What can I use bitcoins for?

So, you know how to get bitcoins. But why? What can I use them for? Payments, obviously. But let’s go into a bit more detail:


One of the most obvious reason is to send money across borders in a low-cost, fast and efficient manner. It’s often called “frictionless” because it doesn’t encounter barriers along the way, like a traditional money transfer which has to go through banks and clearing houses. True, you have to get the bitcoins to start with, that is a type of friction, but this article starts from the assumption that you already have them. Banks often charge between 4 and 10% for cross-border transactions, usually with a fixed component which can push the percentage even higher if the transfer is small. Using a money transfer business such as Western Union or MoneyGram would be more expensive, especially if the recipient or the sender doesn’t have a bank account. Furthermore, international transfers usually take a few days. Bitcoin transfers incur no or very low fees, irrespective of the amount, and can be in the receiver’s bitcoin wallet within minutes.

Total number of daily transactions over past two years, via blockchain.info
Total number of daily transactions over past two years, via blockchain.info

Buying things

Bitcoins can also be used to buy things. The number of businesses accepting bitcoin grew over 30% in 2015, having more than doubled in 2014. That year, Microsoft added bitcoin as a payment method for US-based customers. Dell also started accepting bitcoins last year, and in January 2014 Overstock became the first general retailer to accept the virtual currency from over 100 countries. In Europe, leading ecommerce company Showroomprive started accepting bitcoin in September of last year. Coinmap shows most of the online and offline stores that accept payment in bitcoin. Paying in bitcoin even in offline stores is so easy: the check-out tills usually have a QR code that you can scan, which makes the payment a question of just a few taps.


And if what you really want to buy with bitcoin is only available at an online store that doesn’t accept bitcoin, there are always bitcoin gift cards. Purse.io lets you exchange your bitcoins for others’ unwanted Amazon gift cards (apparently there is such a thing). Gyft lets you buy gift cards for a wide range of stores with bitcoin. Or, Xapo and Coinbase both have debit cards linked to a bitcoin wallet. You can pay with your “card”, which automatically deducts and converts the necessary amount from your stock of bitcoins.


The low friction of bitcoin, and its divisibility, make it ideal for microtransactions (within sidechains or similar, to minimize transaction costs). Changetip and other platforms make it easy to leave small amounts to journalists, bloggers, commenters, artists, etc. This democratic form of monetization of content could well issue in a new era of creative business models.

by Jan Vašek
by Jan Vašek


Most of the bitcoins that have been mined, however, are held for investment. The price is volatile, but has been as high as just over $1000, and just a few years ago was as low as $10. At the time of writing, the market price is approximately $400. Bitcoin enthusiasts see use and acceptance increasing over the next few years as the advantages become more apparent, as more apps make use even easier and as regulation removes uncertainty.

As an investment, bitcoin carries some advantages. It is useful (you can use it for efficient and low-cost payments), and it has a limited supply. Thus, if demand goes up (because of its usefulness) and the supply remains controlled, the price of bitcoin relative to other currencies should also go up. And, your bitcoin investment is in your hands, especially if you keep it in an offline wallet. No political authority can confiscate it, no firm can wipe it off its books, and no hacker can reach it. No central bank can mess with its value by printing more, and no government can use a devaluation to make it worth less.

Bitcoin as an investment does come with significant risks. Its price is volatile, and it is still illiquid. Changes to the protocol, law and even technology can have a material effect on its value, and may even make it unprofitable as a global payments mechanism, so I am not endorsing it as an investment vehicle.


If you have nerves of steel, you can try to buy and sell bitcoin, making a profit (or not) on the difference. Coinbase estimates that 80% of its bitcoin movements are from speculators, who trade bitcoin as a commodity in search of profit. A long list of exchanges can handle bitcoin trading – some of the largest are Bitfinex, Kraken, and itBit. (Note: some estimates claim that 90% of bitcoin day traders lose money, so this is not an encouragement to take it up.)

Sending money abroad, buying things, micropayments, investment or speculation – which is the “killer app” of bitcoin, which will push it into the mainstream? There are advantages and obstacles to each use case – in which will the advantages win? Perhaps in all of them, as activity ebbs and flows, solutions are found and new business models emerge. Time will tell.

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