How to Pay With Cryptocurrency (2024)

One of the primary reasons cryptocurrencies were developed was to be used as anonymous payments. This reason is often lost in the hype by media outlets and the financial sector, which are focused on gains, losses, and price fluctuations. Prices are important, but it is more important to know how to pay with cryptocurrency if you're considering using it.

Cryptocurrency is complicated, but using it to pay for something is relatively simple. Here's how and where you can pay with crypto.

How to Make a Payment With Cryptocurrency

At one time, sending a cryptocurrency involved diving into the command line on your computer and programming a transaction. Now, the complex process of sending and receiving crypto is much more simple, very much like using an app to send or receive money to and from your bank account. How you initiate the payment is specific to the application you choose, but generally speaking, here is how it works.

Acquire a Cryptocurrency

It isn't necessary to have an account with an institution, exchange, company, or other entity to acquire a cryptocurrency. However, it is one of the easier and safer ways to use cryptocurrency.

A regulated cryptocurrency exchange will let you exchange fiat money for cryptocurrency. It will also give you some extra features if you need them, such as storing your private keys or helping you with technical issues. A reputable one like Coinbase, Binance.US, Kraken, or Gemini will be able to get you started when you create an account and fund it for your crypto purchases.

Wallet

To make a payment using cryptocurrency, you'll also need to have a wallet application. Wallets can be installed on your computer or mobile devices and act as an interface for accessing your crypto.

Your wallet doesn't actually store crypto; it holds the keys you need to access them—these are your private keys. Your wallet has a public key that is used in transactions; it acts like an email address that is used to send and receive payments.

There are hundreds of wallets available, each with different features. Some are compatible with nearly all cryptocurrencies, while others may only work with a few.

Most cryptocurrency exchanges provide a wallet for their users that lets them transfer funds to other exchange users or make payments using services that are compatible with the exchange's services. Many wallets can use your device's camera to scan QR codes to create unique addresses for sending and receiving crypto. Some even have near-field communication capabilities that let you make touchless payments in cryptocurrency.

Sending and Receiving a Payment

You'll need to use your wallet to send and receive payments. All wallets are different, so the Coinbase wallet is used for this example. In general, to make a payment or send cryptocurrency, you:

1. Open your wallet app
2. Click on Send Payment or a similar button
3. Enter the amount you want to send
4. Enter the QR code or wallet address of the recipient
5. Click Send or a similar button

To receive a payment, you would:

1. Open your wallet app
2. Tap Receive Payment or a similar button
3. Share your address (your public key) with the sender
4. Accept the payment when it appears in your wallet
   

Where Can You Pay With Cryptocurrency?

Cryptocurrency is still in its infancy, but the list of places you can use it to pay for goods and services is growing. Most businesses that accept cryptocurrency as payment do so through cryptocurrency payment gateways, which are payment service providers that generally guarantee cryptocurrency to fiat conversion at the time of the transaction so that there is no price slippage.

Some notable businesses that accept crypto outright, let you add it to an app for payment, or accept it through a service provider are:

• Microsoft
• Paypal
• Overstock
• Starbucks
• Newegg
• AMC Theaters
• AT&T

Some brick-and-mortar retailers and stores are beginning to accept cryptocurrency as well. Those who do will generally use point-of-sale hardware linked to one of the payment service providers. You'll often see signs on the doors, windows, or at the cash register announcing which crypto is accepted.

Pros and Cons of Paying with Cryptocurrency

Pro Explained

• Anonymity/Pseudonymity: Because cryptocurrency is decentralized and user information is not required, it is anonymous. This allows you to conduct your financial matters without scrutiny by authorities or others who might pry for various reasons. However, some will argue that cryptocurrency is pseudonymous because your wallet address can be used to identify you if you ever allow that information to be accessible.
• Peer-to-Peer: Cryptocurrency is designed to be peer-to-peer, reducing the need for third-party involvement. You can send money to or receive it from anyone without other services.
• Fewer Fees: Many financial services charge fees to you or the business you're shopping at for facilitating payments and receipts. Cryptocurrency's peer-to-peer nature allows for fewer fees; you can think of this as a lower cost for all parties involved in a transaction.
• Pay from Anywhere: Cryptocurrency lets you make or receive payment anywhere you have a connection to the internet.
• Available to Everyone: Many people do not have quick access, or any at all, to financial services like banks and loans. However, most have internet connections through mobile devices. This allows everyone to make and receive payments, acquire or create loans, or access financial services wherever they are.
  

Cons Explained

• Transaction Fees: Although fewer fees are involved in cryptocurrency transactions, you'll need to pay transaction fees to the cryptocurrency network. In the past, these were minor, but they have been rising. Most cryptocurrency developers and communities are working to solve this issue, but fees remain high. For example, at one point, one Bitcoin transaction fee was more than $51, but it has come down to hover between $1 and $2—still high, but much less than previous fees.
• Price Volatility: It's no secret that cryptocurrency prices are volatile. This means that your cryptocurrency's value will change over time. It's possible for your cryptocurrency's price to drop between the instant you purchase an item with it and the time the network approves the transaction—causing you not to have sent enough to pay for the item. Conversely, if prices rose during that time, you might send too much.
  
• Not Regulated: Another well-known aspect of cryptocurrencies is that they are not regulated, backed, or guaranteed. This means you may not have any recourse for getting your money back if you get scammed or if the exchange you store your keys at goes out of business.
• Not Reversible: Once an exchange is completed, it is locked into the blockchain and cannot be undone. The only way to get money back if there was an error or mistake is to have the recipient voluntarily send back what they owe in another transaction.
• Risk of Loss: As with other forms of currency, you can lose your cryptocurrency. You're responsible for the private keys that give you access to your money; if you lose them, there is no way to get them back. In addition to losing your keys, you can lose money if you hold your cryptocurrency and prices fall.

The Bottom Line

Cryptocurrency is an easy way to pay for products or services using online wallets. Online wallets are internet-connected apps that let you access your cryptocurrency wherever you are, but because they are software, they are vulnerable. If you decide to use cryptocurrency for payments, be sure to look into storing your cryptocurrency private keys in an offline wallet until you need to use them.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read ourwarranty and liability disclaimerfor more info. As of the date this article was written, the author does not own cryptocurrency.