What Can You Buy With Bitcoin?

You’ve experienced the rush of buying your first bitcoin. Now what?

Some people choose to sit back and wait for their investment to appreciate, others are more impatient and feel an urgent need to cash out. Every now and then, an emergency hits and you need to dig into the piggy bank. Maybe you’ve been investing for a while and want to treat yourself to some of those juicy profits.

Whatever your reason may be, there are plenty of opportunities to spend your bitcoin, although being patient with your investment also has its merits.

A New Digital Currency

Ever since May 22, 2010, bitcoin has been used as a form of payment. Laszlo Hanyecz, one of the earliest bitcoin miners, will forever be remembered for his 10,000 BTC purchase of two pizzas, worth about $40 at the time of baking. Since this groundbreaking transaction, the utility of bitcoin as a digital currency has gone on to incredible heights, propelling it to the status of legal tender in (at the time of writing) 2 countries (El Salvador and the Central African Republic).

A digital currency needs to be acceptable for commerce for it to be deemed useful and reliable; being a medium of exchange is one of the core principles that makes up any form of money. With its 12-figure market cap and official status as legal tender, it is understandable that bitcoin is becoming increasingly available as a form of payment, both online and in real-world commerce.

As demand for bitcoin commerce continues to grow, an increasing number of transactions will migrate away from the Bitcoin blockchain’s base layer to better suited payment channels, such as the Lightning Network.

Get Creative With Your Spending

As a digital currency, bitcoin is extremely versatile. Thanks to its strong monetary properties, bitcoin is also referred to as a sound store of value. Alongside savings and commercial transactions, people have conceived a variety of use cases for spending bitcoin.

BTC holders looking to get creative with their satoshis have leveraged its high divisibility and permissionless traits to carry out borderless micropayments online. Users around the globe have made use of bitcoin to support charities, offer donations and even tip content creators directly.

Organizations in need of funding regularly receive support through bitcoin payments, regardless of how controversial or divisive their cause may be. If necessary, these payments can done privately using anonymous bitcoin wallets.

Those of you with a more advanced financial background could even consider temporarily using your bitcoin as collateral to fund a loan for a purchase. Just be cognizant of the risks associated and educate yourself before making any commitments.

How to Spend Your bitcoin

As the industry develops, so too does the technology and ease of use. There are a variety of payment methods, ranging from scanning QR codes on mobile phones, copy pasting addresses into web browsers, signing transactions from the security of your hardware wallet, or even linking your bitcoin to a physical tap and go payment card.

Speaking of cards, several exchanges offer their own payment cards to customers that offer attractive cashback rewards for spending your sats. If you’d like to allocate some of your stash to daily spendings this may be an interesting avenue to explore.

Consider the Repercussions of Your Sale

Action brings reaction, which is very often the case when spending bitcoin. Although they differ in their specific legislature, several jurisdictions may apply a capital gains tax on your bitcoin-funded purchase. This would be the case if the value of your satoshis are higher, in fiat terms, than what they were when you first made the investment. It may just be worth your while to consult a local tax advisor before heading out on that sat spending spree.

Putting yourself in a tight economic squeeze is also not a good place to be in. Having too much of your net worth in a volatile asset like bitcoin may put your finances under pressure and require you to spend your bitcoin at an inopportune moment.

Sound investing comes with a solid understanding of time preferences. Having a high time preference can often be quite short sighted and lead to rushed decisions and reckless situations. A low time preference mindset is quite often all that it takes to make more calculated decisions and have better planning for your future.

Acting Within Reason

Despite being an exciting technological innovation, the same basic economic principles apply to spending bitcoin as they do to your fiat purchases. Just as you wouldn’t snap up every single new iPhone that hits the market, you shouldn’t feel the urge to spend your bitcoin just because a new payment method exists. This is especially important when you factor in tax implications and the security considerations that come with being a self-sovereign individual.