Coinbase Who? Process Your Own Bitcoin Payments with Mycelium Gear
It takes more than a Bitcoin address to accept Bitcoin payments as a merchant.
It takes more than a Bitcoin address to accept Bitcoin payments as a merchant. Some kind of software is needed to connect each order with its expected payment. Otherwise, there's no way to to tell which invoice has been paid and which product you should ship to whom.
In other words, you need a payment processor.
The likes of BitPay, Coinbase, and Coinify have been serving as payment processors thus far. And the Mycelium team would like to change that.
"Mycelium’s hope is that Gear will encourage even more merchants to adopt Bitcoin and completely change the way merchant transactions are done, thus continuing our goal of decentralizing everything, improving privacy, and eliminating unnecessary third parties in the Bitcoin economy."
How It Works
Gear works by performing two steps: generating new payment addresses, and then monitoring the Bitcoin blockchain to verify when the payment has been received. Gear also reports on whether an invoice has been over- or underpaid.
Server hardware is needed to run the software. Mycelium is offering free space on their servers for novice merchants, and they expect that advanced merchants will run the Gear core software themselves.
Project lead Roman Snitko told Brave New Coin that Mycelium Gear “is called a payment processor because it provides a service similar to other payments processors […] However, it doesn't hold any money. It simply watches the blockchain (which anyone can do) and generates addresses from the BIP32 public key (which anyone can do).”
This means that merchants can be relieved of the regulatory burden of dealing with the likes of Coinbase. Giving up private information, finding that your purchasing habits are tracked, or worrying that your account will suddenly be closed are not concerns when you process your own payments.
Outsourcing: People vs. Software
Mycelium's spokesperson continued:
“Mycelium Gear does not hold any money on the merchant’s behalf, meaning there are no days of waiting for the money to arrive into your bank account, no risk of money being lost by the merchant processor, no need to fill out applications where you give out tons or personal information, and no complicated restrictive policies.
“All of this means that the costs of running this service are almost zero, which is also what it costs for you to use it: it’s absolutely free.”
But what about the merchants who still want a portion of their bitcoins to be converted to fiat for them?
It seems that Mycelium has already considered that. Gear's website states that an option to get daily payouts in euros will be available soon in the EU. It doesn’t say which third party will do these conversions and deposits.