A Cryptocurrency Payment Gateway That Isn't Centralized
A Cryptocurrency Payment Gateway That Isn't Centralized
A Cryptocurrency Payment Gateway That Isn't Centralized
Attempts to establish cryptocurrency payment gateways in the past have been dogged by a slew of problems. The first is uncertainty, which puts any party holding Bitcoin and converting it to money in jeopardy. Another problem is users' inability to pay in a currency whose value is rising. A third issue is scalability and transaction throughput. Finally, surcharges and long settlement delays have hampered retail payment uptake. If these issues are addressed, blockchain will be viewed as a far superior payment mechanism to traditional payment systems. This is because cryptocurrency provides users and merchants ownership over their money, removing the need for several middlemen to mediate transactions and impose fees. If we wish to offer a feasible decentralised payment gateway based on cryptocurrency, we must address the following issues: uncertainty, price appreciation, scalability, and fees.
While all blockchain projects are constantly working on scalability, it is still a long way from handling transaction volumes equivalent to traditional payment rails. There has been significant development, therefore there is cause to be positive about scalability improving in the coming years. The above-mentioned topics will be the focus of this paper.
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Volatility is the most complicated of these concerns. It is impossible to tackle it directly due to bitcoin's fixed monetary policy, but there are techniques to lessen its impact. To take cryptocurrencies, a store has traditionally had to rely on a third party to settle transactions into fiat at regular intervals and to protect against price swings. The reason for this is that if a shop possesses bitcoin or other cryptocurrencies, large price volatility might have an influence on their profit margins. Using a third party to lessen volatility is a legitimate alternative, but it violates the purpose of cryptocurrencies because merchants must cede control of their own funds and become completely reliant on this third party to conduct their transactions. In addition to losing credibility, this unavoidably increases the expenses and delays of the payment process.
Merchants will be able to handle their own cryptocurrency transactions using stablecoins in the near future. Stablecoins are a type of cryptocurrency that seeks to reduce, if not eliminate, price fluctuation. This article shows how merchants can accept cryptocurrencies as payment without exposing themselves to market risks or relying on third parties.
Stablecoins, among other things, are vital for enabling totally decentralised payment gateways. Once we have a solution for stability, we will allow merchants to execute transactions using any cryptocurrency. In this example, we'll utilise bitcoin, and the payment flow is as follows:
The merchant obtains and instals an open-source plugin that allows him to connect to a bitcoin wallet.
The consumer chooses bitcoin as a payment method.
The bitcoin to money conversion rate is obtained using an oracle.
The product prices are displayed in both bitcoin and fiat money.
The customer transfers bitcoin to the merchant's wallet.
The payment gateway integration searches the blockchain to validate the transaction.
Until the transaction is verified, the bitcoin is taken to an exchange and liquidated into a stablecoin.
Because the bitcoin is promptly converted for stablecoins, shops may accept bitcoin as payment without being subject to volatility for long. The transaction does not require the involvement of a third party because it only involves exchanges between the merchant, the client, and the open market. The merchant can pick how much they want to convert their stablecoins to fiat and do it through a programme that deposits fiat directly into their bank account. This guarantees that the merchant has complete control over their funds before converting them to fiat cash. This is a significant shift for the dealer, who has effectively eradicated fraud and is now paying transaction fees that are significantly lower than those imposed by credit card processors.
It is significantly more difficult to encourage customers to invest in bitcoin, owing to the fixed token supply of most cryptocurrencies. When a token's value is predicted to climb, most users will be unwilling to invest in it, leading in greater speculative appreciation. This raises the cost of conducting business for both retailers and customers. Stablecoins denominated in currency are one answer to this problem, as users can use stablecoins to perform currency transactions. Users have no motive to maintain stablecoins as an investment if their value is expected to remain stable. Stablecoins have this attribute, which supports better token liquidity: they are best used for their stated goal, which is as a money rather than as a value-storing asset.
The fourth issue is conversion fees; at the moment, converting crypto to fiat in most marketplaces around the world is relatively expensive. When conversion is required on a frequent basis, these expenditures may become unsustainable. Customers, retailers, and suppliers can postpone the conversion until stablecoins enable them to deal in cryptocurrencies. This will reduce the cost of accepting cryptocurrencies even more, owing to the elimination of integration and fraud monitoring expenditures. This highlights how the introduction of stablecoins into the ecosystem not only enables a new generation of apps, but also increases the use of all cryptocurrencies. By acting as a global settlement layer for cryptoassets, a stablecoin decreases the friction of working between them.
One of the many ecosystem advancements enabled by stablecoins like Havven is the creation of a decentralised cryptocurrency payment site for online retailers. For more information on Havven, please visit our website at We are actively collaborating with a number of Australian payment processors in order to make this solution available to their merchants. More information will be made available in the near future.