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How do I spend my Bitcoin? (And or?)

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A recent rally to historic highs has sparked a new wave of interest in Bitcoin (BTC). Logically, much of the renewed focus is on Bitcoin as investment. But BTC is also at the heart of a currency, and with each passing day, an increasing number of businesses enable people to buy and sell goods and services.

So, for a moment, let’s put on our goggles and talk about how to spend your Bitcoin.

First of all, it is important to note that Bitcoin is often recognized today as a “store of value”, and that it therefore looks more like gold than the dollar, the pound or the yen, for example. The wild fluctuations in value and sentiment towards future price increases are such that many investors are unwilling to use their BTC to make purchases.

However, an important facet of cryptocurrency adoption is convenience. For Bitcoin to be more widely accepted around the world, more users will need to feel emboldened to actually use cryptocurrency. At the same time, traders will need to have proof that customers will actually use BTC and that the costs of offering it as a payment option will be worth it.

Progress is underway. A growing number of companies have added Bitcoin and other cryptocurrencies as a method of payment. For example, Tesla (TSLA) started accepting BTC for its vehicles in early 2021 (then rolled back in May, then started accepting Bitcoin again in July). And PayPal (PYPL) recently developed an encrypted payment service that can be used by all of its 29 million merchants around the world.

Read on as we explain how to store and spend your Bitcoin, then we’ll discuss many places that will allow you to pay in BTC.

Online exchanges, including Coinbase (COIN) and Binance, are popular places to buy and sell Bitcoin. But to spend it you’ll need a little more than an online wallet.

Fortunately, just like with (traditional) fiat money, you have a few options available to you.

With your dollars, pounds, and yen, you can store your money in a bank. From there, you can spend it digitally, for example by bank transfer or even PayPal. You can also use a debit card. And, of course, you can always take your money out and physically put it in a wallet and spend it that way.

Storing cryptocurrency also involves a “wallet” – but since it is digital money, your wallet must also be digital. You can use software wallets like Metamask or Coinbase Wallet on your desktop, or access your crypto from anywhere using your smartphone. There are also physical wallets: USB devices that store your cryptocurrency electronically.

And in fact, it’s even possible to use paper wallet services for your crypto, which is closest to spending your BTC like it’s real money. With this method, you will have a piece of paper with two QR codes: one can be used to receive cryptocurrency, and the other can be used to spend it.

Buying products from online businesses that accept Bitcoin is easy if you have a cryptocurrency wallet with a built-in browser or browser extension. If you don’t, most wallets offer easy to copy and paste SegWit (separate cookie) addresses along with a QR code to make it easier to send and receive specific cryptocurrencies online and offline. .

The transaction usually involves going to the wallet ‘send’ option, entering the recipient’s wallet address, selecting the currency and amount you want to send, and then approving the transaction.

Of course, if you prefer something simple and familiar, you can spend your Bitcoin and other cryptocurrencies using encrypted debit cards. Even major processors such as Visa (V) and Mastercard (MA) offer these products, and you can use them for your daily expenses just like you would with a traditional debit or credit card.

Bitcoin is becoming easier than ever for holders to spend the way they want online, which has helped pave the way for greater convenience and adoption in the broader crypto world.

A handful of top online retailers that allow users to add money to their accounts using Bitcoin and / or other cryptocurrency:

  • Microsoft (MSFT) / Xbox
  • Nompas dear
  • Newegg (NEGG)
  • Overstock (OSTK)
  • Shopify (SHOP)

In a few cases, online stores such as Etsy (ETSY) do not directly accept Bitcoin, but customers and sellers have still found ways to bypass payment systems to send and receive BTC.

A number of service providers also accept Bitcoin payments, either directly or through third-party service providers, including:

  • AT&T (T)
  • Dish Network (DISH)
  • Nompas dear
  • ProtonMail
  • Tic
  • Wikipedia

You can even pay for your education with Bitcoin; The Wharton School at the University of Pennsylvania recently began accepting cryptocurrencies for its online executive education program.

You can also spend your Bitcoin in the physical world. While the number of options is not as high as online, several retail and restaurant giants have opened their businesses to BTC acceptance, including:

  • Baskin robbins
  • Crate + barrel
  • GameStop (GME)
  • Home deposit (HD)
  • Starbucks (SBUX)
  • Whole Foods (AMZN)

(Note: some companies may not accept Bitcoin or crypto at all locations.)

More and more companies are joining the fray lately. Earlier this year, Landry’s – the parent company of Del Frisco’s, Morton’s, Chart House, and Bubba Gump Shrimp, among other restaurants – said it would accept Bitcoin in most of its locations. McDonald’s (MCD) and Burger King (QSR) are experimenting with accepting cryptocurrency at some international locations.

If you want to know which stores around you accept cryptocurrency payments, it’s worth checking out Coinmap, which shows both merchants and ATMs. Bitcoin.com has a retailer card where Bitcoin is accepted.

The IRS taxes Bitcoin like any other investment like stocks and bonds, which means the length of time you own the asset will affect the capital gains tax rates you pay for trading profits. If you hold it for less than a year and then sell it at a profit, you’ll pay short-term capital appreciation rates of between 10% and 37%, depending on your income. If you hold Bitcoin for more than a year and then sell it at a profit, you are looking at long term capital gains of 0%, 15%, or 20%.

The point is, these same rules apply when you spend Bitcoin.

If you spend $ 200 of Bitcoin that you bought for $ 100, you will have to pay capital gains taxes on that $ 100 of “profit.” If you spend $ 200 of Bitcoin that you bought for $ 400, you can claim $ 200 in capital loss. (Individual filers can deduct up to $ 3,000 in capital losses each year.)

Of course, the tax laws surrounding cryptocurrency can change quickly. Maxim Manturov of Freedom Finance Europe told FX Empire that “The crypto market lacks stability and can start to be regulated at any time, which has already happened in China. The Chinese government has banned banks and payment systems to use Bitcoin. “

Back here in the United States, the possible beginnings of cryptocurrency regulation recently emerged in a bipartisan infrastructure bill.

For now, however, the current tax code is unlikely to completely stop the industry’s most avid consumers. But they could prevent a few spenders from shopping with their Bitcoin. Either way, anyone in the cryptocurrency ecosystem should know the tax consequences of spending their hard-earned digital coins.

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