A guide to Bitcoin: what is it for and how do you spend it?

A guide to Bitcoin: what is it for and how do you spend it?

Bitcoin and other cryptocurrencies are notoriously volatile. However, smart management and good timing can mean serious return on investment. For instance, the price of Bitcoin hit all-time high of $20,000 in mid-December 2020, before rising even further at $34,000 at the beginning of January 2021.

Those who have taken a chance on Bitcoin and find themselves with sizeable assets may now choose to reward themselves by spending their digital currency rather than just invest it. Here’s how.

Where to spend Bitcoin

With the value of Bitcoin on a steady increase since September 2020, more and more companies across several industries now accept the cryptocurrency as a payment method.

Here are a few examples of where you can spend your Bitcoin:

  • - Travel & leisure: airBaltic, London Theatre Direct, CheapAir, Travala (US-based holiday booking system)
  • - Charity or non-profit donations: Save the Children, Wikimedia, RNLI
  • - Vouchers: eGifter and Gyft in the US, or Gift Off in the UK
  • - Retail and e-shops: Etsy, Lush, Newegg, Microsoft, Overstock, Nord VPN

PayPal has also announced that users in the US will soon be able to buy, sell and hold some cryptocurrencies such as Bitcoin. It is not yet known if this will eventually apply to users based in the UK or the EU, but it is certainly a possibility if deployment in the US is successful.

How to spend Bitcoin

Sending Bitcoin is just as simple as making a bank transfer or sending an email. Here is how to get started:

  1. Mine, trade or earn Bitcoin: in order to spend, you need to earn!
  2. Set up a Bitcoin wallet: as you would with cash, for instance
  3. Generate your public Bitcoin address: this is the equivalent of your bank/PayPal details
  4. Transfer a small amount of Bitcoin to your address from the place where you earned/purchased your Bitcoin

With these simple steps, you are now ready to spend your Bitcoin! There are several ways in which you can use your crypto wallet:

  • In-store

While this is not available everywhere, you can technically make “physical” Bitcoin transactions in-store. In order to do so, your retailer needs to 1) accept Bitcoin payments and 2) be equipped with suitable software. If that is the case, all you have to do is scan a QR code presented to you at checkout or transfer Bitcoin to the retailer’s bitcoin address.

  • Online shopping

If you are shopping online, the same conditions apply, but instead of a QR code, you will be required to enter a security code at checkout, just as you do when paying by debit or credit card.

  • By card

Alternatively, you can connect your Bitcoin to your debit or prepaid card. This is a little-known fact, but this method is supported by major credit card companies such as Visa and Mastercard. If your current card does not support Bitcoin, you can get one issued through FCA-approved companies such as Wirex (their cards have not yet been deployed but a waiting list is available).

  • Through a cryptocurrency platform

Finally, you can also make Bitcoin transactions through specialised platforms such as Coinbase, Bisq, Binance and Cash App. In order to do so, both you and your merchant need to have an account on the same platform, Coinbase being the most widely used.

The price of Bitcoin has risen and fallen in recent years and the cryptocurrency is certainly considered a high-risk investment. This is particularly true now that Bitcoin is at its peak – nobody truly knows if it will go up or down. That said, Bitcoin has certainly sparked interest from many investors which can mean, if sustained, a bright future for the cryptocurrency. These prospects (which we still need to be cautious about) are not only promising in terms of value, but also in terms of investment and spending opportunities as more and more companies and industries are starting to embrace and support cryptocurrencies as valid payment methods.

Last Update on 26/01/21

Continue this discussion on the forums