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How to Use Bitcoin (BTC)

How to Use Bitcoin (BTC)

Popular ways to use Bitcoin and what traders can buy with it.

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How To Use Btc F

Key Takeaways

This article dives into the most popular use cases for Bitcoin

  • Holding Bitcoin as an Asset: Buying and holding Bitcoin as an asset class is a popular trading strategy.
  • Active Trading Strategies: Many users opt for active trading, taking advantage of price fluctuations in Bitcoin. 
  • Peer-to-Peer Transactions: Bitcoin’s peer-to-peer nature makes it a secure and efficient way to send money directly from one wallet to another. 
  • Merchant Payments and Purchases: Bitcoin is increasingly accepted as a form of payment by a growing number of vendors, ranging from e-commerce to subscription services. 
  • Charitable Contributions and Donations: Bitcoin can be used for charitable donations, with many organisations accepting cryptocurrencies.
  • Business Transactions and Payments: Businesses can easily accept Bitcoin as payment by providing a public wallet address. Alternatively, services like Crypto.com Pay simplify the process, allowing businesses to receive payments in Bitcoin.
  • Bitcoin Mining: Bitcoin mining is a way to contribute to the blockchain’s operation while earning new bitcoins. Alternatives like mining pools and cloud mining services exist for users interested in gaining exposure to Bitcoin mining without the need for dedicated hardware.

Bitcoin (BTC) is the world’s first and largest cryptocurrency, bringing about a revolution in the way we think about money and how it works. But how does one use it? In this article, we focus on what Bitcoin is and how to utilise it.

For a more in-depth understanding about Bitcoin and how it works, please visit our University articles:

What Is Bitcoin? — A comprehensive explanation of Bitcoin

How Bitcoin Transactions Work — A detailed dive into the technical details of how Bitcoin operates, including explanations of the ledger, nodes, digital wallets, and the blockchain.

Introduction

There’s no question that Bitcoin has changed the financial game. It is an efficient and secure way to digitally hold and transfer value from one person to another. This peer-to-peer (P2P) system of transfer makes Bitcoin work much like cash in the real world, with the main differences from traditional finance (TradFi) of not needing to use the same type of currency or an intermediary, such as a bank.

Below are the most popular ways Bitcoin traders use this cryptocurrency.

Top Seven Ways to Use Bitcoin (BTC)

1. Buying and Holding Bitcoin as an Asset

As an asset class, Bitcoin and other cryptocurrencies have become a staple of many portfolios. As the world started to understand the concept of crypto in the 2010s, more and more people began trading it, leading to a boom in the value of Bitcoin, Ethereum, and many others.

Like other assets, Bitcoin’s value fluctuates. It could rise or fall in relation to a holder’s preferred national currency. If a trader buys Bitcoin at a certain price, they could realise either a gain or loss according to its value at the time they sell. Traders who buy and hold Bitcoin through these fluctuations generally believe it will continue to appreciate in value over the long term. These traders may be looking to hold their Bitcoin for years or even decades.

Dollar Cost Averaging (DCA)

One strategy long-term Bitcoin traders employ is cost averaging, best known as ‘Dollar Cost Averaging’, though it can be initiated with any currency. In this strategy, participants commit a certain amount of funds on a regular basis to purchase Bitcoin regardless of its price. This may be a weekly, monthly, quarterly, or yearly investment, steadily accumulating additional amounts of the cryptocurrency over time. Since long-term market participants believe the price will continue to rise, they are not concerned about shorter-term price fluctuations; they see dips in the price of Bitcoin as opportunities to accumulate more of the cryptocurrency at a more attractive price.

Recurring Buy

Since Bitcoin can be bought in fractions, or Satoshis, which represent one hundred millionth of a bitcoin, users can begin buying in very small increments and still participate in Bitcoin’s price movement. Certain cryptocurrency platforms like the Crypto.com App offer a Recurring Buy feature that will perform cost averaging for users in the amount they request and on their preferred timeline, such as weekly or monthly.

How to start buying Bitcoin

For those looking to buy Bitcoin, signing up with a cryptocurrency platform like Crypto.com is generally a simple way to do so.

