Table of Contents
Table of Contents

How to Pay With Cryptocurrency

One of the primary reasons cryptocurrencies were developed was for them to be used as anonymous payments. This reason is often lost in the hype by media outlets and the financial sector, which are focused on prices going up and down. Prices are important, but it is more important to know how to pay with cryptocurrency because it is gaining so much traction and popularity.

Cryptocurrency is complicated, but using it to pay for something is relatively simple. Here's how and where you can pay with crypto.

Key Takeaways

  • You can buy cryptocurrency with fiat money on cryptocurrency exchanges.
  • You send and receive payments using a cryptocurrency wallet.
  • You can use any wallet compatible with the cryptocurrency you choose to use.
  • A growing list of online retailers and brick-and-mortar stores accept cryptocurrency as payment.

How to Make a Payment With Cryptocurrency

At one time, sending a cryptocurrency involved diving into the command line on your computer and programming a transaction. Now, the complex process of sending and receiving crypto is much more simple, very much like using an app to send or receive money to and from your bank account. How you initiate the payment is specific to the application you choose, but generally speaking, here is how it works.

Acquire a Cryptocurrency

It isn't necessary to have an account with an institution, exchange, company, or other entity to acquire a cryptocurrency. However, it is one of the easier and more safe ways to get your hands on some cryptocurrency unless you're familiar with setting up a wallet and sending or receiving crypto.

A regulated cryptocurrency exchange will let you exchange fiat money for cryptocurrency. It will also give you some extra features if you need them, such as storing your private keys for you or helping you with technical issues. A reputable one like Coinbase, Binance.US, Kraken, or Gemini will be able to get you started when you create an account and fund it for your crypto purchases.

You may not be able to afford an entire coin because they can be very expensive—when you buy a cryptocurrency to use as payment, you'll receive portions that equal the dollar amount you paid.

Wallet

To make a payment using cryptocurrency, you'll also need to have a wallet application. Wallets can be installed on your computer or mobile devices, and act as an interface for accessing your crypto.

Your wallet doesn't actually store crypto; it holds the keys you need to access them—these are your private keys. Your wallet has a public key that is used in transactions; it acts like an email address that that's used to send and receive payments.

There are hundreds of wallets available, each with different features. Some are compatible with nearly all cryptocurrencies, while others may only work with a few.

Most cryptocurrency exchanges provide a wallet for their users that lets them transfer funds to other exchange users or make payments using services that are compatible with the exchange's services. Many wallets can use your device's camera to scan QR codes to create unique addresses for sending and receiving crypto. Some even have near-field communication capabilities that let you make touchless payments in cryptocurrency.

If you choose not to use the wallet from an exchange, you could consider some popular wallets like Exodus, Electrum, or Mycellium.

Sending and Receiving a Payment

You'll need to use your wallet to send and receive payments. All wallets are different, so the Coinbase wallet is used for this example. In general, to make a payment, you:

  1. Open your wallet app
  2. Click on Send Payment or similar button
  3. Enter the amount you want to send
  4. Enter the QR code or wallet address of the recipient
  5. Click Send or a similar button

To receive a payment, you would:

  1. Open your wallet app
  2. Tap Receive Payment or similar button
  3. Tap Share Address or similar button
  4. Accept the payment when it appears in your wallet

Where Can You Pay With Cryptocurrency?

Cryptocurrency is still in its infancy, but the list of places you can use it to pay for goods and services is growing. Most businesses that accept cryptocurrency as payment do so through cryptocurrency payment gateways, which are payment service providers that generally guarantee cryptocurrency to fiat conversion at the time of the transaction so that there is no price slippage.

Some notable businesses that accept crypto outright, let you add it to an app for payment, or accept it through a service provider are:

  • Microsoft
  • Paypal
  • Overstock
  • Starbucks
  • Newegg
  • AMC Theaters
  • AT&T

Some brick-and-mortar retailers and stores are beginning to accept cryptocurrency as well. Those who do will generally use point-of-sale hardware linked to one of the payment service providers. You'll often see signs on the doors, windows, or at the cash register announcing which crypto is accepted.

Pros and Cons of Paying With Cryptocurrency

Pros
  • Anonymity/Pseudonymity

  • Peer-to-Peer

  • Fewer Fees

  • Pay From Anywhere

  • Available to Everyone

Cons
  • Transaction Fees

  • Price Volatility

  • Not Regulated

  • Not Reversible

  • Risk of Loss

Pro Explained

  • Anonymity/Pseudonymity: Because cryptocurrency is decentralized and user information is not required, it is anonymous. This allows you to conduct your financial matters without scrutiny by authorities or others that might pry for various reasons. However, some will argue that cryptocurrency is pseudonymous because your wallet address can be used to identify you if you ever allow that information to be accessible.
  • Peer-to-Peer: Cryptocurrency is designed to be peer-to-peer, reducing the need for third-party involvement. You can send money to or receive it from anyone without other services.
  • Fewer Fees: Many financial services charge fees to you or the business you're shopping at for allowing you to use your money to make or receive payments. Cryptocurrency's peer-to-peer nature allows for fewer fees; you can think of this as a lower cost for all parties involved in a transaction.
  • Pay From Anywhere: Cryptocurrency lets you make or receive payment anywhere you have a connection to the internet.
  • Available to Everyone: Many people do not have quick access, or any at all, to financial services like banks and loans. However, most have internet connections through mobile devices. This allows everyone to make and receive payments, make or receive loans, or access financial services wherever they are.

Cons Explained

  • Transaction Fees: Although fewer fees are involved in cryptocurrency transactions, you'll need to pay transaction fees to the cryptocurrency network. In the past, these were minor, but they have been rising. Most cryptocurrency developers and communities are working to solve this issue, but fees have gotten high. For example, at one point, one Bitcoin transaction fee was more than $51, but it has come down to hover between $1 and $2—still high, but much less than previous fees.
  • Price Volatility: It's no secret that cryptocurrency prices are volatile. This means that your cryptocurrency's value will change over time. It's possible for your cryptocurrency's price to drop between the instant you purchase an item with it and the time the network approves the transaction—causing you not to have sent enough to pay for the item. Conversely, if prices rose during that time, you might send too much.
  • Not Regulated: Another well-known aspect of cryptocurrencies is that they are not regulated, backed, or guaranteed. This means you may not have any recourse for getting your money back if you get scammed or the exchange you store your keys at goes out of business.
  • Not Reversible: Once an exchange is completed, is it locked into the blockchain and cannot be undone. The only way to get money back if there was an error or mistake is to have the recipient voluntarily send back what they owe in another transaction.
  • Risk of Loss: As with other forms of currency, you can lose your cryptocurrency. You're responsible for the private keys that give you access to your money; if you lose them, there is no way to get them back. In addition to losing your keys, you can also lose money if you hold your cryptocurrency and prices fall.

Can I Pay With My Crypto Wallet?

Several online retailers and some brick-and-mortar stores allow users to pay with cryptocurrency wallets.

How Do You Buy and Pay With Cryptocurrency?

The easiest and best way to pay with cryptocurrency is to use your wallet, most of which are compatible with nearly all popular cryptocurrencies.

Where Is Crypto Accepted as Payment?

Many online retailers and some brick-and-mortar stores accept payment in crypto through payment service gateways and providers. Newegg, Overstock, Starbucks, and Twitch are popular retailers.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Coinbase. "How Do I Send and Receive Crypto?"

  2. Blockchain.com. "Fees Per Transaction."

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