What are Bitcoins used for?

What are Bitcoins used for?

Bitcoins are used for exactly the same purpose that regular physical coins are used for - buying, selling, saving and investing.

The investing part is easy. You simply buy Bitcoins on an exchange and keep them in your account at the exchange or in your own private electronic wallet on your own computer (or phone?). Just like any other investment, the value of Bitcoins can go up or down. Generally speaking, if more people want to buy and own Bitcoins then the price will go up because the supply is limited. If they fall out of favour, and lots of people want to sell, then the price will drop.

The value of Bitcoins in terms of physical currency has been quite volatile over its lifetime. This is because cryptocurrencies are relatively new and the rate of adoption (how many people are using them) fluctuates according to many external factors. Perhaps the largest of these factors is the portrayal of Bitcoins in the media. One minute they are the latest thing and you should definitely ‘get on-board’ and the next minute they are totally untrustworthy and dark-forces are sure to steal all your wealth so should be avoided. Other major influences include the treatment of Bitcoins when it comes to tax, and the anonymity of Bitcoin holders.

Buying and selling products and services takes place by transferring coins from your wallet to the wallet of another person or organisation. It’s really quite simple as well; the vendor will give you an electronic ‘address’ to which you should send them in the same way that you might make a regular currency bank transfer.  Read more on Bitcoin addresses here. There are also an increasing number of high street retailers that let you pay for everyday items with Bitcoin using your phone.

There was a time was when the only place you could really spend your Bitcoins was on the Dark Net, where you could purchase guns, drugs and forged passports amongst many other unsavoury things and it’s likely that this accounts for much of the negative press which still surrounds Bitcoin in some quarters.  But these days you can pay for computer games, beer, coffee, holidays,  taxi rides, airline tickets and even buy a Tesla car or pay for your own funeral.