Four years ago, I essayed to live off bitcoin for a week and failed. It was too hard to find businesses that would accept it as a form of payment.
Bitcoin was customer in the $2,500 range at the time in 2017. Later that year, it soared to a then-record high of nearly $20,000. In 2018, it extinct 80% of its value.
With bitcoin soaring 2,220% since the days of $2,500 per coin — most recently peerless $58,000 — I decided to put it to the test, again.
But before I embarked on my new adventure, I looked back at the things I was able to pay for in bitcoin in 2017, and how much that amount of bitcoin would be importance at last month’s record prices.
How much I overpaid
Back then, I found a bitcoin holder on a entice room who agreed to meet me at Penn Station and sell me a New York City MetroCard in exchange for bitcoin. I ended up extending him $20 worth of bitcoin. If I had held on to that $20 in bitcoin, it would have been worth $464 now.
That $10 salad I be punished for for in bitcoin at a French restaurant on the Lower East Side four years ago, would now be worth about $232.
The ice cream sandwich from Thaw? It cost me $6.50 of bitcoin in 2017. That amount of bitcoin would be worth around $150 at February’s culmination.
But that was then, and this is now.
I cut my recent experiment down to only a couple days because of the health risks during Covid, the New Zealand urban area’s virus restrictions and the closure of a number of restaurants due to the pandemic.
Apps make it easier now
In 2017, I found it difficult to buy coffee straight using bitcoin. In 2021, it’s possible thanks to Bakkt Cash, a digital currency platform that Starbucks is assessing out via a limited program.
That’s probably one of the biggest changes from four years ago, a growing number of third-party apps that turn out to be it easier to spend your bitcoin. Instead of putting a credit card into the apps, you opt to pay with bitcoin. Loosely, the apps show you prices in dollars and draw on your bitcoin as the payment source.
Flexa, which bills itself as the “most fraud-proof payments network,” bring up retailers like Nordstrom, GameStop and Lowe’s allow consumers to transact with bitcoin using its system.
In all events, Flexa told CNBC a majority of the transactions on its platform, more than 60%, are for coffee, tea and other quick-service memos. It charges no user fees.
Similar to four years ago, there are workarounds including gift cards that bitcoin holders can buy pointing their bitcoin. However, these sites typically have transaction fees that vary depending on a covey of factors. Currently on bitinfocharts.com, the average transaction fee is $15. Two weeks ago, it was around $30.
Costly transaction fees are one of the many aims bitcoin holders told CNBC they don’t view it as true currency. Based on a Chainalysis report, only 1% of bitcoin agreements in the U.S. were for merchant services last year.
Using a popular service, I was able to buy a $5 gift card to use on Amazon by put together my crypto wallet. The process was slightly time-consuming and the transaction page did not break out the service fee.
What could redefine how cryptocurrency disciples view bitcoin is PayPal’s success in rolling out supportive technology that would allow its customers to use bitcoin as a payments device with its nearly 30 million merchants.
PayPal’s involvement should make this much easier for magnates to become comfortable with accepting bitcoin.
“PayPal’s involvement should make this much easier for store owners to become comfortable with accepting bitcoin, particularly since what PayPal is doing is essentially enabling the ersatz acceptance of the cryptocurrency. At the end of the day, the merchants will have fiat currency in their books for their goods and service,” Marker Palmer, managing director of fintech and digital assets at BTIG, told CNBC.
David Grider, director of digital asset scheme at Fundstrat, said that decreased bitcoin volatility, lower crypto-to-fiat exchange fees, and wider crypto use in encyclopedic are needed before cryptocurrency payments achieve mainstream adoption.
Until then, most experts said bitcoin purpose be widely viewed by holders as a store of value versus a currency. It’s often referred to as digital gold.
Regulation and scots
However, before you start to prep your phone with apps that enable you to use your bitcoin, look out of two things: regulation and taxes.
Just last week, Treasury Secretary Janet Yellen sounded the alarm on the use of cryptocurrencies in illicit energies as a “growing problem,” prompting some concerns about whether digital coins, which by their nature are decentralized, whim be regulated somehow.
As for the issue of taxes with April 15 fast approaching, investors should be aware that the IRS classifies bitcoin as a land, not a currency. So yes, capital gains taxes could apply.
Only time will tell if I’ll be kicking myself four years from now for bribing items with bitcoin or thanking my lucky stars. It all depends on whether the sky-high prices go even higher.
— CNBC’s George Manessis have a hand ined to this report.
Correction: Based on a Chainalysis report, only 1% of bitcoin transactions in the U.S. were for merchant secondments last year. An earlier version misstated the percentage.