What can you buy with cryptocurrency? A guide
What can you buy with your cryptocurrency? This guide should help answer that question…
- The original bitcoin pizza
- El Salvador and Latin America
- Other things to buy
- Cars and crypto: when Lambo?
- A crypto house?
While cryptocurrency is fast becoming a crucial part of the world of investments, it is ultimately a means of exchange. So as well as serving as something to be traded and invested, people can – at least in theory – use it to buy tangible, real world items
But what can you buy with cryptocurrencies? What can cryptocurrency be used for? Let’s take a look.
The original bitcoin pizza
The very first real world bitcoin purchase was made almost 12 years ago, on 22 May 2010, when a computer programmer called Lazlo Hanyecz went on an online forum and struck up a deal with a fellow internet user. Hanyecz would send the user 10,000 bitcoin and, in return, he would get two large pizzas from a branch of the Papa John’s chain.
While this transaction, which would have been worth around $41 at the time, was a pretty good deal, and more importantly a pioneering one, it may not have been the best use of the coin’s value. While in the early days of crypto 10,000 BTC was not worth terribly much, the price has boomed. Currently, 10,000 bitcoins would be worth around $385m.
El Salvador and Latin America
One answer to the question “Where can I spend cryptos?” is El Salvador. On 7 September 2021, the Central American nation became the first country in the world to make bitcoin legal tender.
Legislation passed by the El Salvadoran government said: “In order to promote the economic growth of the nation, it is necessary to authorise the circulation of a digital currency whose value answers exclusively to free-market criteria, in order to increase national wealth for the benefit of the greatest number of inhabitants”.
Bitcoin became the nation’s coin of choice, as it was noted that 70% of the country’s population did not have access to banking services.
The new law said that BTC was “unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out.” That meant, in effect, that anything that was legal to buy in El Salvador could be purchased in bitcoin.
While it may seem like a bit of a silly answer to the question “What can I buy with bitcoins?” to say, “Anything, so long as it is in El Salvador,” it is nevertheless a correct answer.
To help the introduction of bitcoin along, the country’s government set up a trust, worth $150m, which would give citizens a $30 bonus and the Chivo electronic wallet, and let people convert cryptocurrencies to USD without having to pay commission. So, where can you spend cryptocurrency in 2022?
Further developments are in store for the coin in 2022. By the end of this year, Panama, Paraguay and Guatemala are expected to make bitcoin legal tender. Heavily reliant on the US dollar, parts of Latin America are “vulnerable” to currency fluctuations, and consider BTC a viable alternative.
Commenting on the development of crypto in Latin America, Ripple published a report stating: “There is a lucrative opening for traditional banks, fintechs and governments to increase adoption of crypto-forward technology to address this underbanked and fragmented market.
“Smart and progressive regulation will beget further successful regulation — leading to increased innovation and progress around crypto across Latin America. In the wake of the regulatory debate happening in the United States, there is a large opportunity for banks and fintechs to work with regional regulators to create smart public policy frameworks to ensure that all boats rise.”
So, will Latin America become the model for how cryptocurrency might develop in the daily lives of citizens?
What other sorts of crypto transactions are possible?
Other things to buy
Some retailers accept cryptocurrency as a payment.
What is your sentiment on BTC/USD?
The UK beauty retailer Lush takes crypto as a form of payment on its website while, among others, Starbucks and Whole Foods Market have begun to accept cryptocurrency payments in bitcoin, ether, bitcoin cash and gemini dollars.
This is done through a payment platform, such as Bakkt or BitPay, which enables consumers to make purchases through an app on their smartphone. The funds are instantly converted to local fiat currencies on behalf of the merchants.
There are currently more than 36,913 bitcoin automated teller machines (ATMs) across the world. This is a hefty figure, especially considering that on 1 January 2020, there were just 6,358, demonstrating near-exponential growth in the following two years. These machines allow you to both buy bitcoin and swap it for fiat currency, making holding crypto a lot more accessible.
Cars and crypto: when Lambo?
One of the more surprising companies that will not accept crypto payments is Tesla.
The electric car manufacturer’s chief executive, Elon Musk, has long been an advocate of cryptocurrency, and in the early months of 2021 you could buy a vehicle from Tesla with bitcoin. However, due to concerns over the environmental impact of bitcoin mining, which sees large numbers of computers working to solve increasingly complex mathematical equations and using huge amounts of electricity to do so, the company stopped taking crypto as a method of payment in May 2021.
The move saw bitcoin and cryptocurrencies as a whole losing their value, and was one of the factors behind the great crypto day crash of 19 May 2021.
Despite that, it looks like Tesla might be about to change its mind again. In an October 2021 filing with the United States Securities and Exchange Commission (SEC), the company said: “We may in the future restart the practice of transacting in cryptocurrencies (digital assets) for our products and services.”
While it is not known if, when or in what currency Tesla might start doing business again in crypto, this would be encouraging news for the sector.
That said, if you want to buy a car with cryptocurrency, it is definitely possible. You may well have heard crypto investors asking the perennial question, “When Lambo?” but, if you have enough crypto, the answer is “right now”. That is because the online retailer BitCars has a Lamborghini LP 640-4 Performante on sale for 9.8 bitcoin (around $380,000).
A crypto house?
Supposing you bought a car with cryptocurrency – would you not also want to buy a house with it? That is possible, but it might be difficult.
For a start, mortgage bankers must report any deposit that seems to be either too large or an odd figure. Many crypto payments fall into this category, meaning there is a need for more documentation which can, in turn, make the house-buying process slower than it might otherwise be.
Most mortgage underwriters do not recognise cryptocurrency as a valid form of payment. A spokesman for Wells Fargo told Yahoo Money that it only accepted funds from liquidated crypto accounts, and even then there needed to be proper documentation.
The bank said: “We do not purchase loans originated by other lenders through our correspondent channel if such funds were used for the downpayment or closing costs, due to additional complexities associated with ensuring compliance with our validation and documentation requirements.”
On the other hand, Veterans United told Yahoo Money that it was seeing more people wanting to use crypto to buy homes, with vice-president Chris Birk saying: “At the end of the day, it’s another asset source converted into dollars.”
Depending on the exchange, yes. You sell your crypto for fiat currency and you should be able to withdraw it from your crypto wallet.
It all depends on what you mean. If you mean can it be used like real money, then the answer is yes, it can be, depending on who you are dealing with. If you mean is it worth real money, then yes, although the prices can be extremely volatile.
If you're asking if it is a fiat currency backed by an American central bank, then the answer is no. Compare this to tether (USDT), however, which is backed by an equivalent amount of US dollars – ie, it is a stablecoin.
If you want to buy cryptocurrency, why not try Currency.com?
Do always conduct your own research, never invest more than you can afford to lose, and remember that prices can go down as well as up.