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FAQs Frequently Asked Questions

Crypto Report
Why buy something in bitcoin when I can buy it in dollars?
Q: Concretely, suppose I want to buy a car that is selling for $25,000.  The dealer says he’ll take payment in dollars of bitcoin.  OK, let’s say I’ll go with bitcoin.  So where do I get it?  I have to buy it, right?  With dollars, yes?  So why bother with the middle step and instead just plunk down $25K in dollars? I understand that if I buy bitcoin it may skyrocket in value, but it also may plummet in value.  So my buying a car with bitcoin could be like Christmas… or like, say, February of 2008.

A: Where to buy bitcoin: https://www.virtueofselfishinvesting.com/faqs/answer/what-exchange-should-we-use-to-safely-buy-bitcoin-or-other-cryptocurrencies-how-should-we-safely-store-them

Bitcoin's main use case is not in buying goods and services but as a store of value that cannot be inflated away. Bitcoin is disinflationary as the number of bitcoin being created will continue to slow up until it reaches its 21 million mark which is many years off. Bitcoin is a safeguard to millions of families in countries with depreciating currencies. Currently, this includes all countries though some such as Venezuela are falling much faster than others. As long as QEndless remains, and history suggests it will, fiat will continue to debase. Thus companies, institutions, governments, and HNWIs are buying bitcoin. This largely explains bitcoin's meteoric rise in price since it was created in 2009.

As for using bitcoin for goods and services, it is the buyer's risk to hold bitcoin which is hugely volatile. Vendors typically immediately convert any bitcoin they receive into dollars (or pounds or euros) since those currencies are far more stable.
First published: 22 Feb 2021
Last updated: 22 Feb 2021