In the last few years, cryptocurrencies have hit the headlines. They were often considered as mere objects of speculation, and the extreme price development resulted in the cryptocurrency hype. However, meanwhile, this hype appears to be definitely over and cryptocurrencies are again increasingly used as a means of payment.
Whereas in other countries, cryptocurrencies have long been used for making payments, meanwhile a growing number of companies are also implementing cryptocurrencies as a means of payment in Germany. Cryptocurrencies offer a variety of advantages compared to conventional means of payment. These advantages include low fees, almost immediate receipt of the money, and no possibility for the payer to fraudulently credit the amount back.
Companies need a wallet
Cryptocurrencies are suitable for both online payments via the internet as well as local payments in a shop.
In order to enable their customers to make payments using cryptocurrencies, companies first need a wallet. This allows them to store the public and private keys required for payments in cryptocurrencies. An appropriate type of wallet for day-to-day business transactions are so-called software wallets that are available as a program or app for all common operating systems and smartphones.
In simple terms, cryptocurrencies are transferred from one public key to another. In this case, the transaction is authorized using the corresponding private key and recorded on the blockchain. Whoever has control over the private keys, has control over the cryptocurrencies. As a consequence, it is safer for a company to use its own wallets instead of relying on an online wallet provider. As these providers store the private keys on their servers, they obtain full control of the keys.
Additionally, the so-called hardware wallets are appropriate to store larger amounts of cryptocurrencies for a longer period of time. This equipment comes with various technical security devices. A hardware wallet is designed to make it impossible for hackers to steal someone’s cryptocurrency amounts.
Exchanging cryptocurrencies for national currencies
Companies that accept cryptocurrencies are free to either exchange them directly into a national currency or keep the cryptocurrency. Specific online trading platforms are available for such exchanges. These platforms also allow their customers to sell even large amounts of cryptocurrencies without any problems.
As an alternative, a company may also implement payment services providers like BitPay. These enable customers to make payments using cryptocurrencies while the company directly receives a national currency.
Benefit from increases in value
Companies may also keep parts of a cryptocurrency in order to benefit from increases in value. Even after the collapse in prices in spring 2018, companies that have accepted and held cryptocurrencies since 2012 have made a profit of over 1000 percent. Given the persistent negative interest rates and the proposals made by the International Monetary Fund with regard to the devaluation of cash, cryptocurrencies may become an attractive alternative means for storing values.
Our experienced attorneys will be pleased to help you with all legal questions relating to the use of cryptocurrencies as a means of payment. We are looking forward to hearing from you.