As cryptocurrencies have become increasingly popular as alternative assets, more and more companies have been looking to the leading digital currencies like Bitcoin and Ethereum as payments solutions.
But do they make acceptable assets to make (and accept) payments? In this article, we look at what makes Ethereum a medium of exchange and the benefits of the cryptocurrency as a means of payment.
What is Ethereum?
First things first, what exactly is Ethereum?
Ethereum is a first-generation blockchain technology. The network is used to create decentralised applications (dApps), hold assets, and conduct transactions. At its core, it is a decentralised network that’s built using blockchain technology. It is designed as a platform that can be scaled and programmed according to the application, with security as a priority.
Because it is built using blockchain technology, decentralised by nature, the transactions that are recorded on Ethereum’s network are unchangeable, transparent, and users are given full ownership of their tokens.
Ethereum as an asset to make payments
The native currency of the Ethereum network, Ether (ETH), has become a popular method of making and taking payment because of its interoperability in the cryptocurrency industry. What this means is that it can communicate with dApps on its network, rather than operating as a siloed system (like Bitcoin in its current iteration).
Etheruem also fulfills the main requirements needed for a currency. Operating as a store of value, a medium of exchange, and a unit of trade are the three requirements that are all met by ETH.
The benefits of Ethereum as a payment asset
Integrating a blockchain-based system with the traditional financial system has numerous benefits for both users and business owners.
Transparency and a lack of interference
One of the pillars of cryptocurrency networks is that they are transparent by nature. Because of this, users can buy and use them with assurance that their transactions won’t be interfered with.
Speedy transactions
Unlike traditional payments, global transactions on Ethereum happen almost instantly. Fiat transactions that go through banks can take days to reflect in the account, making the process a lengthy one with possible delays on top of that. On the other hand, cryptocurrency transactions are completed in a matter of minutes and do not rely on banks to complete the transaction, so weekends do not limit the time taken to make a transaction.
Lower successful fraud attempts
When Ethereum is used to make payments, the transactions go through a smart contract, which reduces the likelihood of fraud. Because of the secure element locked in a smart contract, scammers and hackers have very little opportunity to use the technology to conduct fraudulent activity. This being said, it is possible for scammers to take advantage of cyber systems outside of the blockchain, so take care when interacting online.
Additional means of payment
Providing customers with an alternative payment option provides businesses an edge over their rivals. Through cryptocurrency gateways, businesses can either accept cryptocurrencies and store them as digital assets or accept crypto payments and get paid in fiat.
{funnel_name} CEO noted:
“The beauty of cryptocurrency working WITH the current financial ecosystem is that it doesn’t have to be one or the other. Both can integrate with each other, without compromising security and convenience.”
Finality
When a transaction is a permanent component of a block, it is said to be in a final state. The typical time it takes to reach finality in Ethereum, which uses the proof-of-work (PoW) consensus mechanism, is six minutes (25 confirmations), whereas the typical time it takes to mine a single block is 15 seconds.
Tokenisation
On Ethereum, any asset that has been digitally registered can be tokenised. This process facilitates the dividing of assets like real estate – this means users can buy fractionalised assets that might be too expensive otherwise.
Buying and trading Ethereum
Beyond a means of payment, Ethereum is a well-rounded alternative asset. As a store of value and a functional platform in the blockchain system, Ethereum offers investors an asset that has seen consistent return on their investment.
Using Bitcode Method site, you can buy Ethereum without the headache of watching the market and still learn to trade while earning passively.
Author: Hannah Parker