Below is how to instantly buy Bitcoin with a credit or debit card in the Crypto.com App:

  1. Download the Crypto.com App and follow the instructions to set up an account. 
  2. Click ‘Buy’ on the Crypto.com App home screen.
  3. Select Bitcoin (BTC).
  4. Under Cash, select ‘Add Payment Method’.
  5. Follow the on-screen instructions to add a credit/debit card to transfer the desired amount of funds.
  6. Once done, click ‘Buy’ again. 
  7. Select Bitcoin (BTC) and the amount to purchase.
  8. Confirm the transaction with a passcode or biometric verification. 

There are other ways to purchase Bitcoin in the Crypto.com App, as well, including pre-funding accounts by syncing with a bank account, or using either Apple Pay or Google Pay. For more about these options, see the full set of purchasing instructions.

2. Trading Bitcoin

Those who are looking to be more active in their asset management often try to take advantage of price fluctuations in Bitcoin by trading, which involves buying and selling Bitcoin and other cryptocurrencies at faster intervals. A trader might buy Bitcoin when they think the price is about to go up and then sell once they’ve realised an appreciation in price. On the flip side, they may have to sell for a loss if their expectations aren’t met, preserving capital to make another trade at a different time.

Traders use a variety of research strategies, such as fundamental analysis, technical analysis (or ‘charting’), and news catalysts, to try timing and capturing price changes in a specific direction. Traders even participate in the options of the price of Bitcoin and other cryptocurrencies dropping.

It’s important to point out that trading is risky. Timing price movement and direction is difficult, and traders typically risk higher amounts of capital over shorter time frames. Traders must have a defined risk strategy and discipline to execute trades according to their plan and accept losses as part of the cost of doing business.

For traders, exchanges are usually the best way to use Bitcoin. These platforms provide charts that analysis traders can use to form and execute their strategies. It is best for those looking to trade BTC and other cryptocurrencies to understand the risks and heed all disclaimers — and never risk money they can’t afford to lose.

3. Sending and Receiving Bitcoin

Bitcoin can be a great way to send money to friends and family. Bitcoin blockchain transactions are secure and can take place directly from one cryptocurrency wallet to another, almost like handing cash directly to someone. 

Below is how to use Bitcoin to send someone money:

  1. Get the recipient’s public address:
    —Every cryptocurrency wallet has a public address for receiving cryptocurrency, and a separate, private address for sending it. The public address is safe, and users are able to provide it to anyone who wishes to send them money. There is very little legitimate risk that the sender could access the user’s wallet or its holdings by having their public address.
  1. Most wallets provide an easy way for individuals to share their public address, such as a link or QR code. This is most likely the way someone will provide their public address information.
  1. Visit the link or scan the QR code from the wallet app.

  2. In the wallet app, select the option to send Bitcoin to the recipient’s public address.

  3. Select the amount of money to send. The wallet app will make this simple by converting from the main currency to an equivalent amount of Bitcoin.

  4. Review the transaction, then click ‘Send’.

  5. Look for a transaction confirmation. This will take place in the wallet app, but users may also get additional confirmations via email or text message, depending on their wallet and configuration settings.

To receive money, the steps are reversed. All a user needs to do is provide their public address to the sender. Sending and receiving Bitcoin is simple and secure!

4. Using Bitcoin to Make Purchases

A large number of vendors accept Bitcoin as a form of payment, from e-commerce companies to subscription services. While some early adopters stopped accepting Bitcoin payments over the past couple of years for various reasons, others are stepping up. Coinmap listed over 15,000 retailers accepting Bitcoin as of 2022. A July 2022 Deloitte survey showed that 75% of retailers expected to start accepting cryptocurrency as a form of payment over the following two years. 

Today, items like food and gift cards can be bought at popular retailers, and even VPN services, domain names, cars, and flights can be bought with Bitcoin. 

If Money Can Buy It, So Can Bitcoin

Even though only a limited number of online merchants accept BTC as a native payment option, cryptocurrency wallets and payment apps bridge much of the gap when it comes to online shopping. Over 100 million people worldwide are estimated to hold cryptocurrency in digital wallets today, and powerful tools like the Crypto.com App make it safe and easy to complete online purchases with Bitcoin.

