Benefits of paying for your server with Bitcoin
When it comes to buying a server, there are a plethora of ways that you can use in order to make a successful transaction. The most common ones include paying with a credit or debit card, bank transfers and through platforms or applications like PayPal or Stripe.
However, these payment methods all have their own disadvantages that can potentially affect your experience such as insufficient privacy and high fees, especially for international transactions that require currency exchanges.
In this article, we are going to be looking at Bitcoin as an alternative payment option and go through some of the reasons why you should consider using BTC when buying not only servers but also other products and services online.
What is Bitcoin and what makes it a viable alternative payment method?
Bitcoin is a decentralized cryptocurrency, first introduced in 2009. But what does that term mean? The fact that BTC is decentralized shows that it is not susceptible to control by any government or financial institution. This consequently means that factors such as inflation don’t play a part in the price calculation of the currency - its overall value is determined by the demand on the market, which can make Bitcoin quite volatile, which is to be expected since it is a cryptocurrency.
While BTC pricing can fluctuate, it remains as the most popular and widely utilized form of crypto, being responsible for over 40% of the total crypto market capitalization. This does bring some stability to BTC.
This is exactly why there are many companies and businesses that have been accepting crypto for their goods or services for a long time like us at VSPBG - taking crypto payments for our Bitcoin VPS since 2014, being one of the first cloud hosting providers in Europe to do so! The number of these companies has been slowly increasing over the years with there being over 15000 merchants that accept Bitcoin worldwide!
And while there are still debates whether BTC was created by a single person or a group of people under the name of Satoshi Nakamoto, there is no debate over the impact that the cryptocurrency has had globally since its introduction! As a matter of fact, the total market value of Bitcoin as of 2023 is valued at over $400 billion USD with there being over 19 million BTC in circulation!
But what are the advantages of paying for your VPS server with Bitcoin?
Increased Privacy & Transparency
First and foremost, Bitcoin offers you privacy. A Bitcoin transaction involves sending a specific amount of BTC from one address to another.
In its essence, a BTC transaction consists of 3 main components - the inputs, the outputs and the signatures.
To put it simply, the inputs are a given amount of Bitcoin, meaning that you need to have Bitcoin in order to make transactions. The outputs on the other hand are the addresses that you want to send BTC to. The signatures are used to verify that the sender actually owns the Bitcoin that they are sending.
While each transaction is broadcasted live on the blockchain network, you have the benefit of not having your identity linked with your Bitcoin address unlike when you pay through a more conventional method such with your card or through your bank.
This means that each transaction doesn’t reveal any personal information about the sender or the receiver as both are just an address.
This, however, doesn’t mean that each transaction is completely anonymous. There are ways in which addresses could be tracked such as by performing an in-depth blockchain analysis, which will not reveal any personal information, but can be used to locate the source and origin address of the BTC transaction.
Low International Fees
BTC payments aren’t usually charged much for each transaction. This is partially because Bitcoin is not a regulated currency, its value is decided by external factors and there is no single authority that can impose any regulatory standards onto it. This, consequently, means that transactions are not processed by a third-party but rather through the network itself.
While there are third-party Bitcoin payment processing options, some companies like us at VPSBG like to create and utilize their own self-hosted BTC payment implementations for better security and privacy protection.
If sending BTC to another address, each transaction is processed by a network of different miners. Additionally, BTC transaction costs are also dynaming, meaning that transactions will cost more when the network is overloaded and less when there aren’t that many awaiting exchanges on the network.
Although we say that they will cost more, it is nowhere near the additional money that you will have to pay if you are going to be utilizing one of the more popular payment methods like paying with a card or through your bank.
This is because banking institutions charge you more not only for the transaction but also for the currency exchange if you are going to be paying overseas. This makes BTC a preferred choice for those that want to save funds when having to make international payments.
Faster & More Reliable Transactions
In addition to higher fees, you’d find yourself having to wait for a couple of days or even weeks for an international transaction to actually go through, which can be quite inconvenient if you are in a hurry. Also when paying with a bank card, it can take 4 months for the payment to be settled and considered final and during this time, there is a risk of chargeback.
Bitcoin payments, on the other hand, are instant (within seconds) and are considered final when the transaction is included in the blockchain with 1 miners confirmation, usually within 10 minutes, but during high network usage can take several hours as there is limit of each block size data (i.e. the number of transactions that are included every 10 minutes is limited).
The network size of the transaction is not based on the amount sent, but the number of inputs and outputs, so the miners fee or transaction priority is not related to the amount of money sent. This is in contrast to the model used by banks or credit cards, where the transaction fee is a percentage of the amount of money that is transferred.
While in some cases sending small amount of money using Bitcoin can be slow, it is important to state that Bitcoin transactions are always going to be much faster than any bank transfer, especially for international transactions, which can take many days, especially during holidays and also are much more expensive for small sums of money (banks charge min. $20 per transaction).
As a matter of fact, you can also help speed up BTC transactions through a number of ways. You could pay a higher transaction fee in order to stimulate miners to process your transaction first.
Finally, you could also take advantage of the Bitcoin Lightning Network. LN payments are made on a network, secured by cryptographic contracts. This allows the Network to support millions of transactions per second, nearly for free, making it highly scalable as they are made off the blockchain. It is also more privacy-friendly as transactions are only broadcasted between the participants rather than on the entire network! At the same time this network is secured by the main Bitcoin blockchain.
Bitcoin transactions are also easily accessible. You only need a device with an internet connection and a BTC wallet, which you can set up in a matter of minutes. In addition to its easy-to-use nature, Bitcoin is also a very viable alternative for people who don’t have access to traditional payment methods or whose currency is currently unstable.
BTC transactions also add another layer of security due to the crypto and blockchain technology that the currency utilizes. These transactions also utilize a technology called hashing, which creates unique identifiers for each transaction and participant. This makes each transaction difficult to be tampered with, hacked or counterfeited without being noticed.
Each transaction is verified and added to the blockchain by an independent, decentralized network of miners, meaning more security. Additionally, the digital signatures of both the sender and the recipient also add another layer of security by preventing unauthorized transactions from occurring.
There are also 2 types of BTC wallets - hot and cold. The hot ones are connected to the internet, while the cold ones aren’t, meaning that you can take advantage of the one you prefer depending on your needs. For frequent small transactions, a hot wallet is convenient and automation can be implemented. For your investment or wallet with larger sums (like a savings account) you can use cold storage for better security.
Finally, Bitcoin also uses a mechanism, widely known as proof-of-work in order to verify transactions, which involves a lot of concurrent computations, which results in the network being extremely difficult to attack or take down.
Overall, there are many advantages of paying for your cloud server with Bitcoin with the most notable ones being privacy, security and cheaper international transaction fees.