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Dec 1, 2021

What Is The Difference Between Cryptocurrency Wallet and Cryptocurrency Payment Gateway

Confused about these words? In this blog post, we'll discuss what's the difference between the crypto wallet and the crypto payment gateway. Read on to find out.

What Is The Difference Between Cryptocurrency Wallet and Cryptocurrency Payment Gateway

The introduction of cryptocurrencies has been one of the most significant changes in current monetary policy. Bitcoin was the first and most renowned, but there have been many more since. The crypto investment, payment, and blockchain processing industries are rapidly and constantly developing. Businesses that accept cryptocurrency stand to benefit greatly from this paradigm change.

Crypto acceptance has recently increased, with entire countries supporting crypto to secure the financial privacy and stability of the public. Online retailers and merchants who prefer to cooperate with specialist services can begin taking a variety of cryptocurrencies in exchange for their goods.

These are referred to as crypto payment gateways. Let's get into the specifics of what they are, how they work, and whether they are appropriate for your company.

What Is a Crypto Payment Gateway, Exactly?

Simply defined, a crypto payment gateway enables a company or provider to accept cryptocurrency payments from clients. If you are a merchant who sells goods or services online using a normal e-commerce portal, you may already accept different payment methods based on what your consumers prefer.

Your crypto payment gateway can provide a plethora of new crypto payment possibilities to clients who are eager to spend money with your company.

Merchants can accept cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, Litecoin, tethered coins, stable coins, and others by implementing a crypto payment gateway. Furthermore, they are frequently connected with capabilities identical to any other type of digital payment, such as wire transfers, ACH bank transfers, or chip and pin transactions.

A list and comparison of solution providers can be found on Crypto Payment Gateways.

What Are Crypto Payment Gateways and How Do They Work?

Primarily, the program allows you to select which payments you wish to accept based on what they offer. In rare situations, they may accept more than 1000 coins that are typically found on exchanges. Furthermore, if you allow clients to pay for your goods or services solely with Bitcoin, they can supply you with that feature.

Some crypto payment gateways will not only supply you with a non-custodial wallet, but they may also provide exchange and conversion services. If you already have wallets for several cryptos, you may be able to connect them straight to avoid exchanges and save even more money in the long term.

In one case, an American corporation decides to take a variety of cryptos in exchange for its goods. When purchases are made in different currencies, they are stored in non-custodial online wallets until the company converts them all to USD and transfers them to their corporate account. In another case, a Canadian company chooses to only accept Bitcoin as payment for its goods, which is a popular choice.

Their payment gateway supports the connection of their wallet, so that when consumers make purchases, the BTC is automatically transmitted to the wallet provided, eliminating the need for an exchange to CAD at that time.

Why Do Crypto Payment Gateways Exist?

A variety of reasons necessitate the use of cryptocurrency payment channels. They are all related to the decentralized nature of blockchain technology, which is why people appreciate crypto in the first place. Some of the most major advantages of employing a cryptocurrency payment gateway will be:

Security - Because blockchain technology necessitates repeated verifications from anonymous third parties, the network's security and transparency are practically unparalleled.

Low Transaction Fees — Crypto transactions are notoriously inexpensive, especially when compared to outmoded fiat payment methods. Crest card or debit card swipe costs, for example, can be roughly ten times higher than the comparable crypto transaction.

Speed — Many crypto transactions are completed in a matter of seconds. Payments can be transmitted and received in fractions of a second using the Bitcoin lightning network, rather than waiting several business days for an ACH or comparable transfer to be processed.

Simplicity - The majority of cryptocurrency payment gateways will assist you in greatly simplifying the process of consolidating your funds and setting up your conversions and transfers.

With that being said, let us now move forward to crypto wallets.

What is a cryptocurrency wallet?

A cryptocurrency wallet, like a traditional wallet, is a location to save your digital currency when you're not using it. Just like in real life, you need a wallet to protect your cash and credit cards, a cryptocurrency wallet is where you're going to keep your digital currencies safe.

When you purchase digital currency on a trading platform or exchange, you may have the option to keep the "keys" to your coins in your account - this is one type of storage. You can, however, transfer them away from the site to a personal crypto wallet, which can be software that is linked to the Internet (a hot wallet) or a completely offline device (cold storage).

Various Types of Crypto Wallets

Depending on what you intend to do with your cryptocurrency, different crypto storage alternatives can serve different purposes. Long-term Bitcoin investors, for example, who intend to keep it as a store of value for an extended period of time, may prefer the security of an offline cold storage wallet. Those who are more actively transacting with cryptocurrency, on the other hand, may prefer the simplicity and quickness that an online hot wallet can provide.

Hardware Wallet

These are also known as cold wallets or cold storage since they save your keys fully offline on a device that is not connected to the Internet. Many popular cold wallet devices resemble USB drives. Paper wallets, which are created by printing information about your public and private keys onto a piece of paper, are sometimes used as cold storage.

Cold storage is frequently regarded as the gold standard for safeguarding digital assets by cryptocurrency enthusiasts. Hardware wallets are the most difficult type of wallet to hack because they are not accessible online. But it doesn't imply there aren't some dangers.

For one thing, hardware wallets are easily misplaced or lost. How many times have you misplaced a USB device containing only documents? That is inconvenient on its own. However, losing a gadget that has the keys to your investments – which are irrecoverable once lost – can be a significant financial blow.

Even hacking can be a problem. If you do decide to use cold storage, DeCicco recommends purchasing a new unit from the manufacturer rather than a used one. If you purchase from a third party, you run the chance of the device being tampered with by a hacker who purchased it, compromised it, and repackaged it for sale.

Software Wallet

These are also known as hot wallets. A hardware wallet is similar to a billfold that you could have in your purse, and a software wallet is similar to your online bank account.

Hot wallets come in a variety of shapes and sizes. You can get one via the crypto exchange where you bought your coins, by downloading a software program to your computer desktop, or by using a smartphone app. However, because each of these alternatives exposes your public and private keys to the Internet, you may be more vulnerable to hackers than if you use cold storage.

How to Select the Best Crypto Wallet

When selecting a storage solution for your cryptocurrency, you should consider your risk tolerance and goals, as well as your level of crypto understanding. If you want to keep your coins for a long time and don't intend to trade them, cold storage may be the best option. However, if you're a newbie who is concerned about the amount of money you invest, you might prefer the convenience of being able to acquire and maintain your coins within an exchange.

Summary of Cryptocurrency Payment Gateway vs Cryptocurrency Wallet

A cryptocurrency wallet refers to an online application or offline device that allows an investor to store all their cryptocurrency. On the other hand, a crypto payment gateway enables a company or provider to accept cryptocurrency payments from clients.

Get Started Accepting Cryptocurrencies Today

If you would like to start getting paid, please sign up for a merchant account and have a look out our guides for non-developers and programmers.

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Martin Dominic Banguis
Martin Dominic Banguis Contributor