How to use bitcoin
Cryptocurrency, particularly bitcoin, is such a popular topic of conversation right now. Most people have heard of bitcoin but have no idea what it is or how to use it in their everyday lives. If you happen to fall into this category and often find yourself questioning how to use bitcoin, this article demonstrates the currency’s variety of use cases by exploring real-world examples.
Many consider bitcoin’s primary use to be a store of value rather than a method of transferring value. Bitcoin is a good long-term asset for those who wish to store it, however, bitcoin has plenty of use cases thanks to the blockchain, the technology underlying bitcoin. For those who are new to the entire cryptocurrency concept, the blockchain is like a real-time public registry or database where all Bitcoin transactions are recorded and are immutable. In short, it’s impossible to change or corrupt the blockchain.
Bitcoin is empowering but also very different to the currencies you know and regularly use every day. Before you start using bitcoin, it’s important to cover the basics such as where to get bitcoin and where to store your bitcoin.
You need to set up or create a Bitcoin wallet to store your bitcoin. A Bitcoin wallet holds multiple wallet addresses, which functions the same as an IBAN for you to send or receive a bank transfer. You can find a more in-depth explanation on Bitcoin wallets and addresses in our previous article. Once your wallet is set up, you can get your hands on bitcoin by purchasing through an exchange, like Kraken or Coinbase.
Now back to uses for bitcoin, before purchasing and integrating bitcoin into your everyday life, it’s important to educate yourself on its ups and downs as it settles down into global finance and on how to secure your coins.
It’s also crucial to remember that bitcoin is taxed. It’s best to jump into your concerns alongside a tax consultant or lawyer after doing some basic preparation.
Please keep in mind that we are by no means providing financial advice. Trading in cryptocurrencies such as bitcoin carries a high risk of loss for the capital invested, even to the point of total loss. Now, let’s explore the possibilities for how you can use bitcoin!
Remittances and global transfers
Ravi Menon, Chief of Singapore’s Monetary Authority (MAS), has asserted with confidence that blockchain technology can improve the infrastructure for global transfers.
Accordingly, the MAS and the Bank of Canada are running trials with cryptocurrency to test its value in the sphere of international payments. International payments also include remittances, which are payments usually sent from people working in foreign countries back to their families in their home countries.
The remittance market is huge and constitutes one way how people have put bitcoin to use. The World Bank estimated that in 2017, officially recorded global remittances would reach $596 billion. In 2016, over €23 billion was sent abroad as remittances from Germany. Western Union, the global leader in the remittance market has begun exploring the realm of crypto.
Bitcoin will exist with or without its integration into mainstream banking. In fact, it was created as an act of resistance to the traditional global financial system and the practice of fractional reserve banking.
Bitcoin has inspired a truly borderless payment system. It promotes financial inclusion by allowing anyone with Internet access anywhere in the world to transact value. It has created a pathway for the two million people around the world who do not have access to bank accounts to become part of the global financial system.
The decentralized, peer-to-peer nature of Bitcoin, which allows for cheaper and faster transfers is what makes bitcoin more attractive than traditional money transfer systems.
Yet, the Bitcoin network must still undergo further scaling to retain its attractive features as popularity and demand grow. The speed and cost of Bitcoin transactions are expected to become lower in the future as more improvements to the protocol are developed and implemented, such as the Lightning Network.
Bitcoin’s similarity to gold in terms of its finite supply is often why people find it an attractive investment. Its ability to reach high price levels is clear. Bitcoin reached prices in the thousands quite fast, which is impressive for a technological innovation that challenged the basic tenets of the old global financial order. It’s especially impressive considering the fact that bitcoin was previously not as easy to acquire, coupled with government skepticism, negative press, and a technological knowledge gap.
Bitcoin’s more long-term value cannot yet be known, but many still decide to invest and see where it takes them, even if that means lots of HODLing. HODLing is the common term used amongst the crypto community to describe the process of holding your coins regardless of their price fluctuations.
As time passes, it’s becoming increasingly easy to invest in bitcoin. We aim to provide user-friendly services to instantly trade euro to bitcoin and vice-versa. However, before investing in bitcoin, it’s important to truly familiarise yourself with the cryptocurrency and be aware of its potential risks.
Payments and purchases
Not only can individuals invest and exchange value amongst each other (for example, in the case of remittances), individuals can also pay service suppliers or make payments to merchants in bitcoin.
The first well-known purchase with bitcoin was by developer Laszlo Hanyecz. The purchase proved bitcoin’s ability to be used for everyday payments. Hanyecz paid 10,000 bitcoin for two pizzas at Papa John’s. At that point, nobody knew that bitcoin’s price would skyrocket to reach an unbelievable height of near $20,000 in late 2017. But even so, bitcoin has retained a price around $10,000 for prolonged periods of time and at that price, those two pizzas would have a value of $100 million!
Bitcoin has come a long way since those pizza days. Online merchants regularly accept bitcoin payments and more stores on the ground are beginning to adapt to the new payment system.
With bitcoin, you can book a whole holiday (including flights and hotels) through a single search engine. You can also buy hundreds of different gift cards, enjoy food and drinks at Room77 in Berlin, pay for your Microsoft software, order food online at Lieferando and much more! You can use CoinMap, a tool to locate bitcoin-accepting merchants, to find stores, restaurants, bars, and cafes which accepts bitcoin as a form of payment.
Spending bitcoin for everyday items is becoming more popular. According to Chainalysis, consumers used bitcoin on merchant services for a monthly average of $190.2 million in 2017.
In July 2018, it was revealed that one hundred merchants would trial the Lightning Network for customer’s bitcoin payments. The implementation of Lightning will make bitcoin payments both cheaper, and faster. It’s exciting to see more innovation and development on top of the Bitcoin protocol. Such developments will allow for the mainstream adoption of bitcoin.
Some may use bitcoin to make donations since charities like Save the Children and Greenpeace accept the cryptocurrency. Bitcoin worked well for WikiLeaks, which came out on top with its help, despite the U.S. government’s attempts to block traditional funding from reaching the organization.
After all the talk about how to use bitcoin, we’re finally touching upon how you can accumulate bitcoin. Believe it or not, it’s possible to earn bitcoin beyond investing and HODLing.
Some employers allow you to receive your salary or part of your salary in bitcoin. Many crypto companies have been paying their employees in bitcoin for years. You can use Bitwage to receive your payslip in bitcoin. How easy can it get!
Additionally, just as shown on CoinMap, if you own an online or a brick-and-mortar store, you can add bitcoin as a payment method for your customers. If you expect that the percentage of customers paying with bitcoin is small, you can easily start with the world-renowned “Bitcoin Accepted Here” sign.
Even if hardly anybody uses bitcoin to pay at your store, you will be helping the crypto industry by increasing awareness and by making customers more willing to accept bitcoin as a form of payment as they see more and more places where they can spend it. Finally, if you dedicate time to learning about the technicalities of Bitcoin mining and acquire the relevant tools, you can slowly and steadily maintain some income through the process.
We hope that you can now see how to use bitcoin in your everyday life. There’s lots of fun to be had with it and it’s exciting to contribute to building the crypto-fiat bridge and see bitcoin’s use cases broaden.
A final use case worth mentioning is Bitcoin’s educational value for how things are set to change. Bitcoin’s introduction of blockchain technology has shaken the world from finance to governance, to logistics, and much more. Bitcoin will always be used to demonstrate the power of blockchain technology and the transformation of the global financial order.