Is it good to buy things with Bitcoin and crypto? These days you can buy almost everything with crypto, whether it is with Bitcoin in particular or any other crypto coin.
You can buy a video game or a ticket to a live football game, or you can even buy a car or a piece of furniture.
However, the question is whether or not you should at all use crypto to buy things.
Well, people have different feelings and opinions regarding it and therefore it is very easy for any average person to get confused.
A few celebs, authors, business people and sports persons do use crypto to buy fancy and costly things because it just takes a couple of Bitcoin or other for it instead of loads of money drawn from a traditional bank account.
On the other hand, there are lots of other known and eminent people belonging to the higher strata of the society who are against buying anything with crypto.
However, in a few specific circumstances it does make sense to buy things with crypto but practically the answer to your question would be negative for most people.
This difference in opinion causes confusion among people. Well, if you too have any doubts, this is the right place to be.
This article will clear all your doubts, if you have any, regarding whether or not you should use Bitcoin or crypto to buy things.
Reading this article you will come to know specifically about Bitcoin and other crypto coins along with some real world use cases as well.
This will help you to make the right decision eventually so that you do not regret it in the end.
Is It Good to Buy Things with Bitcoin and Cryptocurrency?
Typically, it is not the wisest of decisions to buy things with crypto.
Ideally, it is true that crypto payments are a good alternative method to make a transaction but that is for those people who do not have any ways to access a traditional finance system in the region they live or do not have the necessary means or documents to open a traditional bank account.
For example, there are lots of unbanked people all over the world who need to but cannot transfer money to their family members or any other person.
Crypto is good for them to use for that purpose, even internationally, and through their crypto wallets, to make a purchase from a participating merchant.
They can use different apps for it such as BitPay and not need to go through any intermediaries or any traditional financial institution.
However, there are some other people who want to use crypto to buy things simply to capitalize on the faster speed of transaction.
And, a lot of such purchases are currently made all over the world using Bitcoin or any other crypto coins.
For example, if a prince from the Middle East wants to buy the latest Lamborghini from Italy may want to use crypto for that matter.
It is because the prince may want to have the car immediately and do not want to wait for bank information, deposits, approval, transfer and other things that usually take a lot of time.
In such cases the prince will be better off using crypto coins.
However, it is due to the downsides of crypto that you should abstain from using it to buy things.
Typically, as you may know, all crypto transactions are anonymous, relatively.
This is the main reason that crypto has the reputation of being used widely by the criminals to buy and sell things on black markets online.
No matter what, the prevalence of crypto as a popular form of payment mode for making illicit trades still persists.
For example, the computers of the Colonial Pipeline, which is a primary gas line servicing the East Coasts and the US Gulf, was shut down by the hackers who demanded that they are paid $4.4 million in Bitcoin before they restore it.
The US government paid the amount initially but later on seized $2.3 million of that ransom amount back. It did not result in a significant loss because the price of Bitcoin dipped after that.
However, looking at things from the point of views of a business, there are lots of merchants who are willing to accept payments for the goods and services sold by them in the form of crypto.
This trend is likely to grow with each passing day.
Therefore, you can expect to see more growth in the popularity of Bitcoin and other crypto coins down the lane.
Whether this is a good or a bad craze is subject for debate but it surely has allowed a few companies to cash in on it or take part in the uniqueness of a new payment system.
On the other hand, there are a few companies that go a step further and strongly believe that crypto is the future and a good way to go.
The future of crypto looked bright and the market had a bullish experience when Tesla decided and announced that it will accept payment for their vehicles in Bitcoin.
However, they then decided against it, mentioning their concerns about the environmental impact and huge energy consumption of Bitcoin.
Yes, there is a high chance for a day to come in the future when Bitcoin and other crypto coins may become mainstream and more common forms of payments.
However, for any average American investor or trader it is not the right time yet to consider paying for daily groceries in crypto coins.
One of the primary reasons to say so is that the crypto markets are extremely volatile in nature which causes wild price swings pretty quickly and unexpectedly.
This means that the worth of coins paid for groceries today may be high or low tomorrow.
This also means that the price of the product itself will vary depending on the price of the crypto coins used to pay for its purchase which, in turn and typically, depends on the market movements, sentiments and conditions.
