So you’ve owned bitcoin for a while and have even made a little money on it. It has been fun watching the market value of bitcoin go up, but now you need to buy a few things and don’t have any fiat currency. This means it’s time to spend your bitcoin.
There are major paths to spending your bitcoin. You can either find a place that directly accepts cryptocurrency, use a wallet that converts the cryptocurrency to fiat currency before paying, or convert your cryptocurrency back to fiat currency yourself before paying.
Find a Place that Accepts Bitcoin
As simple as this sounds, bitcoin is still not widely accepted by merchants, online or brick-and-mortar, in the world. You will have to seek out merchants who accept bitcoin and then hope they have what you’re looking for.
In addition to simply paying for a good or service, you could trying gambling or donating your bitcoin. Casinos have started permitting deposits using bitcoin, and the result has worked out relatively well so far, so this is expected to continue. Donations are possible for certain charities,
Merchants such as Microsoft, Overstock, Newegg, and Dell are probably the largest companies who work with bitcoin. The hope is Amazon will begin to accept it in the future, but for now this is a great start and opens up a lot of options for users looking to spend their bitcoin.
The biggest reason why these companies are willing to accept it is it is an appreciating good and there are lower fees than if a user buys something with a credit card. Credit card companies take a percentage cut which hurts the company in the long-run. In this sense, bitcoin is disrupting those companies as well.
In terms of large platforms, PayPal and Shopify both have an integrated bitcoin payment capability. This will have an even larger effect than the previously mentioned merchants accepting bitcoin because of the scalability of the use. It will allow a large percentage of merchants to accept the cryptocurrency with little to no work, and will therefore greatly increase the utility of bitcoin.
Paying in Person
It is rare you will find a store that accepts bitcoin by happenstance. Right now, this occurs more often as a form of gimmick or promotion that will get a store or restaurant publicity. Some places have put out QR codes for tips or donations, but this is the exception and shouldn’t be counted on.
If you are intent on spending your bitcoin in person – meaning you transfer the money directly from your wallet to the merchant’s wallet, then do your research ahead of time. Coinmap.com is a service which provides an aggregation of all the known stores who accept bitcoin.
Use a Wallet
Now that cryptocurrencies have reached somewhat of a critical mass, we are seeing a lot more businesses pop up with the goal of making it easier to spend your bitcoin. There is a huge opportunity in being able to unlock the utility of bitcoin as a medium of transfer, and these businesses are working on doing just that.
Companies like TenX and Monaco whose sole goal is unlocking the spending power of bitcoin. These companies work to integrate their platform so when you use their version of a credit card, it converts your cryptocurrency into the appropriate currency and spends it. Their product depends on cheap conversion fees and maximum convenience.
Even if you had never held bitcoin before, having a credit card that could spend your money in the appropriate fiat currency and minimize your fees would be a superior value proposition. These companies know what ails most consumers and want to make it easier to manage all your finances in a centralized manner.
Basically, they are using the opportunity afforded by cryptocurrency’s inconvenience to leverage their platform so they can replace the service offering of big banks. By providing flawless currency management, helping to manage spending, and enabling frictionless instant payments, they become the best option in the market.
Convert it Yourself
Sometimes the easiest way to spend your bitcoin is to just convert it back to fiat currency and spend it yourself. This would be done over an online exchange, but requires less of a time investment and is more convenient. You will have enjoyed an increase in the market value of your investment, and even though this might be the most inefficient in terms of transaction fees, it gives you the most freedom to spend your cryptocurrency on whatever you wish.
Every day it becomes slightly easier for you to spend bitcoin. Businesses want to make it as easy as possible for people to pay with it, not to mention the fact that it doesn’t cost them as much as if you were to use credit cards. Online payment processors and wallet start-ups are both working to make it a simpler process to utilize bitcoin freely. As a result, a few years from now you will probably find there is minimal friction when you go to spend bitcoin. In a way, this is what technologists mean when they talk about bitcoin being widely adopted.
Featured image courtesy of Shutterstock.