Where can you spend cryptocurrency? Some retailers we write about on KCL are accepting it as a form of payment lately, but how? Honestly, this complicated beast is not going away, so I figured it’s time that we frugal-minded shoppers discuss it. I’m not ready to jump on the cryptocurrency crazy train just yet. Here’s why:
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Looking for general info about cryptocurrency? Scroll to the bottom, ’cause I’m diving in.
1. Skip the bank because you have to buy cryptocurrencies like stocks.
You can’t just run to your local bank (yet) and grab a few crypto coins. You have to buy it through exchanges, stockbrokers, or current crypto owners, at a certain price for one coin, similar to stocks. Here are some exchanges:
2. Cryptocurrency prices are off the chart.
I’m a smart, savvy shopper who’s always looking for a deal. I can tell you crypto at this time is not one of them. To buy ONE Bitcoin, it’ll cost you $38,708.80. Exsqueeze me?! Two months ago, it would have cost you over $64,000!
3. You can only spend cryptocurrency directly in a few places.
While a few businesses like Overstock.com, Expedia.com, Burger King in Venezuela, and Coca-Cola (in Australia and New Zealand) accept Bitcoin, it’s not like you can run to Target or Walmart and pay with Bitcoin or any other cryptocurrency.
4. Get ready to deal with third-party apps to spend your cryptocurrency.
As Mastercard works on launching their crypto credit card, and PayPal on their crypto-friendly platform, right now if you’re going to pay with crypto you need to use the third-party SPEDN app for the following stores:
PRO TIP: If you use the SPEDN app to make a purchase with crypto you must enter the exact amount to spend, because the app won’t give you back the difference!
5. It’s better to spend crypto on larger purchases…like a house, thanks to transaction fees.
The average transaction fee to use a Bitcoin is $4.50. For people who have purchased homes, restaurants, Teslas (until Elon shutdown Bitcoin as a payment option), artwork (real and digital), that’s nothing. Tack that onto your $4+ Venti Starbucks Latte, and that cup of joe doubles in price.
Plus, it’s much easier to calculate two Bitcoin for a house than it is to determine how much of a Bitcoin it takes to get that $4 cup of coffee, which today would be 0.00010, or one ten-thousandth of a bitcoin. Sheesh.
6. If you forget the private key (password) to your virtual wallet, forget about your cryptocurrency.
Any cryptocurrency you buy sits in a digital wallet that requires a password. Unlike typical (fairly easy to remember) passwords, most private wallet keys contain 51 characters. Forget or lose that password, and your cryptocurrency is gone forever. NO ONE can retrieve it!
7. It’s easy to use cryptocurrency for illegal transactions.
Since the security and privacy around cryptocurrency transactions is so high, the government has trouble identifying users by their address, and for that reason, trouble keeping an eye on their data. People have used crypto to buy drugs on the dark web and hide “dirty” money.
8. Mining cryptocurrency is horrible for the environment.
It takes a ton of energy to run computers for mining and transferring crypto. According to the Cambridge Bitcoin Electricity Consumption Index, it takes the same amount of power to complete a single bitcoin transaction as the average household uses each month. Carbon emissions from cryptocurrency are so bad; it’s like adding an extra 8.9 million cars to the road. When Bitcoin produces more emissions than American Airlines, it’s not cool.
9. Face the IRS consequences.
As if filing your taxes couldn’t get any more complicated, buy, sell, even exchange crypto, and you can face serious tax implications, as it is considered property.
General info about cryptocurrency:
What year did cryptocurrency come out?
Bitcoin was launched in 2009, making it the oldest and the most popular of all cryptocurrencies (crypto for short). All the other cryptocurrencies are called altcoins. Here’s the most important cryptocurrencies (altcoins) that aren’t Bitcoin:
- Bitcoin Cash
- Binance Coin
What cryptocurrency lingo do I need to know?
If you want to buy and use cryptocurrencies you gotta understand a lot of words. So many words, in fact, that there are several online crypto-dictionaries. Here are a few important ones:
- Address: A string of letters and numbers that identify where you send or receive crypto.
- Blockchain: A type of database that stores information in blocks that are chained together.
- Distributed Ledger: A database that is synchronized, shared, and accessed by multiple people as a way to keep the books on the up and up.
- Exchange: A business that lets you trade your cryptocurrency for other digital currencies or fiat money (see next definition).
- Fiat money: A currency a government declares as its legal tender.
- Mining: Creating new crypto by solving a computational puzzle.
- Wallet: Controls your address and allows you to store and access your cryptocurrency.
I know you have plenty of questions like what are smart contracts, NFTs? Can I buy part of a Bitcoin? Yes, that’s a thing, but better for a later discussion. Remember, I told you cryptocurrency is complicated, but I believe changes will take place and make it easier and less of a hassle to use. I’m keeping it on my radar, but not jumping into it until it gets more practical.