The Crypto.com Visa Card is a no-fail cryptocurrency payment option, using cryptocurrency holdings for debit. Unlock perks and rewards from buying and holding cryptocurrency, from generous incentives on crypto purchases to Priority Pass™ airport lounge access.

Explore the possibility of building a cryptocurrency portfolio and expand Bitcoin payment options with the security and all-in-one-place convenience of Crypto.com, where over 80 million users worldwide take advantage of the world’s leading cryptocurrency platform. Download the Crypto.com App today to get started.

For most vendors, the process to buy with Bitcoin is pretty similar:

  1. Choose the preferred items and start the checkout process.
  1. Choose cryptocurrency as the payment method.
  1. The vendor generally provides an invoice’s quick conversion of the main currency to Bitcoin. Due to the volatility of Bitcoin, these quotes generally are only good for a short period of 15 minutes or less.
  1. At this point, the steps may be different. If the vendor uses a third party to accept cryptocurrency, such as BitPay, their system will help sync the wallet and complete the transaction. If the vendor does not use one of these tools:

    —Click the link or scan the QR code to get the seller’s public address into the wallet and start the transaction.
    —Enter the amount in the main currency and let the wallet app manage the conversion.
    —Review the information for accuracy before sending the transaction.
    —Wait for confirmation.

Or buy gift cards with Bitcoin

Crypto.com Pay serves as a portal to 150-plus online partner stores. It’s easy to shop in the Crypto.com App, which uses its One-Time Card technology to streamline the Bitcoin payment process at checkout. To access an even more comprehensive range of shopping options, convert Bitcoin directly into digital gift cards for personal use, stocking stuffers, or a gesture of appreciation to friends and family.

Gift cards purchased with cryptocurrency operate like any other, working as an equivalent form of payment to cash at the retailer’s online store. There is also the potential to save money when spending Bitcoin on gift cards, with reward possibilities between 2.5% and 10% back. Gift card offerings include grocery stores and services like Whole Foods and Instacart, local transportation from Uber and Lyft, and accommodations via Airbnb and Hotels.com. 

Cryptocurrency gift cards for pizza include Pizza Hut, Olive Garden, and California Pizza Kitchen, to name a few — perfect for celebrating Bitcoin Pizza Day. 

5. Using Bitcoin to Make Donations

Many charities accept Bitcoin and other cryptocurrencies, such as organisations seeking to develop treatments for disease, protecting wildlife, providing clean water, and feeding the hungry. 

A comprehensive guide to charities that accept Bitcoin or some other form of cryptocurrency is available at The Giving Block. For favourite charities not listed, visit their website for an official public wallet address. 

6. Using Bitcoin to Get Paid

For those who own a business, it’s easy to accept Bitcoin. To get started, all that is needed is a public wallet address, which can be shared via link or QR code. 

Alternatively, vendors can sign up for a service like Crypto.com Pay.

7. Earning Rewards With Bitcoin Mining

Mining is a way to help Bitcoin’s blockchain ledger operate while also releasing new bitcoins into the supply in a metered way. Learn more about it in our University article How Does Bitcoin Mining Work?

In the early days, it was relatively easy to mine Bitcoin with a regular laptop or desktop. But as the value of Bitcoin increased, more people began mining, and competition skyrocketed. It became harder to mine and took much longer, and eventually the mining process moved from the computer’s central processing unit (CPU) to the graphics processing unit (GPU).

As growth continued, home computers gave way to dedicated ‘mining rigs’, with Application-Specific Integrated Circuits (ASICs) able to perform mining tasks much more quickly. Today, organisations with a focus on mining carry out the majority of the work using a large number of mining rigs and significant network resources to do it profitably.

Alternatives to Bitcoin Mining

There are other options to gain exposure to Bitcoin mining. Several companies with a dedicated mining infrastructure offer mining pools, and cloud mining services offer the option to rent a portion of an existing hardware setup and get portions of the earnings. Other mining pools allow individuals to invest in new hardware and share in the rewards. In both cases, trade-offs limit participants’ earning potential.

Conclusion

Like the currencies we know, Bitcoin can be bought, sold, earned, held, and exchanged. 

In each case, one factor remains the same: Bitcoin’s role in the global economy as a store of value is undeniable. It has a market-defined value and can be used for many of the same things as with traditional money.

Due Diligence and Do Your Own Research

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