JUN 16, 2014
What Can I Do With My Bitcoins?
Using bitcoin for its intended purpose, as an actual currency designed to transfer value between two or more individuals, is becoming more popular and is an essential step for Bitcoin to reach its full potential.
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Now that you have gotten your grubby little digital claws on some Bitcoin, you might be wondering what you can do with them. The truth is - getting Bitcoin exchanged for fiat currency isn't always the easiest thing to do. Bitcoin ATMs are being distributed to cities around the world, but relative to the increasing popularity of Bitcoin, growth is slow. If you are lucky enough to live close to a bitcoin ATM, transferring in and out of fiat currency is as simple as traveling to it and withdrawing cash.
But by doing so, you are missing an opportunity to participate in the digital ecosystem. Using bitcoin for its intended purpose, as an actual currency designed to transfer value between two or more individuals, is becoming more popular and is an essential step for Bitcoin to reach its full potential.
Can Bitcoin Buy Me What I Need?
For those of us who don't live by a Bitcoin ATM, using our Bitcoins for everyday goods and services can be a fairly involved process. Bitcoin transactions are nearly instantaneous, but turning them into fiat still depends on the aging financial systems built around those currencies and it can take days to complete. That doesn't mean the coins are worthless until they get turned into fiat, however.
If you are interested in general goods, buying a gift cards with Bitcoin is probably the quickest way to turn the digital currency into physical goods for many users. eGifter and Gyft are two major players in the space and they both not only accept bitcoin, but offer rewards for using it.
Both offer 3 % rewards using a point system for bitcoin (with 2 % and 1 % rewards for Paypal and credit/debit cards respectively) and between the two of them, most of the major brands are covered. There seems to be a slight issue using Coinbase with Gyft, the page that gave me 15 minutes to pay “expired” without seeing the payment I sent, but the card came an hour later regardless. Using a local wallet (as opposed to Coinbase's web wallet) with Gyft reportedly works perfectly fine. eGifter, which runs through Coinbase anyway, obviously didn't have any issue.
There is also Pock.io, which deals mainly in UK based retailers (but does have a few worldwide outlets) and also sells cards in exchange for alternative coins like Litecoin, Dogecoin, Peercoin, Maxcoin, Quark, Vertcoin and Worldcoin.
Once payment is processed, the gift card is delivered to you instantly, and can be used to buy nearly anything imaginable (although, grocery stores are sadly underrepresented).
Of course, selling and buying Bitcoin is perfectly possible through Localbitcoins.com and you can digitally transfer Bitcoins to anyone willing to buy them from you, by exchanging goods or services, in real life.
Spendbitcoins.com will also help you find thousands of local shops around the world that will take your Bitcoin directly.
There are also an increasing number of online retailers that take Bitcoins directly. Tigerdirect (a computer components retailer) and overstock.com (general goods) are the two big names, but expedia.com also recently announced that it would begin taking Bitcoin.
What Can Bitcoin Do That Fiat Can't?
Buying Starbucks gift cards are cool, but that probably isn't what most people dream about when they first learned about cryptocurrencies. The whole point of digital currencies is to do things old fiat currencies cannot or will not.
When the internet first infiltrated the public consciousness, pornography was a huge factor in its growth. People don't always like to admit it, but it is our unquenchable thirst for seeing other people naked that propelled the most important invention in the past century to popularity.
Like the internet, Bitcoin's first few popular uses for it happen to be on the seedier side. Bitcoin happens to be a very useful tool for services that for some reason are better off skirting the regulations that come with operating that business in fiat currencies.
Gambling, particularly online gambling is one great example of this. Online gambling, like porn, was one of the first good use cases of the Internet back in its early days. Some crackdowns in the past decade and a half, including a big crackdown by the United States government in 2011, have tempered things down a bit. However, online gambling using Bitcoin has been growing in a big way.
The marriage of gambling and Bitcoin makes perfect sense. Winning in gambling, for both the gambler and the casino, depends on math. For many games, the margin in favor of the house is razor thin, a few percentage points. But it is that small margin, combined with the economy of scale that ensures casinos not only remain profitable, but rake in cash hand over fist. The role of the dealer in nearly any casino game can adequately and, in some cases exceptionally, be handled by a computer.
Bitcoin is based on math, is infinitely divisible and easily transmitted. There are several Bitcoin based digital casinos out there. While their technical legality in many jurisdictions remains up in the air, most of the sites don't discriminate against IP addresses originating from certain countries and so far the authorities have turned a blind eye to the sites.
