A common question about Bitcoin is, “can it be used to make purchases?”
Many people have this idea in their head that Bitcoin is strictly for investment with little to no value as a currency, which would make it similar to gold and other precious metals.
This sentiment has some truth to it, Bitcoin is mostly purchased as an investment, but there are some opportunities to use Bitcoin to purchase merchandise and other services. This article will cover all the different uses for Bitcoin.
Using Bitcoin to Purchase Merchandise
That’s right, Bitcoin can be used to purchase merchandise. Now, you might wonder how this is possible because not many merchants appear to accept Bitcoin.
Well, that’s just not true. 40% of merchants, including many Fortune 500 companies, accept Bitcoin as payment. This is most common on online marketplaces, but the companies tend to hide the Bitcoin payment option because they don’t particularly like accepting Bitcoin.
If you want to use Bitcoin to purchase merchandise, then it’s really as simple as searching for the Bitcoin logo on the website that you are using to purchase the services. You aren’t as likely to see a store that accepts Bitcoin in a brick and mortar setting. However, it’s worth asking the cashier if the store accepts Bitcoin.
Using Bitcoin to Purchase Services
Services are another setting where you can use Bitcoin. Again, it mostly depends on the type of service and the business owner. However, you’d be surprised at the amount of small businesses that accept Bitcoin.
It’s especially common for freelancers to accept Bitcoin instead of PayPal or other merchant services because Bitcoin has very low transaction fees.
If the seller doesn’t explicitly mention they accept cryptocurrency, then it’s worth asking if they would be willing to accept Bitcoin. Also, remember to mention that the fees are much lower on a Bitcoin transaction.
Advantages of Using Bitcoin to Purchase Goods and Services
Bitcoin has a few advantages for making a purchase over other forms of currency. Here are some of those advantages:
Perhaps the biggest advantage of using Bitcoin to make a purchase is that you can use it anonymously. We won’t cover why someone might want to make purchases anonymously.
Just know that anonymity is one of the main reasons that cryptocurrency is used to make a purchase.
The biggest advantage of using Bitcoin for purchases is that the fees are extremely low. The total fees add up to a few cents per transaction, which is much lower than the 3%-5% fees that credit cards often charge.
Some merchants even pass those fees onto the customer, so you do sometimes have to pay the credit card fees.
Faster Processing Time
Bitcoin has a faster processing time than credit or debit cards. It takes about ten minutes for a Bitcoin transaction to clear.
This is faster than a credit card that often takes 3-5 days to fully process. This is mostly an advantage for sellers rather than buyers, but it does help the buyer having a faster processing time.
Bitcoin is non-reversible, which is a huge advantage for sellers as it prevents chargeback scams. It’s not a particularly big advantage for buyers.
In fact, it’s mostly a disadvantage for buyers because they have no recourse in the event that they are scammed.
That said, the non-reversible nature of cryptocurrency transactions is a huge reason that sellers should accept Bitcoin as payment.
Transaction Never Declines
Have you ever had your credit card declined when making a purchase?
It happens to everyone at one point and it can be embarrassing when it does happen.
However, it never happens with a Bitcoin transaction if you have sufficient funds in your wallet.
Strengthens The Cryptocurrency Brand
Finally, every time you use Bitcoin to make a purchase it strengthens the cryptocurrency brand. How?
It shows that cryptocurrency is more than just a tool for investment – it’s an actual currency that can replace credit and debit cards. If none of the other reasons to use cryptocurrency to make a transaction have convinced you to use it, then let this be the reason.
The great part about this advantage is that it slightly increases the value of cryptocurrency, which means you can increase your investment by using Bitcoin for transactions.
Frankly, a believer in cryptocurrency should be using it to make as many purchases as possible.
Disadvantages of Using Bitcoin to Purchase Goods and Services
Using Bitcoin to purchase goods and services is not all sunshine and rainbows – it does have some minor disadvantages. Here are those disadvantages.
We mentioned the non-reversible nature of cryptocurrency as an advantage, but that was for sellers.
For buyers, it helps to have the ability to reverse a transaction in the event that the goods or services did not live up to the expectations.
This one particular disadvantage is the biggest disadvantage of using any cryptocurrency to purchase goods or services.
Not Many Merchants Accept It
As mentioned earlier, not many merchants accept Bitcoin as a payment method. However, the number of merchants that do accept Bitcoin is probably higher than you think.
That said, it’s still not widely accepted, which makes using it for everyday purchases somewhat difficult.
Sellers Usually Charge Higher Fees
Sellers pay less fees on Bitcoin transactions. However, they still charge higher fees (or a terrible conversion rate) when buyers use Bitcoin due to the unstable price of Bitcoin.
Again, this is a problem that you will have if using Bitcoin for transactions. There isn’t a way around this problem other than using Bitcoin frequently enough that sellers begin to charge lower fees due to the popularity.
Finally, Bitcoin has a very unstable price. This might sound like an advantage for buyers, and it can be an advantage depending on the direction the price changes.
In reality, the price changes on Bitcoin so frequently that it’s essentially gambling when you use it to make a purchase.
Will the price jump 20% after your purchase? Or will it drop 20% after your purchase?
No one really knows, which makes using Bitcoin for purchases a risky endeavor.