Cryptocurrency as a means of exchange

The world trade development which grew rapidly as time goes by has an impact in influencing payment systems. Along with the enhancement of the world economy globalization, the need for speed, convenience and security of financial transactions is increasing Therefore, there is a need of reliable and easy payment system for banking customers. The payment system is a mechanism that includes arrangements used for payment through value exchanges between individuals, financial institutions both domestically and globally.

The development in buying and selling transactions that no longer have walls which limits the parties cause the development of payment instruments. Cryptocurrency is a digital currency that uses cryptographic technology as a security which is difficult to be falsified, where transactions can be done or must be done on the internet (online), and each data transaction is encrypted using certain cryptographic algorithms. The difference in cryptocurrency from existing currencies is that the crypto currency is not issued by the central authority, there is no interference or manipulation by the government. At first, this cryptocurrency was not seen as an exchange rate that could represent the existing digital currency. However, due to its rapid development, the crypto currency was immediately known by many people. This electronic money uses chip-based and server-based types which still require the role of a third party to overcome the issue of compatibility between electronic reading terminals (EDC) in order to exchange customer information regarding the account debit process. That is why payment technology was developed using the cryptocurrency (Cryptography) method. This cryptocurrency theory was first published by David Chaumfrom the University of California in 1982. One of the most famous types of cryptocurrency in the world is Bitcoin. Bitcoin was discovered by Satoshi Nakamoto on January 3th, 2009 by a peer to peer implementation (connecting network). After that, then developed the other forms of cryptocurrency such as Ethereum (ETH), Bitcoin Cash, Lite Cash, etc. Because it is in the form of digital currency, the method of distributing cryptocurrency is given to those who conduct mining. The development of global e-commerce raises the need for a fast, secure and confidential payment system. The payment system is a mechanism that includes arrangements that are used to deliver payments through value exchanges.

The problem faced is how cryptocurrency can be utilized for payment systems in Indonesia. Crypto money in Indonesia is considered not as a means of payment, but is included in the commodity of digital assets, it is based on Regulation of the Minister of Trade number 99 of 2018 on General Policy for the Implementation of Crypto Asset. However, the phenomenon of crypto money was already developing. Companies that are now officially accepting this cryptocurrency, according to Flexa, are Barnes & Noble, Baskin Robbins, Bed Bath & Beyond, Caribou Coffee, Crate & Barrel, Express, GameStop, Jamba Juice, Lowe’s, Nordstrom, Office Depot & OfficeMax, Petco, Regal Cinemas, Ulta Beauty, Amazon’s Whole Food Market, and of course, there’s Starbucks, though it’s not part of the official launch. Even Facebook CEO, Mark Zuckerberg, announced the emergence of crypto money provider company, that is Calibra. This financial service allows users to transact on cryptocurrency trading networks. This electronic money phenomenon raises several legal issues. The unclear status of crypto money causes unclear legal consequences arising from the crypto money phenomenon. And a question arises, what are the consequences if crypto money is used as a means of payment? This research will be useful in helping the efficient movement of money in the community, thereby helping to increase public confidence in the rupiah, thereby indirectly contributing to the smooth running of the Indonesian economy. Because it is supported by a payment system that is easier, safer and faster, and also not forgetting what legal consequences caused in the use of cryptocurrency as a means of payment in Indonesia.

reasons why cryptocurrency should be use as means of payment

1. The currency is accepted worldwide

There are a lot of benefits to an international currency, and it’s especially helpful if your business exports services and goods or purchases materials from other countries. Bitcoin and other cryptocurrencies help you avoid the expensive foreign transaction fees or exchange rates. The most interesting part of it is that it cannot be affected by the decision made by the government of one country or the other.

2. Sensitive data

Banks and credit institutions, as well as retailers and service providers, obtain and retain too much of their customers’ personal and financial information. Details including our name, address, employers, social security number, net worth, assets, investments, account balances, credit score, credit line, and transaction history, along with everything we do and buy, who we associate with, when, where, etc. comprise our personal, professional and financial data sets. With traditional financial institutions and traditional fiat currency, we can no longer preserve our privacy.

Cryptocurrency transactions provide an alternative by limiting the amount of transaction data to mere numbers also known as cryptocurrency wallet addresses and transaction IDs confirming that a wallet-to-wallet transaction took place. A cryptocurrency payment processor acting as a third party will typically require your name (and shipping address for the delivery of physical goods), but the rest of your information will remain private as long as you don’t connect your bank or credit card account and transact solely in BTC and altcoins.

3. Less charges, more profit

Payment processing by traditional middlemen and institutions is expensive. Banks, Credit card platforms, Paypal, etc make a fortune from processing and handling your payments, charging over 3% per transaction while Blockchain payments generally are less than 1%. This evidently means more profit from the same sales action.

4. Get your fund faster

When accepting payments made with credit or debit cards it can take weeks before you receive funds for the services or goods you sold. This issue arises due to third parties involved in traditional payment processing (both the vendor’s bank and the buyer’s card issuer have to verify each payment). Bitcoin transactions are very fast compared to bank transfers as they are verified by the network of “miners” (distributed nodes of computers around the world), thus you can receive payments within minutes.

5. Security

Cryptocurrencies such as Bitcoin are based on blockchain which is a distributed, decentralized, digital ledger. The transactions made are permanent. They cannot be modified or deleted. So, the chances of fraud are reduced to a great extent. There will be no counterfeit attempts or identity theft. Besides, blockchain has never been hacked because, in order to change one block, the hacker will need to change all the other blocks on the blockchain since they’re connected. It is enough proof that blockchain is secure. Moreover, you have complete control over your funds.

6. No third parties

Traditional payment methods involve a third party. You provide services to your customers and receive payments in your bank account for your services. But still, it is the bank who has control over your money. They can freeze your funds for whatever reasons. Also, your account can be closed if deemed necessary. This can result in huge monetary losses for businesses. But with crypto payments, that will not be a problem.

Since there is no third party involved, the money goes to your crypto wallet that you have full access to. No one else controls your wallet. So, the money stays with you no matter what. Also, the government has no control over the transactions nor they can keep an eye on the transactions. And they cannot take away your money as it happened in Cyprus.

Also, if you’re a business owner who wants to stay ahead of the competitors, it is important that you keep up with the latest trends. You have all the great reasons to start accepting crypto payments.