The exact nature of the math behind Bitcoin has allowed Bitcoin casinos to reduce their profit margin even further, all the way down to a 51/49 % split. Even better, bitcoin gambling can fit nearly any budget. Since everything is done using math behind the scenes, it is entirely possible to play poker hands for tens of thousands of dollars, or a fraction of a cent. This opens up online gambling to anyone with a Bitcoin wallet, even if the player only has a few mBTC to spare.
Bitcoin doesn't stop at gray markets like gambling either; it delves headfirst into the black market as well. The Silk Road is unfairly linked at the hip with Bitcoin in the minds of the uninformed, but the fact is that the online black market was still one of the first popular places to spend Bitcoins.
The Silk Road was famously shutdown last year by the feds, but in its place many other darkweb marketplaces have risen up. On them, it is possible to purchase nearly anything illicit that can be transferred digitally or through the postal system. I can't say that using any of them is a “good idea” but the fact remains that they do represent one major use case of Bitcoin and cryptocurrencies that can not be as easily accomplished using fiat currencies. Fiat currencies can, and often are, used to buy illegal goods, but they can't be used in such a large global network without being subject to monitoring by the authorities.
Simply using bitcoin or another cryptocurrency is not enough to protect your privacy on these illicit marketplaces, you'll have to use an anonymous browser like Tor, a coin laundry service like CoinJar or Darkwallet, and a secure messaging system like Pretty Good Privacy (PGP). But, in many cases, it does represent a much safer way to purchase these kinds of goods and services than buying them in real life. Finding the markets themselves aren't always easy, but sites like deepdotweb.com do provide market reviews and will point you in the right direction.
What 'Legal' Things Can Bitcoin Do That Fiat Can't?
Buying drugs online might be an interesting use of Bitcoin, but it would be a disservice to the cryptocurreny to act like that is the most exciting thing it can do. Microtransactions have been promised to us for years, but Bitcoin and currencies like it have finally delivered on it.
Donating to charities, media outlets and content providers has never been easier. There are thousands of places out there accepting bitcoin, and sending them money doesn't waste a dime on middle men or regulatory institutions.
Okay, so Bitcoin can be used to buy everyday goods, gamble, tip people and acquire likely illegal objects, but what else can it do?
We often talk about cryptocurrencies breaking down the barriers and bottle necks in the financial industry. This can be seen in how easy it now is for companies to go public without the need for approval from the NYSE or other financial regulatory institutions.
Instead, companies can go public on a variety of bitcoin powered stock exchanges, that let users not only buy stocks using bitcoin, but enjoy the protections and freedoms that come with a trust-less, decentralized currency. Many companies' stocks are cryptocoins themselves.
Unlike traditional stock trading site, buying stocks in crypto related companies with cryptocurrencies has low fees and no barrier to entry. Nearly anyone can join up and start playing at virtual stock broker almost instantly.
While it may not seem like such a big deal at first, the potential societal changes resulting from anyone being able to invest in any company, without the need for parasitic middle men, almost cannot be overstated. Finally, the same tools the rich and powerful use to increase their wealth are coming to the common man, and we won't even have to pay much for the privilege.
Cryptocurrencies are going to be used in ways we cannot yet imagine, but the innovations that are around the corner are already extremely exciting.
Distributed Autonomous Corporations (DAC) are corporations that run on their own, (without direct human guidance) are owned by the people who use its service and run completely on their own cryptocurrency backbone. The profits of DACs are automatically and fairly transferred to its stockholders. A complete explanation is beyond the scope of this article, but it is something commonly pointed to as a possible use for cryptocurrency technology in the future.
PubPay is a relatively new idea that comes from the creator of the Dark Wallet. PubPay hopes to provide an incentive for whistle blowers by allowing the public to crowdfund their revelations using cryptocurrencies. While it isn't limited to just whistle blowers (it could also be used by a developer looking to profit off of code before making it open-source) having a crowd funded platform for the Edward Snowdens of the world can't be a bad thing for those that favor transparency.
When it comes to politics, blockchain technology could one day be utilized to change the way we vote, or even develop a new kind of economic system outside of capitalism and Marxism.
Bitcoin has helped out a lot of charities, and it makes it easier than ever to send money to individuals, but a decentralized, transparent and distributed charity might also be something we see in the not-too-distant future.
Despite some dark spots, Bitcoin has a bright past and an exciting future. It is important to remember that it is still in the early days of the technology. Comparing it to the internet, we are still in the TCP/IP era. Its list of uses is growing everyday and what is already on there is significant. Bitcoin might not be able to do everything fiat can, but other than the systems around it, there is no reason it can't. Meanwhile, it already can do things fiat will never be able to do.