Process Your Own Bitcoin Payments With Mycelium Gear
The perennial innovators at Mycelium have released free and open source software to replace today's bitcoin payment processing services.
There are considerably more steps involved for a website to accept bitcoins for payment than simply having a wallet address for payments to be sent to. A payment processor, in most circumstances, needs to generate bitcoin addresses, provide the order status at each stage and notify the website when the correct amount has been paid, so the product can be released accordingly.
Until now the only payment processors in existence, to do this important job for merchants, were also aimed at accepting fiat currencies. They include the popular services Coinbase, Bitpay, CoinOfSale, and Coinify. Not only do these processors usually charge a fee, albeit substantially smaller than any credit card processors fees, but they also have to conform to federal Anti Money Laundering (AML) and Know Your Customer (KYC) laws, which require them to collect US customers’ information and report any suspicious transactions to the US federal government.
Having to comply to a multitude of fiat-payment rules makes existing payment processors complex, and less useful for merchants who only want to add bitcoin payment processing to their website. Reluctant to sign up with one of these companies, many merchants have opted for placing a bitcoin address on their website. However, in doing so they forgo the extra services that would help their business. To solve this problem Mycelium recently introduced the completely free and open source software program, Mycelium Gear.
"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."
— -Mycelium
Designed to be a solution for payment processing without any compromises, and with no fees or middlemen, Mycelium Gear offers all the benefits of bitcoin merchant processing services.
"Mycelium Gear is a merchant processor which demonstrates something that has never been possible before Bitcoin: the ability for merchants to use a full featured merchant processor to receive payments online, and have the money go straight into their own wallets, even if that wallet is running on their own phone in their pocket.”
— – Mycelium
Unlike other payments solutions Gear does not go through a bank or any 3rd party service. Instead, Gear uses the blockchain’s natural ability to track spending so users can watch their bitcoins go directly from the customer into their bitcoin wallet, with no stops in-between. In an interview with BraveNewCoin, Gear project lead Roman Snitko explained, "Mycelium Gear is called a payment processor because it provides a service similar to other payments processors – notifying merchants that a payment has been made. 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).”
It may sound like a simple program, but it’s a merchant solution that has been sorely missing from the bitcoin merchant tool chest.
“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.”
— – Mycelium
Gear’s payment processing is simple. When a purchase is made the customer is presented with an invoice, including a bitcoin address to send their payment to. The program monitors the public Bitcoin blockchain and notifies the merchant when a payment is detected. It can even tell you if an order has been overpaid or underpaid.
“Mycelium Gear is designed for both basic and advanced users. For basic users without a lot of programming experience, it provides an easy step-by-step walkthrough that creates a widget they can easily copy/paste into their website. For more advanced users, Mycelium Gear has a full API, including detailed documentation on how to implement it into your own shopping cart software.”
— – Mycelium
Since Gear needs to run on a server, Mycelium offers two options for merchants. Neither of these puts the platform in a position to hold bitcoins. Mycelium Gear never needs to interact with any money directly. For novice users, Mycelium will run the software on their servers for free. More experienced users can download and run the open source Gear core software. This latter option should be welcomed by merchants concerned with privacy.
When asked if there is any way for a government agency to penalize merchants running their own Gear server, Snitko replied “It is hard to imagine how any kind of regulatory body can treat this as subject to financial regulation. Even if such a thing is possible, the core is opensource. Any merchant can install it on their own and continue accepting payments."
Since Gear has adopted the BIP32 Hierarchical Deterministic address standard, generating bitcoin address in Gear is simple but powerful. For each customer payment a new public address is generated, which allows easy merchant tracking and bookkeeping, as well as being an added layer of security.
“Mycelium Gear relies on the unique benefits of BIP32 HD wallets, which use a single unique random number, called a seed, to generate a list of public bitcoin addresses (called an xpub key), and a corresponding list of private keys (xpriv key) for each of those addresses.”
— – Mycelium
Setting these addresses up is easy, and at no point do you hand over a private key to the software. You do have to use a bitcoin wallet such as Electrum or Mycelium’s own wallet that has adopted the BIP32 standard, so that you can obtain a compatible format of your wallet’s public key from the wallet software.
“When using Mycelium Gear, you give it only the xpub key that generates a unique bitcoin address for each customer invoice, while you keep the private xpriv key – the part that actually allows you to spend that money – only in your own wallet.”
— – Mycelium
Although Gear only processes bitcoin, products on merchants’ websites can still be priced in any fiat currencies. Mycelium offers several options during install that make it a fully-functional replacement for bitcoin payment processing.
“Mycelium Gear also allows you to set your prices in other currencies, such as USD and EUR, and automatically adjust the amount of bitcoin for the invoice based on the bitcoin price at the time of purchase.”
— – Mycelium
Mycelium has a long record of innovating in the bitcoin space that goes back to the very origin of bitcoin itself. With a product suite that includes one of the most popular wallets, a hardware wallet device, a marketplace to buy and sell bitcoins locally, and even a highly-secure paper wallet generator, Mycelium has added another great offering for it’s customers and the bitcoin community as a whole.
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