is Bitcoin (BTC)?
Bitcoin (BTC) is a virtual crypto that is designed to act as money and a form of payment that is outside the control of a single person, entity, or group. This therefore removes the need for a third party intermediary to mediate financial transactions.
Instead, the network relies on miners who maintain the network by processing and validating transactions that take place on it. For the work that these miners do, they are rewarded in crypto native to the blockchain. This reward comes mainly from transaction fees that people transacting on the network pay when using the network.
Bitcoin was introduced to the public in 2009 by an anonymous developer or group of developers using the name Satoshi Nakamoto. Since then, Bitcoin has become the leading cryptocurrency in terms of recognition across the globe.
Following the launch and success of Bitcoin, many other cryptos followed suit and either attempted to compete directly with the Bitcoin network to replace it as a form of patent, or attempted to be a utility or security token in other blockchains and emerging financial technologies.
Bitcoin’s Blockchain Technology
Cryptocurrencies rely on its underlying technology: blockchain technology. A blockchain is a distributed ledger, which can also be thought of as a shared database that stores data. All information and data stored on the blockchain is secured by various encryption methods.
When a transaction takes place on the blockchain, information from the previous block is copied to a new block with the new data, and is then encrypted. Each of these transactions is verified by validators that are referred to as miners in the network.
When a transaction is verified, a new block is opened and a Bitcoin is created. This Bitcoin is ten given as a reward to miners who verified the data within the block.
To ensure that all of the information on its blockchain is secure, Bitcoin uses the SHA-256 encryption algorithm to encrypt the data stored on the blockchain. Simply put, transaction data that is stored in a block is encrypted into a 256-bit hexadecimal number. That number contains all of the transaction data and information linked to the blocks before that block.
Transactions are placed into a queue to be validated by miners within the network. All of the miners in the network all attempt to verify the same transaction simultaneously. The mining software and hardware work to solve a nonce, which is a four-byte number included in the block header that miners are attempting to solve.
The block header is hashed, or randomly generated by a miner repeatedly until it meets a target number specified by the blockchain. This block header is then solved and a new block is added for more transactions to be encrypted and verified.
Bitcoin As a Payment Method
Bitcoin is by far the most popular cryptocurrency of all, and more and more people are investing in digital currency. As a result, Bitcoin is starting to become a widely accepted payment method. The payment technology is developing and companies from across the globe are starting to accept Bitcoin.
Although altcoins are expanding their growth, BTC is the most-used payment method for companies and small merchants.
Companies That Accept Bitcoin
Let’s take a look at some of the businesses that accept Bitcoin. Some of these companies were early adopters of the digital currency, while others only started accepting BTC payments recently.
Microsoft
First on the list of companies that accept Bitcoin is Microsoft, which is one of the early adopters of BTC. They started accepting BTC as a form of payment all the way back in 2014. Using BTC, users could buy games and applications with digital currencies. Unfortunately, Microsoft stopped accepting digital currencies in 2016 and again in 2018 due to the high volatility.
Home Depot
Among the stores that accept BTC is one of the largest hardware store chains in the United States, Home Depot. Customers are able to pay in the market leading crypto, but the currency gets converted into U.S. dollars immediately. This is because Home Depot only wants USD on their balance sheets.
Twitch
Twitch, the streaming video platform, also began accepting BTC as a form of payment in 2014, but they silently stopped doing so in 2019. Although there are a lot of pros to using BTC as a payment method, the digital currency’s value is not stable enough for everyone.
A year later, the platform reintroduced BTC payments and also added support for Ether (ETH), and less popular cryptos such as PAX, USDP, and Binance USD (BUSD).
Whole Foods
The supermarket company, Whole Foods, has made its possible for their clients to pay with Bitcoin, similar to Home Depot. The technology behind the store concept converts digital coins directly into USD.
Whole Foods recently upgraded to the Spedn application so that users can now also purchase food groceries using Bitcoin, Litecoin (LTC), and a handful of other cryptos.
