How To Send Money to Someone Using Cryptocurrency

Cryptocurrencies have gone from being a mystery to a widely accepted store of value, means of making money online and a medium of exchange, with over 560+ million cryptocurrency owners worldwide as of 2024. With the existence of so many crypto exchange platforms, sending and receiving cryptocurrency is pretty straightforward, even for beginners. 

The first time I got paid in crypto, it was very fast; I received it less than a minute after the sender typed “sent.” That experience left me fascinated, and since then, I’ve sent and received money several times through cryptocurrency and learnt enough to teach an absolute beginner how to do the same. 

So, keep reading if you want to learn how to send money to someone using cryptocurrency. I’m going to break it down step-by-step, tell you the benefits, and answer any questions you might have. 

How do crypto transactions work?

Cryptocurrencies are digital currencies that run using blockchain technology. Blockchains are shared public ledgers that store data in blocks for transparency and record purposes. Hence, you do not need a conventional bank account to use them; instead, you need an exchanger or a broker and a wallet address to make a transaction.

Crypto transactions are fast, transparent, and relatively secure, and interestingly, they attract cheaper transaction fees, even for international transfers (more on this later). 

A standard crypto transaction begins with the sender initiating by adding their wallet address and that of the recipient, crypto amount, and transaction fee. Then the sender signs it with their private key to authorize the transaction and this allows the transaction to be broadcast to the crypto network for verification. Once verified by miners or validators(depending on the crypto involved)the transaction is added to the blockchain and the fund is sent to the recipient’s wallet. 

That said, here are some basic elements involved in every crypto-based transaction:

1. Wallet: you need digital wallets to access your crypto assets. This is because the wallets store the private and public keys you need to sign in and carry out a transaction.
2. Keys: this refers to the public and private keys that work together in completing transactions and accessing cryptocurrency. For every new transaction, a private key is generated, which creates a public key (because they work in pairs), which in turn generates an alphanumeric code called an address for sending and receiving crypto.
3. Wallets: these are of different types, but the ones you need to concern yourself with at the most basic level are hot and cold wallets. Hot wallets, like MetaMask or Coinbase Wallet, are connected to the internet for easy access, while cold wallets, like Ledger or Trezor, are offline hardware devices offering maximum security for large amounts.
4. Transaction fees: when sending and receiving crypto, the fees vary according to the exchange you use, the crypto asset involved in the transaction, and network congestion. They include miner’s fees (particularly for Bitcoins) and service fees charged by the exchange platform.

Let’s now look at the simple steps involved in sending money through crypto.

How To Send Money Using Crypto

The first thing you need to know is that you should never send crypto to someone you don’t trust, as transactions are generally irreversible. That said, follow the steps below to send money to someone using cryptocurrency to anyone around the world: 

1. Choose a wallet: Decide on the type of wallet you want to use based on your needs and security preferences. Download or purchase it.
2. Get crypto: Buy the desired cryptocurrency you want to send, e.g. Bitcoin, Ethereum, etc, on a crypto exchange platform using fiat currency or other crypto. Then transfer it to your crypto wallet.
3. Get the recipient’s wallet address: This is a long string of letters and numbers unique to a wallet. You can ask the recipient for it directly or scan their wallet’s QR code.
4. Send the crypto: In your wallet app, find the “send” or “transfer” option. Enter the recipient’s address and the amount of crypto you want to send.
5. Double-check transaction details: Check the recipient’s wallet address, amount, and transaction fee (if applicable) carefully. Confirm the transaction once you’re sure everything is correct. 
6. Wait for confirmation: Once the transaction is initiated, wait for it to be confirmed on the blockchain network. This might take a few seconds to minutes. 
7. Notify the recipient: Inform the recipient when the transaction is complete and share any tracking details if needed.

Below, I’ve highlighted some of the most common cryptos used in sending money:

Pros and Cons of Sending Money Through Crypto

Pros

Speed

Cryptocurrency transactions are usually processed much faster than traditional banking transactions. Depending on the cryptocurrency and network congestion, transactions can be completed within minutes or even seconds, making them ideal for time-sensitive transfers.

Low fees

Cryptocurrency transactions typically incur lower fees compared to traditional financial systems, especially for cross-border transfers. As a result, sending money using cryptocurrency can be more cost-effective, especially for large transactions.

Accessibility

Anyone with an internet connection and a smartphone can use cryptocurrency. It doesn’t matter if they don’t have access to traditional banks. This makes it easier for people in different parts of the world to send and receive money without a bank account. 

Decentralization

Cryptocurrencies are not regulated by the government or a central institution, hence, you don’t have to involve a third party to execute a transaction. This is known as peer-to-peer(P2P) network.  

Cons

Price instability

Cryptocurrency rates are quite volatile, and this unpredictability has deterred many from hopping on its train. Sometimes at the point of exchange, this instability may reflect in you sending more or less than you bargained for.

Irreversibility

Crypto transactions cannot be reversed or disputed (as in the case of traditional banks). Hence, you can only rely on the goodwill of the recipient to return what you sent or count it as a loss. 

Security risks

You’re at risk of losing access to your wallet and digital assets if you misplace your private keys or your wallet gets hacked. 

Frequently Asked Questions About Sending Money Using Crypto

1. How do I send crypto to someone?

To send cryptocurrency to someone, simply log into your wallet, select the cryptocurrency you want to send, enter the recipient’s wallet address, specify the amount you wish to send, and confirm the transaction.

2. How does crypto money transfer work?

When you send crypto to someone, the transaction is verified and recorded on a digital ledger called the blockchain. Once confirmed, the recipient gets the crypto in their wallet.

3. How long does a crypto money transfer take?

In general, cryptocurrency transfers can be processed within seconds or minutes. However, it may take longer during periods of high network activity. 

4. How can I withdraw money from crypto?

To withdraw money from cryptocurrency, you can sell your cryptocurrency on a cryptocurrency exchange for fiat currency such as Naira, USD, EUR, etc. You can also use it to purchase goods and services directly from merchants that accept cryptocurrency payments.

5. Which cryptocurrency is best for sending money?

Different factors influence the suitability of a crypto for sending money but the best in terms of stability is USDT or USDC. Bitcoin remains the most globally accepted crypto hence it’s also a great choice. Other options are Ripple, Serum (XRM) and Solana.

Conclusion

Sending money to someone using cryptocurrency offers a fast, secure, and convenient alternative to traditional banking methods. 

By following the steps outlined in this guide and leveraging the advantages of cryptocurrency, anyone can easily send funds to friends, family, or businesses across the globe. And if you’re ready to try out crypto trading, sign up on Nosh to begin your journey.