Cryptocurrency has gained popularity. Now as more people have their Bitcoin stored more people are wondering how to spend cryptocurrency. There are quite a few things you can do but first, let’s look at how to store cryptocurrency which is an important step in the process.
Storing and using cryptocurrency
Storing crypto is an important part of the spending process because it can affect how you spend your currency and it is important to do so safely. You have a few choices as to how you can store your cryptocurrency.
Crypto wallets are not your typical wallets. They are a physical device or a digital app that keeps your cryptocurrency safe and accessible when you are ready to spend it. There are two types of wallets including hot and cold. A hot wallet is connected to the internet and uses software.
A cold wallet is not connected to the internet. Instead, it is used like a USB drive when you need to access your funds. Both have their own pros and cons. Some might say that hot wallets are more susceptible to being hacked because they are connected to the internet. Others may feel that a cold wallet can be lost because it is not in a digital form.
A crypto exchange is an online service that allows buyers and sellers to come together to buy and sell cryptocurrency. You can even use a crypto exchange to convert money into crypto. Keep in mind there are some fees involved with crypto exchanges.
Paper wallets are exactly how they sound. It is a piece of paper with either a QR code or a crypto key on it. If you have a QR code, it is scanned and allows you access to your crypto to spend or trade. Some feel this method is secure because you can store it in a safe place and not worry about it getting hacked, just make sure you keep track of the piece of paper.
6 ways to spend cryptocurrency
Now that you have your cryptocurrency stored, there are 6 ways to spend it. Some are a little direct while others are a bit unique.
Debit and prepaid cards
Debit and prepaid cards are a convenient way to spend crypto. Even major credit card companies such as Visa and Mastercard have cards that you can use to spend your cryptocurrency wherever those cards are accepted.
This can add to the convenience factor with spending crypto because these cards are usually accepted in a lot of places. There could be some fees associated with using this card to make purchases.
Here are some popular places to get your hands on a debit card to spend your currency.
Make direct purchases
As cryptocurrency gains popularity, some companies accept crypto as a direct payment. Some major companies use a third party to process the transaction and the amount is transferred into dollars.
The site will walk you through any additional steps needed to successfully complete the transaction. Here are just a few companies that accept direct purchases with cryptocurrency.
Sell to an exchange
You can use a crypto exchange to convert your cryptocurrency into usable cash. There are a few options for exchange sites but you want to make sure these sites are secure and legit. You also want to explore how liquid the funds will be upon the exchange and what coins are supported. Some sites, for example, will only exchange Bitcoins. Also, check to see if there are limits on how much you can exchange. Here are some popular crypto exchanges.
Buy gift cards
Some of your favorite retailers might not accept some of the popular cryptocurrency just yet, but you could still use your funds to purchase a gift card. You can buy gift cards for some popular retailers like Uber, Amazon, and even Starbucks using your cryoptcurrecny. Even if they do not accept cryptocurrency directly, this is a great way to still use your funds to make purchases. You can use the following services to purchase gift cards to some of your favorite places.
Donate to charity
Have a favorite charity that you want to donate to? A great way to spend cryptocurrency is using it to donate to charitable organizations. Some of the following popular charities accept cryptocurrency as a donation.
- Save the children
- Electronic freedom foundation
- Rainforest foundation
Paying bills is another way to spend your cryptocurrency. You can pay utilities, phone bills, and even your rent using crypto like Bitcoins. Some popular websites just need you to login, provide your biller information, let them know where the cryptocurrency is being sent, and in a few more steps your bill will be paid.
Pros and cons of paying with cryptocurrency
Having options of how you can spend your cryptocurrency is useful but there can be some disadvantages too.
What are the advantages of using cryptocurrency? Let’s take a look.
No banking fees
Unlike with a bank, there are no miscellaneous banking fees when spending your cryptocurrency. You reduce the risk for things like late fees, overdraft fees, or even high interest charges.
Though it can seem difficult or even exclusive, cryptocurrency is actually accessible to anyone with money. If you are interested in buying digital currency, there are no qualifications or an application process to get your hands on crypto.
Another advantage of cryptocurrency is that transactions can be anonymous. No worries about your spending being tracked.
There are some disadvantages to spending with cryptocurrency.
Like all taxable income, you will be taxed on your cryptocurrency gains. This is especially important to consider if you have a large gain amount in one year. Make sure you are prepared for this to be paid at tax time.
As mentioned before, there are some fees when you convert your cryptocurrency. The transaction fees can add up since you are converting your crypto to spend.
Crypto is volatile. This means the market is constantly changing based on supply and demand, hype from other buyers and sellers, and investors. The changes can happen quickly and some can be predicted but others can’t be. This means your funds can change in an instant but not always for the better.
While cryptocurrency is popular, it is not easily available when you need it. If you need cash and you have a bank account, you can usually go to any ATM to withdraw money. With cryptocurrency, it might not be that simple. Spending your crypto might require more steps.
Banks not only offer availability but also some protection. Cryptocurrency is not overseen by a bank, so if something goes wrong, there is no way to reverse the transaction or get your money back. It is important to be accurate when making purchases because crypto purchases do not offer you any protection.
There are some options for you to spend your crypto. From paying bills to purchasing gift cards, you can spend your cryptocurrency pretty similar to cash. There are advantages and disadvantages to both so make an informed decision when considering how to spend cryptocurrency.
Frequently asked questions
Where can you spend cryptocurrency?
There are some businesses, like Expedia or Microsoft, that will allow you to use your cryptocurrency directly, but you can also purchase gift cards to popular retailers with crypto.
What can you do with cryptocurrency?
You can spend your cryptocurrency like you would cash, donate it to charities, or use it to purchase more crypto. The choice is yours.
What can you use bitcoin for?
Bitcoin is one of the more popular forms of cryptocurrency. Bitcoin can be used like most other cryptocurrencies to make purchases, buy gift cards, and donate to charities to name a few options.