Many people who hold Bitcoin and other cryptocurrencies mainly view it as a long-term investment due to its large price appreciation. However, many cryptocurrencies are becoming a viable way to pay for typical day-to-day transactions such as buying simple things such as a pair of jeans from an online retailer or even food from the supermarket. Many investors hold Bitcoin as an investment in their wallet but the most recent question people are asking is – how do I spend crypto?
How to store cryptocurrency:
Before we dive into how to spend your cryptocurrency, it’s important to understand how to store it. With traditional money, your main options include storing it in an online bank and then you would typically spend it digitally through bank transfer or PayPal, or you can use a physical debit/ credit card or cash. Fortunately, just like with fiat (traditional) money, you have some options available to you for how to store crypto.
In order to store cryptocurrencies, you need a software-based digital ‘wallet’ on your desktop or mobile wallet that you can access and use from anywhere. You can use software-based wallets such as Metamask or Coinbase Wallet on your desktop or smartphone. If you are unsure which platform to use to store your crypto then it may be worth getting in touch with a crypto tax advisor who will be able to advise you on which wallet may be the best option for you.
Another option is to use paper wallet services for your crypto, which is the closest you’ll get to spend your crypto as if it were actual cash. With this method, you’ll have a piece of paper with two QR codes – one can be used to receive cryptocurrency, and the other can be used to spend it.
Now that we have discussed the main methods for storing crypto, let’s move on to how you can actually spend your cryptocurrencies.
How to spend crypto:
In some ways, paying with cryptocurrency is similar to sending an email, except that instead of sending a message to an email address, you’re sending an amount of money to a Bitcoin address.
One of the good things about paying with crypto is that you don’t need to provide as much personal information as you normally would with traditional payment methods. You only need to give your name and address if you’re purchasing physical goods. If it’s a digital item, then your email will usually suffice, and if you’re making a donation, you may not need to provide any information at all.
After you provide the required information, rather than asking for a credit card number, the website will display the payment information which will consist of at least one of the following:
- A link to “Sign in” if you are using a mobile or desktop wallet
- A QR code
- A Bitcoin address
At this stage, the process may differ slightly depending on the type of bitcoin wallet you’re using.
Using a digital wallet
If the merchant you’re paying uses a digital online wallet to accept crypto payments and you also have a funded wallet, you can complete the checkout by simply signing in to your account and confirming the order. Once you confirm the order, the process is finished and the merchant will be notified of your payment.
Using a QR code
Most cryptocurrency payment processors will also provide a QR code at the checkout, which represents a bitcoin address and payment amount.
QR codes make it easy to pay from a wallet app such as Coinbase on your smartphone – all you have to do is simply scan the QR code and it will pre-fill the recipient’s bitcoin address and the requested payment amount. Once you send the transaction, the payment is complete.
This is a good option If you don’t have a Coinbase account or wish to pay from a different wallet.
Using a Bitcoin address
If you can’t scan QR codes or the merchant only provides a bitcoin address, you can also manually enter this as the recipient of a transaction in your wallet software. To pay to a Bitcoin address, you’ll need to provide two pieces of information to your wallet:
- The recipient’s bitcoin address
- The amount of cryptocurrency you wish to send
Both of these will be displayed on the payment page during checkout, although some will leave the amount up to you in the case of donations or other more flexible payment models.
With the address and amount, simply enter them into the “send” form of your wallet and submit the transactions.
Crypto Debit Cards
If you’d prefer something simple and familiar, you can spend your Bitcoin and other cryptocurrencies by using crypto-linked debit cards. The cards are issued by major credit card companies including Visa and MasterCard, so you can spend your cryptocurrency wherever a Visa is accepted.
Where can I spend cryptocurrency?
Crypto is becoming easier than ever for holders to spend as they wish online, and many leading online retailers such as Shopify, Microsoft and Xbox now allow their users to add money to their accounts using cryptocurrency.
As well as digital transactions, you can also spend your cryptocurrencies in the physical world. Although the number of options isn’t nearly as robust as online, several retailing and restaurant giants have opened their companies up to accepting crypto, including Starbucks and Whole Foods.
More and more companies are joining the most recent financial development – even McDonald’s and Burger King are now experimenting with accepting cryptocurrency in some international locations. In some instances, you can now even pay for your education with Bitcoin; the University of Pennsylvania’s Wharton School recently started accepting cryptocurrencies for its online executive education program.
If you want to find out more about where you can spend your crypto, you can use a search engine called Spendabit which will allow you to search through millions of products, all available for purchase with different cryptocurrencies.
The use of cryptocurrency in the day-to-day world is becoming increasingly popular and more advanced each day, and it is expected that at some point in the future the majority of transactions will be made through the use of crypto, but the question remains – do you planning on using your cryptocurrency holdings for day-to-day transactions?
If you’re interested in finding out more about which businesses both online and offline accept cryptocurrency payments, or whether using crypto in your daily life is a good option for you, we can help you to get in touch with specialist crypto tax advisors in the UK. to help detail where crypto is accepted and advise you on whether or not you should jump on the bandwagon and start using crypto for daily transactions.