Gyft
The gift card company, Gyft, enables users to buy, send, as well as redeem their online gift cards for retailers and platforms such as Starbucks, Amazon and Sony Playstation. As a user, you can execute every transaction using Bitcoin, and so much more, without any additional fees.
It’s a simple process on the site. All you have to do is choose the desired gift card, select BTC as the preferred payment method, and then use your crypto wallet to send the payment.
Benfica
Benfica, a popular sports brand, officially known as Sports Lisboa e Benfica, accepts BTC payments from their customers. Users are able to purchase everything from merchandise to tickets for games using digital assets.
The cryptos supported by the platform are BTC, Ether, and UTRUST tokens. Accepting cryptos as a form of payment, the company is able to attract tech-savvy supporters and make it easier for them to buy sporting goods abroad.
Save the Children
Save the Children is the biggest and first international NGO that started accepting donations in BTC and other cryptos in 2013. Their slogan is “HODLhope”, and they strive for the right for kids to be healthy, educated, and protected.
Virgin Airlines
The founder of Virgin Airlines, Richard Branson, has continued his innovative streak by getting his companies, Virgin Airlines and Virgin Mobile, to start accepting Bitcoin payments from their customer base. In addition to this, users are even able to pay for space travel with the largest crypto by market market cap.
Seeing that cryptos such as Bitcoin and others are often regarded as the finance of the future, it makes sense that the future of travel will team up with digital assets. For 16 BTC, you can purchase yourself a trip with Virgin Galactic, which will take you to an altitude of more than 50 miles.
Overstock
Overstock is one of the Bitcoin vendors that accepts the digital currency as a payment option and holds BTC. Overstock is a tech-driven retailer that visualizes dream homes for all.
This is now the fifth year in a row that this big e-commerce player accepts Bitcoin, as well as other cryptos such as Ether, Litecoin, Dash, and Bitcoin Cash.
How Do You Use Bitcoin?
Now that you know which stores accept Bitcoin as a form of payment, let’s take a look at how to get started with BTC so that you can start purchasing items with the digital currency.
How To Buy BTC
Cryptos are decentralized by nature. What this means is that you cannot buy them at a traditional bank or an investing firm. It’s part of the upcoming regulation plan to make this possible, but at the moment users have to purchase digital coins on a crypto exchange.
How a Cryptocurrency Exchange Works
The basic premise of a cryptocurrency exchange is to connect cryptocurrency buyers with cryptocurrency sellers. At the center of every exchange is an order book. This order book is responsible for storing buy and sell orders as well as connecting buyers and sellers with each other.
To connect buyers and sellers as efficiently as possible, a cryptocurrency exchange implements a series of algorithms in the order book that match buyers and sellers using specific order criteria such as which cryptocurrency token or coin is used in the trades, the quantity of cryptocurrency in each order, and the price specified in each order.
Once a buyer and seller are connected by the order book, the account linked to the sell order is credited with the buyer’s fiat currency from the order and the account linked to the buy order is credited with the seller’s cryptocurrency from the order.
An exchange can either be centralized or decentralized. Let’s now analyze the key differences between the two types of cryptocurrency exchanges.
Centralized Exchanges Defined
Centralized cryptocurrency exchanges are exchange platforms where the users’ keys and funds are stored and secured by a third party.
Centralized exchanges account for a very large portion of the trading volume in the market as centralized exchanges are the only cryptocurrency exchange platforms that facilitate the exchange between fiat currency and cryptocurrency – allowing users to exchange from fiat currency to cryptocurrency and vice versa.
Many centralized exchanges also provide support for the exchange from one cryptocurrency token or coin to another, although the number of available cryptocurrency-to-cryptocurrency pairs is usually limited on a centralized exchange platform.
Decentralized Exchanges Defined
Unlike a centralized exchange that is owned by a third party, a decentralized exchange is completely peer-to-peer. Meaning, transactions between buyers and sellers are not facilitated by a third party – as is the case in a centralized exchange.
Also, users do not need to hand over control of their funds and keys to a third party and are completely responsible for the safety and security of both. Decentralized exchanges can only facilitate the exchange from one cryptocurrency token or coin to another, and cannot facilitate the exchange between fiat currency and cryptocurrency.
