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What Makes Crypto a Safer Way to Make Online Payments?

What Makes Crypto a Safer Way to Make Online Payments?
The Silicon Review
10 July, 2024

There’s no such thing as excessive security when it comes to online payments. Traditional payment method providers – banks, credit card companies, and online payment mediators – keep pushing the envelope in terms of personal data protection.

Innovative payment options also keep emerging on the horizon, offering global users cutting-edge, enhanced features. Cryptocurrencies are the new wave of online payments.

This article explains what makes crypto a safer way to make online payments.

How does crypto work?

A cryptocurrency is a digital currency that can be used for online payments or savings. Based on the price and size of cryptocurrency, people use it for both or either of the above.

Cryptocurrencies are obtained either through transactions with crypto brokers or via mining – a process in which computers are used to handle complicated mathematical issues, during which coins are made.

Crypto assets are stored on the blockchain – a virtual chain of blocks containing information about transactions and the users behind them. Third parties can’t alter the order of blocks or access the data stored on them without the consent of all included stakeholders (we’ll get to that later on). This is exactly the most important security-related aspect of cryptocurrencies.

That’s why people pay for all kinds of things using crypto, from eCommerce items and games to crediting their gambling accounts. Speaking of the latter, it’s vital to learn in advance more about the iGaming platform in question and play only on double-checked platforms, such as the ones on this conclusive list of safe options. As Techopedia’s iGaming analyst Ciaran McEneaney claims, most of the secure online casinos that accept cryptocurrencies are typically the fastest payout sites. That’s why crypto is changing this market, as well.

Blockchain behind the payments

Let’s now go back a bit to the blockchain technology behind crypto payments.

As defined by the IBM, blockchain is a single, shared, tampering-evident system. Once recorded, the transaction data can’t be changed. They’re stored within a special block, preceded and followed by a similar virtual cube with the payment-related data inside it. Such blocks form an irreversible chain of transactions that lean against one another, making it inaccessible to anyone who’d like to play with that sensitive information, such as data hijackers.

That being said, block creators, i.e., data owners, can access the information stored within their crypto cubicles, dare we call them that way. This is the user-friendly aspect of blockchain technology. However, it would take a consensus of all the participants within a single blockchain segment to let other people or institutions get their hands on it. This is blockchain’s crucial safety-boosting element.

Since each block also has a time stamp, containing information when particular data has been saved, it makes hacking into such systems even harder. To top it off, you also have to provide two or more multi-authentication elements to access your blockchain data

No regulation – advantage or flaw?

Blockchain technology and everything based on it – crypto included – is unregulated by any domestic or international financial institution. It sounds appealing, but here’s what it really means in practice.

When people pay using more traditional payment methods – bank cards or even digital wallets – such transactions are subject to scrutiny by domestic or international bodies. They check the participants in transactions, the origins of the transferred assets, and many other features to check whether everything is legal. Also, the tax authorities might pry into particular transactions and see whether the interested parties have paid the prescribed share to the state.

In blockchain and, consequently, cryptocurrencies, there’s no such a thing. The entire system is based on supply and demand, plus the aforementioned consensus of the participants in transactions and exchange of cryptocurrencies.

On the one hand, such deregulation opens the way to faster transactions, boosting the economy and encouraging people to embrace innovative payment and money-saving solutions.

On the other hand, those same reasons could push some potential users away from cryptocurrencies. The lack of a regulatory framework can seem insecure for some people, especially if they don’t know enough about blockchain technology in the first place. But if we know that there were about 580 million holders of crypto assets worldwide as of November 2023, it’s clear that knowing why crypto is safe and how to use it for payments will be part of financial education in the near future.

The key takeaways

In the end, let’s round this off with several key takeaways, regarding the usability and safety aspects of cryptocurrencies:

  • Crypto is built on blockchain – innovative technology based on complex mathematical and computational procedures that boost payers’ data security.
  • It’s much harder for hackers to get into blocks within blockchain than to penetrate into bank account information; still, it’s not completely impossible.
  • There are no financial institutions that would intervene in terms of crypto transactions, which accelerates the entire market, nudging the exchange of goods and services. This is convenient for using crypto in online payments, from buying T-shirts on eCommerce websites to funding accounts on offshore casinos.
  • Blockchain technology keeps evolving, which will make it even more demanding for ill-intent perpetrators to tamper with blockchain data.

Based on everything said above, every adult person should see for themselves whether cryptocurrencies are their cup of tea and whether they should use such a payment method to pay for their morning coffee.