How to Pay with Bitcoin
Learning how to pay with bitcoin is far from an essential life skill in 2019.
But if libertarians and enthusiasts have their way and mass adoption changes the world’s payment systems, it might be someday. If and when that happens, the lucky few who read this post are going to be ahead of the game. But before we go into the ways people use to pay with bitcoin now, it’s important to acknowledge what paying in bitcoin was like in the early days.
How to Pay with Bitcoin in 2010
Bitcoin’s blockchain launched in October of 2008. Laszlo Hanyecz made the first ever retail bitcoin transaction on May 22nd, 2010. What did he buy? 2 pizzas! In today’s market value, Hanyecz would have paid nearly $80 million dollars for those pizza slices. Aside from the value of the pizza order today, what’s striking about Hanyecz purchase is how elementary his request was back when he made it on bitcointalk.org:
“I’ll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day. I like having left over pizza to nibble on later. You can make the pizza yourself and bring it to my house or order it for me from a delivery place, but what I’m aiming for is getting food delivered in exchange for bitcoins where I don’t have to order or prepare it myself, kind of like ordering a ‘breakfast platter’ at a hotel or something, they just bring you something to eat and you’re happy! I like things like onions, peppers, sausage, mushrooms, tomatoes, pepperoni, etc.. just standard stuff no weird fish topping or anything like that. I also like regular cheese pizzas which may be cheaper to prepare or otherwise acquire. If you’re interested please let me know and we can work out a deal.”
Hindsight is Always 20/20
Notice the way Hanyecz positions everything. He’s just looking to cut a deal so he can eat some pizza. Obviously at this point in bitcoin’s adoption, he can’t just walk up to a point of sales terminal and order what he wants. He needs to go to an online forum and find someone willing to take a chance on what turns out to be an $80 million cut of an entirely new asset class!
What’s even funnier looking back is noticing that someone on the forum thought spending 10,000 bitcoins for a pizza was too much back then: “10,000… That’s quite a bit.. you could sell those on https://www.bitcoinmarket.com/ for $41USD right now.. good luck on getting your free pizza.” What a difference less than a decade can make. Here’s the thing. Spending bitcoins in 2010 wasn’t easy. Finding retailers to accept it likely left consumers with maybe one or two local options and perhaps a handful of them online. Today, major corporations are accepting cryptocurrency.
How to pay with Bitcoin in 2019
Nine years is a long time in the world of cryptocurrency. Not only is it significantly easier to pay for things with bitcoin today than it was back then, it’s easier than it was two years ago or even last year. Innovation in technology moves at the speed of light. The list of ways to pay with bitcoin is growing, and it will continue to grow as the days go by. For now, we’ll count them down.
Paying a Bitcoin Forward
At its heart, bitcoin is a peer-to-peer payment system. It always has been and it always will be. The basic principles of the blockchain make it so. Think about it. A blockchain is a decentralized database. In the case of bitcoin, it’s used as a public ledger that nobody can manipulate. Nobody owns it, and nobody can inflate the value of the currency built on it artificially. Blockchain is for everyone and by everyone. That’s why the good old fashioned way to pay for something with bitcoin will always be transferring value to a friend. Here’s how to do just that! Firs things first assuming you already know how to buy bitcoin, you might already have a wallet on a computer or smartphone.
If you don’t, Coinbase.com offers arguably the world’s leading crypto wallet. The portfolio of coins customers can buy and trade with Coinbase is always expanding. Right now, just using a credit card for a small instant purchase, customers can buy Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. The company’s trading service, Coinbase Pro, offers the opportunity to trade for many other currencies, but it’s only for American users. Nevertheless, paying a friend in bitcoin is really easy. Just have your friend generate a wallet address on their mobile device and give it to you via text or QR Code. In text, the address is just a long string of random characters like this: 1BoatSLRHtKNngkdXEeobR76b53LETtjaC (Note: This address is fake, don’t send any currency to it)
Take the text address your friend sends you and paste it into the Send field on your crypto wallet app. Choose the amount of cryptocurrency you’d like to send and then fire away. Don’t worry if your friend doesn’t receive the crypto right away. It can take a while for a transaction to go through, particularly on the Bitcoin network. The average completion time for a transaction is 10 minutes. If copying and pasting a bunch of random text is too much for you, using a QR code is even easier. A QR Code is a square filled with random black and white dots. It’s coded with the crypto wallet address. Simply scan a Send or Receive address using the camera embedded in a phone and viola, the transfer is complete.
Spending Bitcoin with Online Merchants
In 2010, having a large online merchant accept bitcoin was a foreign idea. Today it’s much more common. Overstock.com is perhaps the most recognizable brand accepting cryptocurrency. The ecommerce site is a poor man’s version of Amazon, or perhaps more like the furniture retailer Wayfair in a lot of ways. Overstock has been accepting bitcoins for years. The company is so bullish on it that CEO Patrick Byrne announced that the company was launching its own cryptocurrency in 2017 at the height of the initial coin offering boom.
