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How to pay with Bitcoins : A complete guide to using your cryptocurrencies in the real world
Using your cryptocurrencies to pay for everyday purchases is sometimes possible through various methods. Here's a detailed guide to understanding how to pay with Bitcoin – a solution that includes direct payments between wallets , the use of providers , the Lightning Network , and the option of a crypto card that instantly converts your assets into fiat currency .
Table of contents
How to pay with Bitcoins Bitcoin payment methods
How to pay with Bitcoins : Direct payment via wallet to wallet
The most classic method for paying with Bitcoin is to make a transaction directly between two wallets . In this process, the customer and the merchant each use a crypto wallet such as Metamask , Exodus or Trust wallet to send and receive funds.
Technical operation
- The merchant generates a unique address in the form of a QR code incorporating the exact amount to be paid in Bitcoin .
- The customer scans the QR code with their wallet and confirms the transaction .
- The transaction is broadcast on the blockchain and awaits several confirmations to be validated.
This method, known as on-chain , relies on the blockchain . While this solution offers robust security cryptography and the decentralized consensus mechanism, it is often criticized for its slowness. Indeed, an on-chain transaction can take between 10 and 60 minutes, or even longer during periods of network congestion. This delay is the necessary trade-off to guarantee security and decentralization. This is why numerous alternatives exist.
How to pay with Bitcoins : Payment via a crypto payment provider
To simplify the process and reduce exposure to volatility , many merchants use payment platforms . These providers act as intermediaries between the customer and the merchant, managing the entire payment process .
Detailed process
- Bitcoin option on the website or in store.
- The service provider generates an invoice in the form of a QR code with a address and the amount in Bitcoin corresponding to the sum in fiat .
- The customer scans the QR code with their wallet and signs the transaction .
- Upon receiving the transaction , the service provider can immediately convert the amount to fiat via instant conversion , or leave the funds in crypto in the merchant's account.
- The merchant receives a notification confirming receipt of payment.
Solutions such as BitPay , Coinbase Commerce , NOWPayments , and Shopify crypto integration facilitate this process. These providers simplify Bitcoin payments and allow merchants to protect themselves against exchange rate volatility through instant conversion to fiat currency. In return, they typically charge a fee of around 1% to 2% of the amount paid. However, this loses the decentralized nature of Bitcoin, since a centralized intermediary is involved in processing the payment.
How to pay with Bitcoins : Crypto card payment
A crypto card offers an indirect way to use your cryptocurrencies on a daily basis. In this case, you don't make a Bitcoin payment , your cryptocurrencies are converted into fiat currency (euros or dollars) before being debited from your card.
How a crypto card
- You have cryptocurrencies on a centralized platform (Binance, Coinbase …) or a decentralized wallet (Ledger …) and a crypto card is available.
- At the time of purchase, the crypto card automatically converts the amount into fiat currency through an instant conversion
- The merchant receives payment in fiat currency , without needing to adapt to the specifics of the Bitcoin .
This system is particularly attractive for those who want to use their cryptocurrencies without worrying about the complexities of blockchain transactions . Bank cards linked to a centralized exchange for automatic conversion of funds into euros or dollars at the time of payment, but they require entrusting one's assets to a third-party platform and therefore relinquishing control of private keys .
Conversely, some newer cards can be linked to decentralized wallets , where the user retains full control of their funds. In this case, cryptocurrencies remain stored in a wallet for which the user holds the private key , and conversion to fiat currency only occurs at the time of spending, via a gateway integrated into the wallet. This preserves the spirit of decentralization while benefiting from the universal acceptance of the traditional banking network.
The Lightning Network relies on a system of open payment channels between two users. Once a channel is created, they can conduct an unlimited number of transactions with each other, without these transactions being immediately recorded on the blockchain . Only the opening and closing of the channel are recorded on-chain. This allows for the aggregation of exchanges like a transaction wholesaler , which significantly reduces the load on the main network.
