According to recent research carried out by a popular online platform dealing with news and research, 20% of American adults have claimed that they are more likely to make purchases using crypto! Since a Bitcoin ATM can be found easily these days, using cryptocurrencies for transactional purposes is not all that difficult after all! However, whether using Bitcoin for transactions is indeed a wise call is a point of contention!
Using Bitcoin as Transactional Money – Some Considerations
- Using Bitcoin for Transaction could mean Loss: What makes crypto a sad choice for transactional practices is its high level of volatility. According to experts no one in his right frame of mind would use Bitcoin for buying something as commonplace as a cup of coffee! This is because if you pay$3 for the coffee today, or tomorrow the same fraction of Bitcoin will be worth $30! This would mean a gross loss!
- The Blockchain isn’t Such a Developed Network: The blockchain isn’t such a developed network after all! It cannot support billions and trillions of small-scale transactions. This means, that making commonplace purchases with crypto would be extremely difficult and it can also prove to be a frustrating experience in itself.
- The Processing Timelines aren’t Impressive: Bitcoin transactions take longer to perform and paying with them could mean waiting for longer periods for the transactions to happen. This could mean exasperation!
- Acceptability is Low: Although it has become relatively simpler to come across a Bitcoin ATM in Illinois, acceptability for Bitcoin is still low across merchants. Not many will be willing to accept crypto as a form of payment. Hence, keeping your regular currencies or cards handy would be advisable even when you are loaded with crypto money. Overall, it may not make sense!
- Taxation is Complicated: Taxes pose complications when you are using Crypto to buy goods or services. Crypto buys do not need reporting to the IRS. However, when you are trading crypto money in exchange for goods or services the cost basis has to be tracked carefully. Every time you buy using Bitcoin, tracking the market value of the currency at the time of purchase and the time when you used it for the transaction has to be formally reported in terms of profit or loss. Overall it is a complicated process to deal with.
Cryptocurrencies VS. Real Currency
When it comes to American citizens, using the dollar for commonplace purchases is perhaps wiser than depending upon cryptocurrencies. The dollar registers lower fluctuations and is hence more dependable. However, when you consider currencies that are less safe and also less stable as compared to the US Dollar, the case for a currency like Bitcoin perhaps becomes strong. Suppose if you consider a currency that is as volatile as the Iranian Rial, it loses value with every single day, it may be a good idea to consider crypto money instead.
Also, crypto transactions could be a good idea for those who do not possess the requisite documents for opening a bank account. Crypto is also a suitable alternative for those who do not have access to traditional financing.
Preparations are mandatory however; one needs to know how to buy using bitcoin safely. Tokei