Figuring out how to pay with bitcoin on Overstock isn’t rocket science. Simply choose bitcoin as the payment option at checkout. You’ll then be given a wallet address to send to and be given a small amount of time at a locked in bitcoin price, so that you’re not immediately susceptible to the price swings of cryptocurrencies. This ensures that you only pay the fiat value for the purchase. That’s it. Electronics junkies can do the same thing at NewEgg.com. Like Overstock, NewEgg isn’t new to crypto. The site has been accepting bitcoin for quite a while now.
Spending Bitcoin with Merchants Who Don’t Take It Directly
Even though the adoption of bitcoin is growing by leaps and bounds as the years go by, the reality is the majority of businesses don’t accept bitcoin. So what do you do when one of your favorite places to shop doesn’t take cryptocurrency? You use gift cards. eGifter.com allows people to buy gift cards with bitcoin from any number of stores. It makes paying with bitcoin more convenient in a sense because it broadens the range of retailers you can spend cryptocurrency with, just not in the most direct way. The one downside to using this approach when paying with bitcoin is that there is usually a built-in fee for making the purchase. In other words, you’ll have to spend a little more than a gift card is worth in order to acquire it. The one advantage to using a gift card however is that gift cards don’t expire, so you can keep them for a long time and make purchases whenever you’re ready. From that standpoint, spending money on gift cards might be good for somebody who is super enthusiastic about bitcoin and wants to live off of it on a day-to-day basis.
How to Use Credit Cards to Pay with Bitcoin
No there isn’t a way you can apply for a traditional credit card that lets you use bitcoin and pay it off later. All bitcoin-friendly credit cards are prepaid, meaning that you load them with currency in advance and spend the money as you go. The upside to this is clearly convenience. With a prepaid credit card, you don’t even have to worry about whether or not the merchant accepts bitcoin. The bitcoin converts into dollars at the time of purchase and that’s it. However, just because it’s convenient, doesn’t mean you can use it in any country at any time.
Cards issued in the United States and Canada operate in American and Canadian dollars. If you are to use these cards outside of those countries (or whatever country you reside in), you would not only pay fees, you may also have to pay for currency conversion. Many prepaid cards also require users to maintain a minimum balance or pay an annual fee. It’s not a perfect system but if you’re looking for convenience, at least at the present moment, there’s nothing that tops a MasterCard, Payoneer or Visa Debit. BitPay.com serves customers with both personal and business needs. They allow merchants to get set up and accept bitcoin and allow individuals to sign up for a prepaid card that makes it easier to spend it.
How Adoption is Making Paying Easier
One way to make online spending easier is to use a merchant that operates a store via Shopify.com. Shopify is a publicly traded company whose share price is skyrocketing since the company’s initial public offering. The reason for that is that the platform makes it easy to set up a professional -looking store and empowers anyone to scale and e-commerce business. Now Shopify is letting merchants accept cryptocurrency as payment. While it’s not mandatory for merchants to do so, as adoption continues to expand, for merchants will accept bitcoin. It only makes sense. In 10 years, you may not even need a prepaid card to do online shopping.
You also may not even need it to go and buy coffee. That’s because heavy hitters like Starbucks are even accepting crypto now. That’s thanks to an app called Spedn. It allows merchants to sign up and accept crypto, and it allows individuals to use it. One of the reasons merchants love it is because it guarantees transactions, meaning retailers don’t lose money on chargebacks. Chargebacks cost American businesses an estimated $31 billion a year. It’s not just Starbucks seeing an opportunity to both make and save money. GameStop, Petco, Whole Foods, and Nordstrom represent are a handful of recognizable brands ready to align themselves with crypto.
How Will Paying with Bitcoin Be Easier in the Future?
If you’ve read this far, you’ll notice a common theme. Making it easier to pay with bitcoin comes down to increasing levels of adoption. Both businesses and individuals always adjust to things that make life easier and enriched them financially. The more and more people realize they can make or save money by using bitcoin, or experience a greater level of convenience and security because of it, the more they will use it. It’s as simple as that.
It may be awhile before everybody takes bitcoin for granted the way they take paper money for granted now. But if recent history is any insight, it will definitely be easier to pay with bitcoin as time goes by. We might even see an influx of people living off of it as time goes by. One thing we are sure to see is more and more private companies developing their own financial systems.. Facebook Libra anyone? For now, just enjoy the ride and get in on the bitcoin revolution. In the long run, you’ll be glad you did. Even if all you get out of it as a learning experience and a bit of exposure to what the future holds.
Article Produced By
Heiko Closhen, Entrepreneur