What you can buy with Bitcoin explained
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THE price of Bitcoin has hit new highs this week, but where can you actually spend the cryptocurrency?
Tesla founder Elon Musk helped push the value of a single Bitcoin to beyond $48,000 (£34,680) this week after revealing that the car maker has invested $1.5 billion in the virtual coin.
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Mr Musk has also said buyers will soon be able to purchase a Tesla using Bitcoin.
But this isn't the only place where Bitcoins can be spent.
There are almost 20,000 locations across the world where you can use the virtual currency in real-life shops and pubs as well as online, according to cryptocurrency website Coinmap.
Before investing in any cryptocurrency, you should be aware of all the risks involved.
What is Bitcoin?
BITCOIN got you baffled? Here's what you need to know:
- Bitcoin is a virtual currency
- It's traded between people without the help of a bank
- Every transaction is recorded in a public ledger, or "blockchain"
- Bitcoin is created by mining
- Mining involves solving difficult maths problems using computer processors
- Bitcoin can be traded anonymously, which can make it a popular way of funding illegal activities
- The value of Bitcoin fluctuates wildly
- Bitcoin is one of many different cryptocurrencies, but by far the most popular
Their value is highly volatile and City watchdog the Financial Conduct Authority has warned investors should be prepared to lose all their money.
Investing in cryptocurrencies is not a guaranteed way to make money.
What can you buy with Bitcoin?
Tesla isn't the first brand to accept Bitcoin as a form of payment but it is one of the most high-profile.
You can already purchase Xbox games from the Microsoft Store using the cryptocurrency in the US, but this is not currently available in the UK.
The Royal National Lifeboat association will let you make donations using the cryptocurrency.
You can also buy pints at the Pembury Tavern in east London, once it reopens after lockdown or a seat on Virgin Galactic's commercial space flights.
Property companies such as Gravity Co-Living in London will even let tenants pay their rent with Bitcoin.
How to spend your Bitcoins
Crypto website says paying with Bitcoin has its advantages as you don't have to give as much personal information such as your name and address when buying online.
Instead, transactions are stored in a network called the blockchain.
The cryptocurrency can be spent anywhere so you could avoid forex fees on overseas purchases.
It can also be cheaper for retailers as they don't have to pay fees to VISA or Mastercard to accept card payments through chip and pin readers.
Some shops will accept Bitcoin like any other currency.
They may display a sign on their website or shop window that says Bitcoin accepted here.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
Others may let you pay through BitPay, which is an online payment processor similar to PayPal but it lets you store and spend your Bitcoins.
BitPay also has a debit card that lets you use your Bitcoin to purchase items currently in dollars.
It is planning a UK launch.
You can find shops, pubs, restaurants and even estate agents near you that accept Bitcoin using .
Enter your postcode and click on icons nearby to find places accepting Bitcoin near you.
Cryptocurrencies are stored in a virtual wallet through apps or websites such as or .
Each wallet will store your unique Bitcoin address and you will need to provide your email and setup a secure password to login.
Shoppers can send payments to a different Bitcoin address through their wallets.
You will just need the recipient's Bitcoin address.
Some stores may provide a QR code that you can scan through your wallet app.
This will automatically send your Bitcoin payment.
The risk of buying and selling with Bitcoin
Bitcoin is a risky investment and you should also think carefully about making purchases with the cryptocurrency.
It has had wild price fluctuations in recent months and the price can change on an almost hourly basis.
For example, the price of a Bitcoin was at $40,258 on January 9, according to Coindesk, but fell to $34,214 just three days later.
That's a 15% drop.
These price swings are risky for a business as you could sell an item for a Bitcoin at one price and the value may drop soon after, leaving you with less money from a sale.
Similarly, the price of Bitcoin has soared by more than 21% since the start of this week so it can be hard for a shopper to get an accurate idea of the price of an item if its value changes on a daily basis.
Like any payment, make sure you trust who you are sending money to as there is a risk that your Bitcoin code could be hacked or stolen.
Shoppers don't get any protections when paying with Bitcoin.
You can raise a dispute with Paypal if a purchase goes wrong or make a section 75 request for a refund with your credit card but none of this can be done with cryptocurrencies.
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The price of Dogecoin has also surged recently but again, you should be aware of the dangers.