As such, decentralized exchanges lack liquidity since the majority of cryptocurrency trading is from a fiat currency to a cryptocurrency and vice versa.
Pros of Centralized Exchanges
User Friendly
Centralized exchanges offer beginner investors a familiar, friendly way of trading and investing in cryptocurrencies.
Centralized exchanges remove the need of having to interact with cryptocurrency wallets and peer-to-peer transactions to execute a cryptocurrency swap – which can be relatively complex for cryptocurrency newcomers.
Instead, centralized exchanges give users a simplified, user-friendly cryptocurrency swap option as they can just log into their account on an application or a website to view their accounts and their account balances, as well as make transactions.
Reliable
There is an additional layer of security and reliability around transactions and trading when looking at centralized cryptocurrency exchanges. This is because transactions are facilitated through a developed, centralized platform which offers the user high levels of comfort.
Cons of Centralized Exchanges
The Risk of Being Hacked
Centralized exchanges are responsible for securing and holding customer funds. In the case of a very large exchange, the collective client funds held by a platform can be up to billions of dollars worth of cryptocurrency – making them a target for hackers and theft.
Transaction Fees
Centralized exchanges often charge high transaction fees for the services and degree of convenience they offer users. These fees can be fairly large when trading large amounts of cryptocurrency.
Pros of Decentralized Exchanges
Mitigated Risk of Being Hacked
When using decentralized exchanges, users do not need to transfer their funds to a third party before executing a token swap. This eliminated the risk of a company being hacked and the user’s funds being stolen – ensuring users that they have a greater degree of safety from hacking and theft.
Preventing Market Manipulation
Since trading in a decentralized exchange is peer-to-peer in nature, decentralized exchanges prevent market manipulation – protecting users from wash trading and fake trading.
Anonymity
Users do not need to fill out know-your-customer (KYC) forms when using decentralized exchanges. This offers the user privacy and anonymity that they may not get when using a centralized exchange platform.
Cons of Decentralized Exchanges
Complexity
Users must remember their keys and passwords to their cryptocurrency wallets when using decentralized exchanges. Otherwise their assets will be lost forever and the user will not be able to recover their funds. The user will need to learn and get familiar with the platform and the cryptocurrency swap process.
This is unlike centralized exchanges which offer a more convenient and user-friendly process for users.
Lack of Fiat Payments
Users cannot trade fiat currencies on decentralized exchanges using cryptocurrencies. Due to this, decentralized exchanges are less convenient for users that do not already hold cryptocurrencies.
Liquidity Struggles
Approximately 99% of cryptocurrency transactions are facilitated by centralized exchanges, which suggests that they are accountable for the majority of trading volume in the market. Due to the lack of volume, decentralized exchanges often lack liquidity. It can also be very difficult to find buyers and sellers when trading volumes are low.
List of Cryptocurrency Exchanges
Let’s take a look at some of the best crypto exchanges that you can use to purchase Bitcoin.
Binance
Binance is one of the world’s largest cryptocurrency exchanges, and boasts low fees, access to a vast amount of cryptocurrencies, as well as advanced features for veteran cryptocurrency investors and traders. However, Binance is currently not available to U.S. customers. U.S. customers will have to use Binance.US – a more limited version of the largest cryptocurrency exchange in the world.
KuCoin
Next on the list is KuCoin, which is the 9th biggest cryptocurrency exchange in the world in terms of daily trading volume. KuCoin offers users advanced features, low fees, and a large list of supported cryptocurrencies. Similar to Binance, KuCoin is not licensed to operate in the United States.
Bittrex
Bittrex operates two separate exchange platforms that share liquidity in order to meet the demands of both US and international regulators. The core Bittrex exchange focuses on US customers and offers less cryptocurrency trading options than its Bittrex Global counterpart.
To Recap
Bitcoin is a virtual crypto that is designed to act as money and a form of payment that is outside the control of a single person, entity, or group. Due to the high volatility in crypto prices, including the price of Bitcoin, most retailers do not accept crypto. However, the list of vendors that accept BTC as a form of payment is growing by the day.