Thanks to this off-chain , payments are virtually instantaneous, independent of network congestion, and fees are extremely low – often less than a fraction of a cent. This approach is particularly well-suited to micropayments and everyday uses such as buying a coffee or a transport ticket.
On the merchant side, providers such as OpenNode , Strike or BTC Pay Server offer solutions compatible with the Lightning Network, allowing instant payments without the delays or costs associated with on-chain transactions .
How to pay with Bitcoins : Technical details and practical aspects
Technical operation of Bitcoin transactions
At the heart of every Bitcoin transaction lies the blockchain , a decentralized public ledger. Here are some essential technical aspects:
- Each transaction is digitally signed using cryptography , ensuring flawless security
- On-chain transactions require validation by miners, which guarantees the integrity of the system .
- The validation process involves solving complex mathematical problems, enabling the creation of new blocks.
- Transaction fees vary depending on network demand and the size of the transaction data .
This decentralized consensus mechanism ensures that every Bitcoin payment is irreversible and traceable, even if this comes at the cost of a relatively long confirmation time .
Security and of cryptocurrency payments
Security concern when using cryptocurrencies . Here are some recommendations for secure payment management
- Use a wallet or a wallet to store your cryptocurrencies .
- Make sure you back up your private keys and recovery phrases in a safe place.
- Always verify the authenticity of QR codes and addresses before initiating a transaction .
- Regularly update your software and crypto wallet security improvements .
Using providers security protocols to protect funds from fraud and attacks.
Accounting and tax management for retailers
For merchants who accept Bitcoin payments , payment management be accompanied by rigorous accounting practices and precise tax monitoring. Here are the key points:
- Record each transaction with the date, time, amount in Bitcoin and its equivalent in fiat currency at the time of payment.
- Use specialized tools to automate transaction conversion and reconciliation .
- Keep proof of each payment so that you can justify the amounts during tax audits.
- decentralized finance experts to adapt your practices to current regulations.
practice is essential to avoid tax complications and ensure transparency in the Bitcoin payments .
How to pay with Bitcoins : Bitcoin network slow?
Bitcoin's on -chain network relies on decentralized mechanisms that ensure security and censorship resistance. However, these advantages come at a cost in terms of speed:
- transaction validation process requires adding each transaction into a block, which can take from 10 to 60 minutes, or even longer during periods of high demand.
- Fees increase with network congestion, sometimes making micro- payments economically unviable.
- The trade-off between security and speed is at the heart of the design of the Bitcoin : the faster the transaction , the greater the risk of compromising the reliability of the blockchain .
This slowdown has led to the development of alternative solutions, notably the Lightning Network , which offers Lightning technology enabling instant payments by relying on an off-chain .
How to pay with Bitcoins : Comparison of different payment methods
Bitcoin payment method has its advantages and disadvantages in terms of fees , speed, security volatility management . Here is a brief overview:
- Wallet to wallet :
- Advantages : Total control over your cryptocurrencies , no fees .
- Disadvantages : Long confirmation time, exposure to volatility .
- Payment provider :
- Advantages : Instant conversion to fiat transaction management .
- Disadvantages : Service fees (often 1 to 2%), dependence on a third party.
- Map crypto:
- Advantages : Universal use with merchants accepting fiat currency , automatic conversion
- Disadvantages : It's not a direct Bitcoin , it's dependent on exchange rates, and it relies on a third party.
- Lightning Network :
- Advantages : Instant payment , very low fees , ideal for micro-payments .
- Disadvantages : Requires the opening and management of payment channels, a solution still in the adoption phase for some merchants.
Using bitcoins to pay: what are the tax obligations?
The tax treatment of Bitcoin payments varies by jurisdiction, but in many countries – such as France – involves capital gains on any crypto-fiat cryptocurrency payment .
