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It’s fair to say that these past few years have been a baptism of fire for Bitcoin What Is Bitcoin: The MakeUseOf BitCoin Guide What Is Bitcoin: The MakeUseOf BitCoin Guide Whether you just want to find out more about BitCoin or to actually use the currency, you'll want to check out "Virtual Currency: The BitCoin Guide", the latest manual from author Lachlan Roy. Read More , the world’s first and most popular cryptocurrency.

In February 2014, MtGox, which was the largest Bitcoin currency exchange, folded after $460 million worth of Bitcoin was stolen, probably by its founder Mark Karpeles, who has since been arrested for embezzlement.

Later that year, it was reported that Bitcoin had performed worse than the Russian ruble, which itself had lost 50% of its value that year as a result of international sanctions. Its value weakened further as governments clamped down on “dark web” marketplaces Journey Into The Hidden Web: A Guide For New Researchers Journey Into The Hidden Web: A Guide For New Researchers This manual will take you on a tour through the many levels of the deep web: databases and information available in academic journals. Finally, we’ll arrive at the gates of Tor. Read More .

But since then, things have stabilized, and 2016 is looking to be a good year for Bitcoin as it goes from being niche and sinister to something you might actually want to use.

Bitcoin Is Now a Usable Currency

Many in the Bitcoin community hope that the cryptocurrency will eventually be used for the buying and selling of everyday things, much like how we use traditional fiat currency. But the problem is that until very recently, it wasn’t that great at being a currency.

Wait, what?

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The thing that makes a currency work is confidence. If I have ten dollars in cash, I’m confident that what I can buy with it today, I can also buy with it tomorrow. As a spender, I want to have confidence that its value and power won’t radically change from day to day.

It’s for this reason why stable currencies — like the U.S. Dollar, Japanese Yen, British Pound, Euro, and Swiss Franc — are used by governments as their foreign exchange reserves: because the value of a currency is intrinsically linked to how much people trust it.

Chart

Bitcoin, by this definition, was not a good currency. From day to day, its value would fluctuate significantly, soaring and dipping. While this is great if you’re using Bitcoin as an asset (so you can gamble on buying low and selling high), it’s not as good if you want to use it as a currency. After all, if you sell a $500 laptop for 2 BTC and the next day BTC loses 40% of its value, you’ve essentially lost $200.

Bitcoin nowhere near as stable as the U.S. Dollar — over the past month it reached a low of $386 and a high of $445 — but it’s still a marked improvement over its previously volatile state. Its definitely more stable now than it was before.6MonthsChart

So, what does this mean for users of Bitcoin? Essentially, it has matured to the point where it’s now practical to use it as a currency Why Bitcoin and Other Cryptocurrencies Will Become The Money Of The Future Why Bitcoin and Other Cryptocurrencies Will Become The Money Of The Future Will Bitcoin become the money of the future? Although it has had rough start, and there are security and social obstacles to overcome, could Bitcoin actually make the world a better place? Read More . Merchants now have confidence in it, and many are happy to accept it in exchange for physical goods What Can I Buy With Bitcoin? [MakeUseOf Explains] What Can I Buy With Bitcoin? [MakeUseOf Explains] If you’ve never heard of Bitcoin before, then don’t worry because you’re in the majority. Let’s just say that it’s a virtual currency (meaning you’ll never be able to hold an actual Bitcoin in your... Read More like laptops.

Bitcoin’s Strength: No Capital Controls

The global financial crisis introduced a whole bunch of new words and phrases into our collective lexicon, like derivatives, subprime, credit default swaps. They are big, scary words with meanings nobody can quite understand. But for ordinary people, one phrase is scarier than the others: capital controls.

A capital control is when a government places limits on the amount of money that can be taken out of the country or withdrawn from a bank in hard cash.

We saw it in Iceland in 2008 after their financial system imploded spectacularly in a blaze of smoke and lost life savings. To stem the flow of money leaving the country, Iceland introduced capital controls that prevented people from converting assets held in Icelandic Krona to foreign currencies. These controls were only – and barely – lifted late last year.

Icelandic-Krone

A more recent example happened in Cyprus in 2013 when the government had to bail out their banking institutions from the edge of utter collapse. To prevent a bank run, the government limited ATM withdrawals to 260 Euro per day (later 100 Euro). Other limitations were put in place which affected people’s ability to transfer their money abroad.

This was very similar to what happened in Greece in 2015 when the specter of their leaving the Euro loomed. The Greek government harshly limited how much cash could be withdrawn from ATMs and blocked all international card transactions. While this arguably saved these institutions, it essentially left Greeks traveling abroad destitute and unable to access their funds.

Almost immediately after Greece and Cyprus introduced capital controls, there was a surge in the price of Bitcoin. Why? Because Bitcoin was, and is, an unstoppable way to evade capital controls. Bitcoin essentially allowed ordinary Greeks and Cypriots (but mostly Greeks) to move their assets abroad rather than keep them in at-risk banks.

BitCoinATM

It could be argued that Bitcoin’s effectiveness in evading capital controls is what’s driven it firmly into the mainstream in Greece. While Bitcoin ATMs are very much a novelty in most of the world, in Greece they’re about to become mainstream, as according to CNBC, one company has plans to roll out 1,000 of them.

This goes a long way to explaining the enduring popularity of Bitcoin in China, where they’ve had restrictive capital controls for a long time. The government there limits the amount of money you can take out of the country at $50,000 per year. While that’s fine for most in the working and middle classes, it’s a real problem for the growing number of Chinese ultra-rich.

