What is it used for?
A lot of people ask me whether cryptocurrencies are just toy money or whether they actually hold any value. The true test of the value of any currency is its buying power. So, once you own some crypto, what can you do with it?
Because of the limited supply of Bitcoin, the more demand for them – the higher the price goes. One of the reasons the price has increased so much is that more people learn about Bitcoin every day, so when they buy Bitcoin and the supply doesn’t increase with demand, the price increases. For this reason some people buy or mine cryptocurrencies for the sole purpose of holding onto them, hoping they appreciate in value over time.
Although nowhere near as widespread as credit card acceptance, there are many brick and mortar stores who accept Bitcoin and other cryptocurrencies as payment for goods and services. Online there are many more options to spend your crypto.
There are lists of offline and online retailers who accept Bitcoin, a simple google search will provide you with all the information you need.
Here are a few online retailers who currently accept cryptocurrency as payment:
Zynga – the mobile gaming giant responsible for FarmVille and many other online games
Shopify – hugely successful web company which allows you to set up and run your own store online
Newegg – computer and electronics retailer
Expedia – online travel booking website
Dish – Satellite TV & Internet Service Provider
Microsoft – deposit Bitcoin and use as credit in their online store
Namecheap – Website domain name company
Virgin Galactic – Richard Branson’s space flight business
*Watch for Amazon and or Ebay*
Overstock.com have recently started accepting Bitcoin as payment and this will make them one of the companies to watch in this space.
There is a legendary story from 2010 about a developer who bought two pizzas with 10,000 Bitcoin. Back then, Bitcoin was a little known digital currency and it was still in its infancy – at the time of writing, one Bitcoin is worth around 8,500 USD.
When Bitcoin was created, it was envisaged that it could be used as digital money – but because of the amazing ability for it to be used to store value (accessible by anywhere without any need for a trusted third party such as a bank or other large organisation) there are now a lot of people buying and holding Bitcoin. This means there is not as much liquidity as there could be, so transaction costs are relatively high for small value transactions.
While there are people who will accept Bitcoin as payment for many things, it is difficult to justify purchasing small priced items with Bitcoin. For this reason there are other cryptocurrencies that can handle lots of transactions and have much lower transaction fees which can be used for these smaller purchases.
The price of a cryptocurrency can go up as well as down, much like regular currency, stocks and shares. Traders have started taking advantage of the fluctuations in value of cryptocurrencies and have begun trading them in the same way. A whole industry has grown around crypto trading, with trading platforms, apps and websites being launched to take advantage of this relatively new opportunity.