Moreover, several merchants and companies out there who claim to accept crypto as a mode of payment for their goods and services sold typically accept only Bitcoin and not all types of crypto coins.
Since everyone may not necessarily hold Bitcoin in their crypto wallet, this benefit therefore will not be enjoyed by all.
Still, with all these said, people are interested to see how exactly crypto coins work out as a mode of payment.
According to a recent survey report by PYMNTS.com, a research and news platform for commerce and payments, it was revealed that about 20% of the adults in the United States are interested in making a purchase using crypto coins.
However, before you agree with them and cash in on your crypto or Bitcoin in particular to add to the balance on the Starbucks app, take a look at what the experts have to say regarding using crypto for making a purchase.
No, Not Bitcoin
Experts strongly suggest not using Bitcoin because, according to them, this is one of the worst crypto coins to use to pay for buying something.
Bitcoin, as you may know, is the first crypto that was initially designed to be used exactly like money.
In fact, the Bitcoin white paper dubs it as ‘a peer to peer electronic cash system.’
However, that seems to be outright questionable in practice due to its volatile nature and frequent price fluctuations.
Experts say that it is due to this price volatility making a purchase with Bitcoin is a risky affair.
For example, if you pay some amount of Bitcoin worth $3 for having a cup of coffee at Starbucks the same amount of coin tomorrow may be worth $30. In such a situation it is a significant loss incurred by you.
More importantly, experts reiterate that people invest in Bitcoin not to go to a store and buy groceries, electronics, or to have a cup of coffee.
For that, you have your credit and debit cards. Typically, people buy Bitcoin because it has a much higher store of value in comparison to others.
Other Crypto Coins
Now you may want to know what about the other types of crypto coins? Whether these are good to use to buy products or not since Bitcoin has not been successful in becoming a useful mode of payment or a new currency?
Experts however seem to be a bit more liberal when it comes to other types of crypto coins.
They say that the other types of crypto coins fare a bit better than Bitcoin when it comes to using them for buying goods and services.
Typically, every type of crypto coin is optimized to do specific things and there are a few popular crypto coins that are designed in a much better way to use them for buying things.
The list includes and is not limited to:
- Tether and other stable coins.
The main reasons that the Altcoins are decided to be better alternatives for cash purchases are their design and support and as for the stable coins it is the fact that their prices are pegged with existing currencies.
These coins are more like cash, experts say, and therefore are good to use for buying things.
The transaction speed of these particular crypto coins is faster and the fees are lower and therefore can be used to make payments very quickly.
However, in reality, just as any other thing, using crypto as cash payments for purchases also come with a few significant downsides.
For example, consider BCH or Bitcoin Cash that was created after the original was found to be extremely volatile and not suitable to use as a new type of internet money.
Therefore, the developers decided to split from the original Bitcoin crypto and create the new Bitcoin Cash.
Bitcoin Cash was typically designed to be a more stable version so that it successfully supports buying things with it.
However, in reality, this particular crypto coin too proved to be still quite high in volatility with its prices falling down to around $250 for each coin and then again rising up to $1,500 or more at times.
This means that if someone uses the BCH to buy something at the wrong time he or she has a high chance of making heavy losses.
Another significant downside of using crypto to buy goods and services is related to taxes, which may result in a lot of complications and confusions.
It is true that you will not need to report about your crypto purchases to the IRS or the Internal Revenue Service but still it can cause a lot of complications while preparing your tax file.
This is because according to the guidelines of the IRS you will need to report when you trade crypto for any goods or services.
Every time you make a purchase with crypto you will therefore need to keep a track of the cost basis or the fair market price of the crypto when you bought the specific type of crypto coin and when you used it to buy the goods or services.
Based on that, you will need to report your capital gains or losses.
Real World Uses
Now, finally, if you still want to use crypto coins to buy things, it will be better for you to know some of the real world use cases.
As for the American citizens, buying things with crypto may not prove to be a good reason because the value of the US dollar fluctuates much less in comparison to most of the crypto coins that are available out there in the market right now.
Still, when you consider any other currency that is less safe and stable than the US dollar in comparison, the need to use these crypto coins to buy things may increase in the real world.
Crypto coins may be endorsed as the future of money and a lot of people may already have started to make and accept payments in this specific form of digital currency but it is still not time to use it to buy your daily items, as it is clear from this article.