I started my journey with cryptocurrency a little over a year ago and quickly found myself asking: "How can I actually use my cryptocurrency?"
There are three ways you can use your cryptocurrency. 1) Peer to Peer Transactions. 2) Consumer Purchases. 3) Investments.
Recently a friend and I decided we wanted to make a transaction using cryptocurrency instead of using traditional paper money. It was fun being on the the cutting edge of using digital money to make a transaction with each other. Read below to see step by step example of how a transaction done in person works.
How To Buy Things From Your Friends Using Cryptocurrency.
In person cryptocurrency transactions happen almost the same way that paper money transactions are currently made, but there are a few things you should know before you begin.
Let's say your friend is selling a motorcycle and you want to pay for it using Bitcoin. You both agree on a fair value for the exchange (Let's say $5000 USD) and then decide to move ahead with the transaction.
Before you get started with your transaction:
-You will need to determine the current exchange rate of Bitcoin to US Dollars (or your country's currency). You can use a Bitcoin Exchange Calculator found online or by downloading a Bitcoin exchange app. There is also one on my resource page that you can use.
***Be aware that cryptocurrency values are constantly changing and can be volatile.
-Both You, and your friend, will need a cryptocurrency wallets that are set up and ready to use. For tips on choosing and setting up a cryptocurrency wallet click here.
-Your crypto wallet will need sufficient Bitcoin funds to cover the purchase of the motorcycle, and also a little extra funds to cover a small transaction fee.
-Your friend will have their wallet address available to give you. This is the address you will use when sending your payment.
For An Exchange Being Made In Person:
Step 1: Open your crypto wallet.
Step 2: Click the send arrow button.
Step 3: Type in the amount you want to send.
Step 4: Scan your friends crypto wallet address by taking a picture of it using the QR code button in the send to address line. Or your friend can text you their wallet address and you can paste it in the send to line.
Step 5: Verify and complete transaction.
Congratulations! Just like that you have successfully completed your first cryptocurrency transaction. Wasn't that fun? You just caught a glimpse of the future with the use of digital money! As time goes on technology will improve and these transactions will become more simple.
How To Make A Purchase At A Store Using Cryptocurrency
I recently purchased a small item from an online store using cryptocurrency. Basically, I wanted to experience how this may or may not be different from how purchases are currently transacted.
Purchases Made Through Online Business:
Making purchases from an online store is simple and is done basically the same way that you currently buy from online sites.
Step 1: Add the item you would like to purchase to your cart.
Step 2: Click "Pay with Bitcoin" (or whatever cryptocurrency they accept)
Step 3: Scan your QR code or give your wallet address.
Step 4: Confirm and place order.
The toughest part of using cryptocurrency for payment is finding the companies that accept them! This list may help you find participating stores.
Purchases Made At Brick and Mortar Stores
I have seen a few retail stores that accept Bitcoin and cryptocurrency. Sometimes you will see a sign in their window saying "Bitcoin Accepted." Here is how you pay for items in these types of stores.
Step 1: Select your item
Step 2: Scan the QR code from your cryptocurrency wallet.
Step 3: Wait for transaction to be verified. (This may take a little longer that your normal transactions)
And that is it! The process is pretty simple!
How to Invest Using Cryptocurrencies
This is by far the most popular use for cryptocurrency right now.
Most companies and individuals can clearly see the potential for cryptocurrency and blockchain technology. However, the infrastructure needed to make a full adoption into society are still lacking.
In my opinion, (*I am not a financial advisor), investing in the companies or projects that solve infrasturcture problems is where the largest potential for gain is.
If you are someone looking to use cryptocurrency as an investment, you should probably be looking to find the projects that are solving issues like: scalability, transaction speed, price volatility, and user-ability.
Download a Step By Step Guide for how to set up an cryptocurrency investment account.
Blockchain and cryptocurrencies will likely be a major part of our future economy and the companies who provide a solid service for the average customer will win the biggest. Look at it this way. Amazon is such a massive company because it makes shopping simple, easy, and fun for the average consumer. Moving forward, the cryptocurrency and blockchain companies who serves the most people, in the simplest way, and with the best value, will be the best investments of the future.
Why Do We Even Need To Use Cryptocurrency In The First Place?
You may be reading this and wondering why we should even go through the hassle of learning a whole new way of exchanging money and doing business. I mean, the way we do things right now is working just fine...right?
The reason we need cryptocurrency is...Trust.
Most people in the world put their "trust" in the US Dollar, and in the US Government which backs it. Many people blindly or naively believe that the United States is bullet proof and infallible. However, in 2008 we caught a glimpse of how vulnerable the United States financial system really is. In addition, record amounts of national debts continue to pile skyward by the trillions, even during this great economic time we are currently in. Furthermore, the value of the United States dollar continues to be pressured, and whether we want to admit it or not, the current system of fiat money is unsustainable for the long term. So the question is: Should we really be putting our trust in fiat paper money?
Cryptocurrency allows us to "trust" technology, known as blockchain, which cannot be manipulated or controlled by any single person, entity, or government.
Having a currency that is decentralized, secure, easily exchanged, has value, and is limited in supply, becomes a solution to the trust problem that the US dollar currently faces. It also gives trust, stability and control back to individuals.
Many people either aren't aware of this "trust" issue, or they simply don't care. The truth is, an economy that is built on a foundation of trust offers the potential for a more secure economy than one that can be easily manipulated. This is the reason so many people are working so hard, and investing millions, to solve the problems which are currently holding cryptocurrency back.
You are actually helping to create a new economy!
Learning how to use cryptocurrency for our everyday transactions allows us to re-shape the landscape of our economy.
Our society continues to trend toward more online business and we increasingly use digital money. Want proof? Just ask yourself how many times you have shopped online this month, or how much paper money you are carrying in your wallet right now. Most of your purchases have probably been made with either a credit card or debit card backed by a "trusted" third party and also based on some kind of fiat currency.
By using cryptocurrency, you are able to make digital payments without needing the validation of a third party entity. It allows us to re-define the rules of money in terms that work best for us, not a centralized entity that can charge fees or change the rules whenever they want.
Clearly cryptocurrency is not perfect and it faces many realistic challenges before mass adoption can happen. However, the potential for a new economy, which is built on trust, offers a more solid foundation to our future economic landscape.
Read Next Article: "Is Cryptocurrency Going Mainstream?...And When?"
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P.S. I am not a financial adviser and am not intending to give financial advice.