Why Can’t I Pay Using Bitcoin?
On yesterday’s Crunch, we talked about how Tesla purchased $1.5 billion worth of Bitcoin and stated the company would start accepting Bitcoin as a form of payment. Tesla’s announcement sent Bitcoin flying, touching an all-time high of nearly $49,000.
One of my friends who listens to our daily Crunch wondered, “why don’t more companies accept Bitcoin? Why can’t I use Bitcoin to pay for expenses like groceries or gas?”
Say for example, you wanted to buy $10 worth of food from the grocery store. You wouldn’t want to use Bitcoin as a form of payment because of transaction fees associated with the cryptocurrency. The average transaction fee is more than $11 bucks, so in our example, you could end up paying double the price. However, for big ticket items like an $80,000 Tesla, these small transaction fees aren’t a problem.
But transaction fees aren’t the only reason Bitcoin is not practical to use on everyday expenses. Bitcoin is an extremely volatile currency, meaning the price rises and falls quickly and often. The cryptocurrency could rise more than 30% in a single day or it could fall more than 30% in a single day, for no discernable reason.
More retailers are starting to accept Bitcoin, but according to the Wall Street Journal, payments in Bitcoin only make up around 5% of total sales.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.