Cryptocurrencies’ potential for online payments is almost limitless; no other payment method can provide nearly as much security and privacy:
– Complete control of your money by you only (no third parties)
– Lower fees than traditional payment methods
– Anonymity (although coin addresses are public information, transactions are not linked to IPs or pseudonyms)
– Transactions anywhere in the world instantly (no import/export limits or delayed delivery)
– Innovative cryptocurrencies with features like smart contracts
– Proof of stake, faster than proof of work
However, this also means that there is a lot more competition in the online payments niche. Bitcoin’s market cap has surpassed that of PayPal, and several other coins are on their way to catching the dominant force in online payment systems. A cryptocurrency that wants to earn its place among the best online payment methods needs to distinguish itself from its competitors. Here are some of our suggestions:
Monero (XMR) – Privacy and Anonymity
Monero promises privacy and anonymity; unlike most other cryptocurrencies it is untraceable since they don’t mix transactions (yet). Ring signatures make sure that there is no way for third parties like merchants or governments to link a transaction to a user’s address. The sender’s and receiver’s addresses in a transaction are obscured, and there is no way to tell how much Monero has been sent in one transaction.
Monero uses the same hashing algorithm as Bitcoin (SHA-256) which means that miners can use their existing mining rigs when mining Monero, but this also means that there could be a possible risk of changing hashes for existing transactions. However since miners need to start over with each new block this would require malicious intent, something miners usually don’t have much of because it doesn’t pay off well.
Bitcoin (BTC) – Market Penetration
Bitcoin is already well established as the first cryptocurrency; it has the advantage that people are already aware of Bitcoin which makes it easier for them to accept Bitcoin online. Since Bitcoin also uses proof of work, mining new coins can be very profitable to early adopters and thus incentivizes merchants to accept Bitcoin.
With the name now very mainstream and more and more ATMs, online shops, and brick-and-mortar stores accepting Bitcoin, it’s future for online payments looks bright. If you ever wondered how you can avoid high fees when buying bitcoin, check out our article The Cheapest Ways To Buy Bitcoin.
Litecoin (LTC) – Low Fees and Faster Transactions
Due to the shorter block time of Litecoin, the network synchronization is faster than with Bitcoin which means that merchants can accept payment on confirmation instead of waiting several minutes or hours for a transaction to be confirmed as many times. However, litecoins have a much lower market cap than bitcoins which means that there is much more space for growth. It is still relatively cheap though, which might attract customers who prefer cheap purchases over-speed or anonymity.
Etherium (ETH) – Smart Contracts
Etherium, the cryptocurrency of the Ethereum platform, has smart contract features which make it possible for applications to run autonomously. One example is an application that escrows Monero or Etherium and immediately pays them out to a seller once both parties have confirmed that the product has arrived (for example when buying items on eBay). This saves both time and money because no trust between buyer and seller needs to be established; the payment simply goes through if both sides agree.
Other cryptocurrencies may offer similar services but Etherium has been around for longer so more people are aware of its existence. Furthermore, new features can be added by just running new code on top of the existing platform which makes it easier for developers to expand upon this technology.
Stellar Lumens (XLM) – Cheap International Payments
Due to the distributed nature of Stellar’s blockchain, it is very fast for sending money around the globe, especially when transferring XLM. This also makes charges very low. Despite being younger than some other cryptocurrencies it already has a large market cap which makes it compete with more established cryptocurrencies. Besides this, since Stellar runs on top of an existing protocol layer (Ripple), they can piggyback on Ripple’s partnerships and liquidity pool, which means that they are likely to have higher liquidity than many other cryptocurrencies making them attractive for online payments or remittance.