A popular way of circumventing this it is to just convert Renminbi to Bitcoin and to take it out of the country on an encrypted USB stick, where you can then just sell it and store it in a foreign bank account far from the reaches of the Chinese government.

What Can You Actually Buy?

We talked earlier about how Bitcoin is now a semi-functional currency. (It may not be as stable as the Japanese Yen, but it’s no Zimbabwean Dollar either.) As a result, more and more vendors are flocking to Bitcoin in order to reduce the costs of payment processing and to engage with a tech-savvy audience.

Computers

Take Dell for instance, who is perhaps the largest retailer that currently accepts the currency. Its entire catalog is available for purchase with it, and processing is done through the third-party CoinBase. While Bitcoin undoubtedly represents a tiny part of their sales, if it takes off, it could ultimately save Dell a lot of money.

DellBitcoin

Payment processors often take as much as 2.75% per transaction as their cut, which we saw when we surveyed the market of Android payment processors Credit Card Processing On Android: Best Tools For Accepting Payment Credit Card Processing On Android: Best Tools For Accepting Payment Want to process credit card payments on your Android device? Here are the best tools for getting it done. Read More . While that doesn’t sound like a lot, it is when you’re selling large-ticket items and shifting billions of dollars of stock. Dell’s revenue for 2015 was $59 billion, so 2.75% of that is an unthinkable sum of money.

Airline Tickets

You can also use Bitcoin to pay for services, such as travel. AirBaltic, who is the flag carrier of Latvia, has accepted it since 2014 with a couple of caveats. First, you can only use it to pay for the most basic of tickets. (Forget about booking a business class ticket with Bitcoin.) Second, you have to pay a small fee in Euros for the privilege of spending Bitcoin.

Another small Baltic-based airline, Air Lituanica, briefly accepted Bitcoin. This airline operated a single Embraer aircraft on just a handful of routes departing from Vilinus. Unfortunately, it wasn’t financially successful and the company declared bankruptcy in May 2015.

Hotel Rooms

In the same vein, it’s also possible to book hotel rooms with Bitcoin. CheapAir (a flight and hotel search engine) has accepted the digital currency since the end of 2013 when it was still trapped in its cycle of boom-and-bust. A risky proposition if there ever was one. In recent years, they’ve even added Dogecoin and Litecoin to the list of cryptocurrencies they accept.

hotel

There’s also a more mainstream hotel booking site that accepts Bitcoin: Expedia. They’ve allowed people to make reservations with it since June 2014.

Coffee

Surprisingly, an increasing number of coffee shops are accepting Bitcoin. Some, like the Prague espresso bar, Bitcoin Coffee, exclusively accept Bitcoin as payment for coffee, but the vast majority of them accept it in addition to standard fiat currency.

coffee

While Bitcoin isn’t accepted at the larger coffee chains, like Starbucks and Tim Hortons, there are some services which allow you to spend your digital currency there. One of the biggest is Fold Coffee, which also works at Target and Whole Foods.

Pizza

One of the earliest Bitcoin transactions was in 2010, when Florida programmer Laszlo Hanyecz exchanged the 10,000 Bitcoins he had mined for two piping-hot pizzas. If he had held onto them, his coins would have been easily worth over $4 million today.

pizza

Six years later, people are still swapping Bitcoin for stuffed crusts and deep dishes. One service, PizzaForCoins, allows people to order from Dominos, Pizza Hut, and Papa John’s, which some might unkindly call “the trifecta of terrible pizza”.

Other Stuff

If you’re not in the mood for any of the things above, you can still spend your Bitcoins on other products at retailers like OverStock, TigerDirect, and NewEgg.

Bitcoin isn’t for everyone though. While admittedly it’s cheaper to process, and faster than paying through traditional mediums, it lacks some essential consumer protections. For instance, you can’t issue a chargeback for a fraudulent transaction, like you can with a credit card.

Do you use Bitcoin? Have you found any especially interesting uses for it? Tell me about it in the comments below!

Image Credit: golden Bitcoin by Julia Tsokur via Shutterstock, Icelandic Krona by Puyol5 via Flickr

  1. megan
    March 30, 2016 at 9:50 pm

    I use Bitcoin all the time to purchase things I need. Its used on far more things than just fraud. Where there is money there is fraud that goes with any currency in circulation but that hasn't stopped us from using it. It has a negative rep cause of people spreading inaccuracies such as you have by saying its used for fraud. That my friend is "the truth!"

  2. MariaBTC
    March 30, 2016 at 6:52 pm

    A lot of thing are used for Fraud. The number one thing used in fraud is cash. Should we ban Cash? Should you look at the current number one use of Bitcoin today it is exchange trading. Goods and services have come a long way but will take a long time for it tom become mainstream.

  3. The Truth
    March 30, 2016 at 3:13 pm

    They are also used for Fraud. Lots and lots of fraud. In fact, I would be willing to bet a wooden nickel that this may be the largest use of bitcoin.

  4. Matt
    March 30, 2016 at 2:30 pm

    Alot of people don't treat bitcoins like currency. Like you said the market value fluctuates, something sound familiar? the stock market. My buddy has close to 40k in mining equipment and that's how we treat it. I study the trends and blogs to see if its gonna be a + day or a - day, and make the decision to invest. Buy low, Sell High...I don't try to get a huge return, we usually move so many that with even a 10 cent rise were making $$$.

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