Bitcoin has become a popular choice amongst consumers and investors alike. With it does away with credit, debit, and cash purchases in favor of a peer-to-peer transactions system. A little over ten years later, bitcoin is slowly being recognized as a legal tender in some parts of the world. Although the price of each coin has continued to fluctuate, one thing we do know is that bitcoin can be used to buy and sell a large variety of products, especially with a little creativity. Small purchases can be made using third-party sites like PayPal, and big purchases can be made using a bitcoin escrow service.
The unique nature of virtual currencies, including their decentralized nature and finite supply, has given them inherent advantages over the fiat currencies commonly used today. Here are a couple of scenarios when it will be advantageous to use your bitcoin to buy products.
1) Use bitcoin when you want to do transactions anonymously
Bitcoin purchases are great for users who want to purchase things discreetly. Although each transaction is published to the public blockchain, each user’s personal identity is protected, similar to the anonymity of a cash transaction. To ensure security, just the public key is recorded in the transaction.
This isn’t to say bitcoin should be used for black market purchases. Rather some users don’t trust a third party with personal details such as their financial information, and rightly so. Bitcoin typically does not need your personal banking details and allows users to transact with greater peace of mind. It is important to note that while bitcoin transactions are not entirely untraceable, linking a transaction to personal identity is a lot more complicated than traditional mediums of payment.
2) Make purchases with anyone, anywhere
Often users have difficulty with cross-border payments, as exchange rates and foreign wire transfers can make for expensive payments out of the country. Since the bitcoin payment system is designed to be peer-to-peer, anyone on the network can receive payments regardless of where they are located. Transaction fees to do so are low for foreign purchases since no third-party intermediaries exist. This results from bitcoin’s decentralized status since bitcoin payments are processed through a private network of computers on a shared ledger.
For travelers, additional benefits include shorter waiting periods and the elimination of authorization requirements that may be needed. This is commonly a concern for parents with children traveling overseas or families that live far away and need financial support and can prove beneficial as funds are often required on an immediate basis. Each transaction on the blockchain is recorded simultaneously, updating all accounts.
Users can also make transactions with only a smartphone or computer, making it more accessible to populations that don’t have access to traditional banking systems.
3) Anytime you are making a mobile payment
Such as is the case for any mobile payment methods, users can make purchases with their coins anywhere that has Internet access. This is especially useful in the case of purchasing big-ticket items like real estate. In most cases, time is needed to drive to the bank or order a bank draft when putting a down payment down on your home, and costs are needed to issue this request. Using bitcoin, purchasers are not subject to any banking fees like they would be with a traditional currency.
Since bitcoin is largely online, making purchases does not require a user to go into a brick-and-mortar store. That said, the benefits of online purchases go two ways and benefit the seller as well. Payment reversals are not possible in the blockchain, which means small business owners will never have to worry about transacting with a fraudulent buyer.
Where can I use bitcoin?
Although bitcoin has a few clear advantages for when to use it, the number of retailers that accept bitcoin is still limited. In most cases, creative payment solutions such as peer to peer transactions through escrow can be used to make purchases for items that can’t be directly purchased.
Some continue to be skeptical of purchasing a currency outside of government regulation. However, the currency continues to be adopted by many making it easy for the average user to buy and sell it. The biggest risk is the volatility in the price of the coin, which can lead to unfavorable exchanges if not executed at the right time.