It’s true; many market analysts predict bitcoin will continue to make considerable gains over the next 5, 10 and 15 years, so avid investors may have a hard time spending their hard earned dough. Fortunately, there are many compelling reasons to use it for payment, such as the speed, low transaction fees and anonymity. With these benefits in mind, here is an insider look at the process of buying and selling using bitcoin.
How to buy products with bitcoin
The concept of bitcoin is to be an entirely anonymous platform. However, the reality looks slightly different. To buy and sell products with bitcoin, users must transact to and from their online bitcoin wallet, which may have been set up with some personal information like an email and password. After purchasing cryptocurrency, most beginner users and those who plan to make a purchase immediately will choose to keep their funds in a web wallet, so it is available for future transactions. Once the currency is available in an online location, users will need to find an item available for purchase with bitcoin.
Currently, few big-box retailers are accepting Bitcoin for their goods and services. Therefore, bitcoin users may have to seek out clever workarounds to facilitate their transactions, such as a bitcoin escrow service, or opt for a crypto marketplace targeted at digital currency transactions.
Buying from an online storefront
Likely the hardest part of buying products with bitcoin is determining where to spend them. Some of the well-known names include Microsoft for online games, Overstock for furniture, and Newegg for electronics. Luxury items like watches, supercars, and real estate Cryptoexchange have become a popular choice for many. Still, others may be looking for a handmade or one-of-a-kind item. For these products, Shopify or Etsy storefronts will likely have the largest variety.
Regardless of where consumers end up purchasing from, the process is quite similar. Users may proceed through the standard checkout process until they are ready to make their payment. At this time, each user will meet a “Pay with bitcoin” option. Selecting this will prompt users to include their wallet information by copying their address or scanning a QR code. Users can then review the terms of the transaction, confirm and place their order.
Buying from an independent seller
Users may also choose to purchase from an independent Seller. In this case, the Seller may provide the public address that they want the Buyer to send funds to. For added protection, a Buyer and Seller may choose to engage with an escrow service provider to help guarantee the security of the transaction.
How to sell products using bitcoin
The bitcoin network has no central owner in nature. Satoshi Nakamoto, the creator, designed the currency to facilitate low-cost transactions, to make the very process of selling things online simple. There are several methods to sell products for beginners and experts, each with its own benefits and drawbacks. How users decide to sell their product will also be dependent on what is being sold (i.e. a rare vintage collectible or several repeatable products).
Selling one-off items
First, the user may choose to find a buyer on their own and conduct the transaction by providing the Buyer with an address to send the funds to. The Buyer and Seller may determine the transaction agreements and execute them per the terms of their discussion. It is important to note that anything can be bought or sold with bitcoin as long as the other part provides consent.
The main concern with this selling method is finding a Buyer willing to pay in bitcoin can be challenging, especially if you offer a niche product. Secondly, with bitcoin’s immutability, there is no guarantee the other party will fulfill their end of the deal. That said, this method is still effective if the other party involved in the transaction is known.
Creating a storefront that accepts bitcoin
Shopify is one storefront that allows users to accept bitcoin for their products. To do so, store owners can simply go to their settings and select “Payment Providers.” After opening this tab, users can select “Alternative Payments,” where options for Coinbase Commerce, BitPay, and GoCoin are available for enablement. It is important to note that an account on one of the cryptocurrency platforms will require a separate setup process.
After selecting a platform, store owners will need to add the email associated with their account, API Key, and select which digital currencies they are willing to accept.
Other alternatives to Shopify include Etsy for handmade or vintage items and Openbazaar to sell just about anything else. The Openbazaar platform is decentralized and built completely on open source code. These features help to cut down on the fees paid by Sellers. Sellers will also have the option to display their listings in different currencies, including bitcoin cash, litecoin, and zcash.
Selling through a cryptocurrency marketplace
Users may choose to leverage a cryptocurrency marketplace that specializes in digital currency transactions to open up the variety. On these platforms, a large audience may already exist that are looking to buy products with bitcoin.
The main concern with this method is that the Seller will be required to sign up for an account and provide the information specified by the website. The platform may also take a cut of the sale, although this is not the case for every marketplace.
On the contrary, a major advantage is leveraging an escrow service provider on the same platform. An escrow service provider available as a neutral third party and helps to ensure the Buyer and Seller fulfill all the contract nuances. They will also be responsible for managing the money in the transaction by securing it in an escrow account. Only when both parties are satisfied with the transaction outcome will the escrow service provider release the funds held in their custody.
Although it may sound complicated to engage with this many external parties, platforms like Cryptoexchange offer a medium that combines both. Cryptoexchange includes a luxury bitcoin marketplace that sells real estate, watches, domain, and sports cars and allows users to add on “escrow” at the time of checkout. If none of these product categories appeal to users, they may choose to just use the escrow tab provided.