In France, whenever an individual uses their bitcoins to purchase goods or services, they are considered to have sold a digital asset, potentially generating a taxable capital gain . This gain is subject to the flat tax rate (PFU), also known as the flat tax , at a rate of 30%. It doesn't matter whether the merchant accepts payment in Bitcoin or whether the conversion is done automatically by a card or service provider: in both cases, the tax authorities consider that an asset sale has taken place.
To manage this complexity, tools like Waltio , Koinly , and CryptoTaxCalculator automate capital gains , import transactions from wallets or exchanges, and generate tax reports compliant with French regulations. These solutions are particularly useful for active users or those who make regular cryptocurrency .
How to pay with Bitcoins : Practical cases and concrete examples
Example of an online retailer
An e-commerce site specializing in the sale of digital currency offers several options for paying with Bitcoin :
- At checkout, the customer chooses Bitcoin as payment .
- The site redirects the customer to an interface provided by a service provider such as Coinbase Commerce or BitPay .
- The service provider generates a QR code with a address and the amount to be paid in Bitcoin .
- The customer scans the QR code with their crypto wallet and signs the transaction .
- Once the transaction , the merchant receives a notification and ships the order.
This process ensures immediate conversion fiat if necessary, limiting exposure to Bitcoin .
Example of a physical retailer
In the case of a local business, for example a fast food shop, Bitcoin is often done via a payment terminal integrated with a service provider :
- The terminal displays a QR code with the payment address and the amount in Bitcoin .
- The customer scans this QR code from their mobile wallet transaction .
- The service provider detects the transaction and performs an instant conversion to fiat currency to credit the merchant's account.
- The merchant receives payment confirmation and the customer can immediately collect their order.
This solution is particularly well-suited to avoid waiting times associated with confirmations on the on-chain , while offering an instant payment .
Integrating the Lightning Network into everyday commerce
The Lightning Network is particularly useful for purchases requiring speed of execution, such as buying coffee or transportation tickets. For example:
- BTC Pay Server- based system compatible with the Lightning Network .
- At the time of payment, the customer scans a QR code specific to the Lightning Network .
- The transaction is completed almost instantly, with fees , often less than €0.001.
- The system records the payment in an open payment channel, which will then be settled on the blockchain when the channel is closed.
This method is ideal for micro-payments and avoids the delays and fees associated with on-chain transactions .
How to pay with Bitcoins : Future development prospects and innovations
Research and innovation in the field of cryptocurrencies and decentralized finance continue to progress. Several areas for improvement should be noted:
- Optimizing transaction protocols to further reduce fees and confirmation time on the blockchain .
- The development of new hybrid solutions combining the advantages of on-chain transactions and the Lightning Network .
- Improving the user interfaces of wallets and payment platforms for more intuitive integration into consumers' daily lives.
- The rise of crypto cards and their widespread adoption, enabling conversion and universal compatibility with the traditional financial system.
- The rise of decentralized solutions that allow traders to manage their own transactions without intermediaries, thus strengthening decentralized finance and financial sovereignty.
Bitcoin payments even more accessible and efficient, thus meeting the needs of a rapidly changing market. Industry experts predict deeper integration of instant payment across a range of sectors, from e-commerce to local services.
Conclusion on how to pay with Bitcoins
In summary, paying with Bitcoin is still marginal in everyday life, but the main options are:
- Direct payment via wallets , which offers total control but imposes a confirmation delay due to the on-chain .
- The use of payment providers conversion to fiat transaction management .
- The crypto card that allows you to use cryptocurrencies held on a centralized or decentralized platform, instantly converting them into traditional currency.
- The adoption of the Lightning Network for instant payments and low- cost micro-payments .
Each method has its advantages and limitations, and the choice will depend on the specific needs of the merchant or user. While the Bitcoin offers security and decentralization, its confirmation time remains an obstacle for large-scale, everyday use. The development of the Lightning Network opens new perspectives for the widespread and seamless adoption of cryptocurrencies .
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Yoann
Training engineer, I quickly became interested in the field of finance. Convinced that decentralized finance has a bright future ahead of it, I participate in its democratization by developing Crypternon.
