Satoshi Nakamoto developed the first decentralized cryptocurrency called Bitcoin (BTC) and referred to it as “a peer-to-peer electronic cash system.” According to Bitcoin’s white paper, online payments could be made directly from one party to another without going through a banking institution with a peer-to-peer version of electronic cash.
That said, aside from using Bitcoin as an investment vehicle or a store of value, it can be used to pay for goods and services. Similarly, other cryptocurrencies such as Dogecoin (DOGE) can be used to pay bills online with crypto.
This article will discuss how to pay in cryptocurrency, how to use Bitcoin for everyday purchases, and different ways to use your cryptocurrencies to pay your cell phone, gas, or grocery bills.
How to make a payment with cryptocurrency?
First one needs to acquire a crypto asset like Bitcoin to start paying with cryptocurrency. Exchanges like Coinbase and Binance allow users to exchange fiat for currency (or vice versa) and store their private keys securely. However, self-service can be an alternative if you don’t trust third parties for your private keys.
The next step is to sign up for a wallet of your choice to pay your bills directly from your crypto wallet. From hardware to software and web to paper wallets, there are plenty of options available to send cryptocurrency payments. 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 the cryptocurrencies you choose.
Finally, check with your utility provider to see if you can use cryptocurrencies to pay your bills. With the growing adoption of blockchain technology by merchants, many businesses have already started accepting payments in cryptocurrencies. For example, Amazon supports Cardano (ADA), BTC and Ether (ETH) payments. By using a payment processor (ie online crypto payment gateway) like BitPay, businesses 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 their expenses, 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 their mortgage, as they may not be able to pay their rent or mortgage directly using cryptocurrencies because most banks does not yet accept them as payment methods.
Companies like AT&T allow customers to pay their cell phone bills using cryptocurrencies. Similarly, some municipalities are also starting to accept payments in BTC, ETH and others. In addition, one can pay for gym memberships, student loans, electricity and credit card bills directly from their crypto wallet or using a crypto payment card.
While choosing to pay in cryptocurrencies, it is important to check whether your jurisdiction of residence treats them legally. For example, Switzerland treats cryptocurrencies as an asset class, meaning that Swiss residents can trade in crypto. But on the other hand, since 2019, China has formally banned cryptocurrency exchanges. That said, avoid trading in cryptocurrencies if they are not considered a legitimate form of payment in your country.
Can you pay bills with Bitcoin?
Many companies accept BTC as a payment method, including Microsoft, Wikipedia, Travala, Shopify.com and others. For example, Xbox gift cards, which can be used to make purchases at the Microsoft Store online, on Windows, and on Xbox, can be purchased through Bitcoin platforms. There are a few different types of cryptocurrency-based payment methods for paying bills with crypto, as discussed in the subsections below:
Bitcoin payment card
Bitcoin debit cards are like bank-issued prepaid debit cards that can be loaded with cryptocurrency to pay bills. When you use a Bitcoin card at a merchant, stored BTC or other cryptocurrencies are converted to any fiat currency to complete crypto payments for shopping.
Also, any fiat currency that the card supports can be withdrawn from ATMs using a Bitcoin Debit Card. To apply for a Bitcoin debit card, users may need to create an account with an exchange that issues such cards and sign up for a digital wallet. In addition, users may be required to 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 collaboration with major credit card services such as Visa and Mastercard, Bitcoin debit cards are issued that can be used for both online and offline shopping. For example, the Shift Bitcoin Debit Card allows users to link their existing accounts and make purchases where Visa is accepted, making spending BTC as easy as spending dollars and cents. Similarly, anywhere Mastercard is accepted, users can use the BitPay card to start paying their bills with crypto.
Also, some cards support cryptocurrencies as well as fiat currencies and payment card holders to convert BTC (or any cryptocurrency) to foreign fiat currency. Despite these privileges, this does not mean that Bitcoin debit cards are without disadvantages. For example, risks of cyber attacks arise if money is transferred from a wallet to a payment card provider.
Bitcoin powered bill payment services
In addition to Bitcoin debit cards, billing companies such as Coinsfer in the US accept BTC to pay for subscriptions, bills and products on behalf of their customers. Buyers have to send links to products they want to buy using cryptocurrency, and then Coinsfer gives them the full order cost (including shipping costs). After Bitcoin payment from customers, Coinsfer pays for their order which they can track.
Direct Bitcoin payments
While shopping online or offline, ask the merchants if they accept BTC or read through their website to clarify. Various companies where you can pay via Bitcoin include Microsoft, Whole Foods, Overstock, Virgin Airlines and Save the Children, among others. By paying directly to the merchants who accept BTC, conversion and service fees are eliminated. In addition, it reduces the steps you have to go through if you choose a bill payment service.
Also, some states, such as Colorado in the US, have started accepting BTC for tax payments via PayPal, allowing residents to make direct payments in Bitcoin. After Bitcoin became legal tender in El Salvador, McDonald’s and Starbucks also started accepting BTC as a form of payment.
Benefits of using cryptocurrency to pay bills
Due to the pseudonymous nature of cryptocurrencies, one can manage their finances without government oversight. However, information can be made available via wallet address if users so wish. Furthermore, one can directly pay their bills using cryptocurrencies (where acceptable) using a peer-to-peer blockchain network.
In addition, you only need an active internet connection to make cryptocurrency payments anywhere in the world. In addition, unbanked or low-income individuals can receive crypto loans or make payments in BTC, ETH, DOGE and others on marketplaces that support cryptocurrencies.
Disadvantages of using cryptocurrency to pay bills
Blockchain networks charge transaction fees to receive and pay bills in crypto, and one may want to avoid such expenses. Also, cryptocurrencies are not regulated in some countries, which means that if money is lost, one cannot claim their money back. Additionally, since cryptocurrencies are highly volatile, users may have to pay large bills if prices rise, or may not have enough crypto available if prices fall.
The private keys and seed phrases that provide access to users’ funds are their responsibility – if they misplace them, there is no way to get them back. In addition to losing your keys, the price drop of a cryptocurrency you shot could result in financial loss. Furthermore, a transaction completed using cryptocurrencies cannot be undone as it is recorded in the blockchain except in scenarios such as an error or mistake and the recipient would like to transfer money back.