You Have Some Bitcoins, but What Do You Do With Them?
If you are like many people, you have started trading Bitcoins. But, once you have some in your possession, what can you do with them? Today, Bitcoin is more like gold than currency. It has insane value fluctuations, and just like you wouldn’t use gold to buy things, you might not want to use your Bitcoin.
However, some people are jumping away from this philosophy. After all, this is a cryptocurrency…”currency” being the important phrase. If it is currency, you should spend it, right? More and more companies are offering to accept Bitcoin as payment. For instance, you can buy a Tesla with your Bitcoin, or you can use PayPal to make a purchase online by using Bitcoin. Let’s take a look at where you can spend Bitcoin and what you need to know:
Spending Your Bitcoin Online
It is easier than ever to spend your Bitcoin online, which is paving the way for it to truly become a currency. Here are some of the online retailers that are allowing customers to make purchases with Bitcoin:
- Some Etsy vendors
There are also a number of utility and service providers that are offering the ability to pay via Bitcoin including:
- Dish Network
In addition to this, some schools and universities are also allowing people to pay for their education with Bitcoin, including the Wharton School at the University of Pennsylvania.
Using Bitcoin for Offline Purchase
We have covered using Bitcoin online, and honestly, there are more and more retailers adding the ability to make purchases online, but there are also more ways than ever to use Bitcoin in the “offline world,” too. Here are some of the well-known retailers that have started to accept Bitcoin:
- Home Depot
- Crate + Barrel
- Whole Foods
These companies are already accepting Bitcoin, and others are testing the new venture. For instance, Landry’s, which is the parent company of restaurants like Morton’s, Bubba Gump Shrimp, Chart House, and Del Frisco’s recently announced that it would begin accepting Bitcoin across many of its locations. In addition to this, Burger King and McDonald’s have started to accept Bitcoin at some of their international locations.
If you are interested in learning which stores in your area that are accepting Bitcoin, you can easily do this by using a site called Coinmap. This site not only shows merchants that accept Bitcoin, but it also shows where Bitcoin ATMs are located in your area. Additionally, Bitcoin.com offers maps.
Don’t Forget About Taxes
If you are in the US, you have to remember that you have to pay taxes on your Bitcoin. Currently, the IRS considers Bitcoin as an investment, similar to a stock. This means that the longer you own the asset, it can affect the capital gains tax rate you pay for your profits. For instance, if you have it for less than a year, and then you sell your Bitcoin for a profit, you pay a rate of 10% to 37%, depending on your income level. If you hold it over a year, you will pay 0% to 20% depending on your income.
We are saying “sell” your Bitcoin here, but the same applies when you “spend” your Bitcoin. For instance, if you bought Bitcoin for $100, and it is now worth $200, and you go to Home Depot to buy something with that Bitcoin, you will have to pay extra taxes on the $100 you earned. Now, it works the opposite way, too. If you bought $400 for Bitcoin, but the value fell to $200, and you spend that, you can claim capital loss.
Just keep in mind that these laws are likely going to change as people begin to see Bitcoin differently. In fact, in China, one day the government just said…”No Bitcoin.” So, any bank, any company, or any organization that accepted Bitcoin suddenly could no longer accept it. In the US, it seems like there is a possibility that cryptocurrency, including Bitcoin, could begin to be regulated, and that will change things again.