What is bitcoin used for? The top 5 answers show how bitcoin is our modern day financial super hero. Bitcoiners may vary on their top things, but all uses are a break with the rusty old rail banking system. There are an infinite number of financial and non-financial use cases and five practical applications make bitcoin a powerful choice.
Use #1) International Remittances
Cross border payments are a multi billion-dollar industry scraping off about 10% in fees for every dollar transferred. I wrote a chapter in my book, The Ultimate Bitcoin Business Guide, called Money Transfer Madness™ to describe the insanity of this non-value added service. Similar to Credit Card Chaos™, Money Transfer Madness™ can have 8 or more parties in the transaction each grabbing some fees along the way which don't justify the value of the service anyway you slice it.
A reasonable person will tell you a fair price is 1-2%, but 5 to 10 times your hard earned money goes to waste. Bitcoin proves the system is rusty and obsolete because you can send $1,000,000 halfway around the world nearly instantaneously for $.07. This two-party only sender and receiver method destroys all the middlemen.
Use #2) Cryptos & ICO's
Did you know there are hundreds of alternatives to bitcoin called cryptocurrencies or altcoins? Just take a look at coinmarketcap for a list of top coins by market capitalization. Many folks are just finding out about bitcoin meanwhile there's an entire universe of cryptocurrencies. Each coin is part of a protocol that can do a range of cool stuff like Ethereum's smart contracts and Augur's prediction markets.
Bitcoin is the Godfather of all cryptocurrencies and the participation gateway to all the others. If you want to buy Bitshares, NXT or Steemit, you'll need bitcoin to make the swap. ShapeShift allows you to shift from one coin to another, however bitcoin is usually the starting point. Initial Coin Offerings (ICO's), new cryptocurrencies offered in a presale before the project goes live, are another great example where you need bitcoin to buy the new coin. Before you get hundreds you have to get the one, bitcoin.
Use #3) Storing Value
Precious metals are a typical choice for storing long term value and hedging financial markets. Gold, Platinum, Silver, Palladium et al have a perceived intrinsic value thus giving it magical hedging powers. If you shifted all your assets into gold before The Next Big Short™, then world markets would blow up while your gold remains steady as always.
Economists would say there is no such thing as intrinsic value, but that's a deep dive for another day. Precious metals would support an intrinsic value argument compared to the fragility of central banks. Bitcoin is central bank less, everything that banks are not and most like an electronic version of gold, therefore it's a brilliant precious metals hedging long term value play.
Use #4) Spontaneous Hedge
High inflation countries burn your cash like spontaneous combustion. Be thankful if you don't live in a place like Argentina with an average 20% inflation over several decades. Ironically, bitcoin is more valuable to an Argentinian than an over banked US citizen with credit cards falling out of their wallet. Bitcoin isn't subject to central bank shenanigans and political power plays so it's high inflation hedge is a welcome peso alternative.
If you thought Credit Card Chaos™ was bad enough how about waiting for 30 days for your money in Argentina with another 20% cut for the inflation fee. This explains why cash is preferred over credit cards. The more painful your money circumstances the more valuable bitcoin becomes. 2008 is coming again so you should get ready with some bitcoin.
Use #5) Painless Payments
Another chapter in my book, The Ultimate Bitcoin Business Guide™, is aptly named the Banking Burnout Bonanza™ to describe the long waits, the high fees and the headaches of everyday banking. If you're an entrepreneur or in business you feel extreme pain the average consumer never knows. Gettin' Pain in Bitcoin Never Felt so Good is a tale about getting paid instantly and spending the money with fun, freedom and ease. It shows how bitcoin is everything that banks are not.
Whatever You Want
After you get paid in bitcoin you can do anything you want. You can pay your Argentinian vendor in bitcoin to avoid Money Transfer Madness™ while they can spontaneously hedge sky high inflation. Then you can but some Ether, get some cool presale tokens in an ICO and store the rest in gold with Vaultoro. I hope you and your business have as much fun with bitcoin as we do.
So Much More
There's much more to cryptoocurrencies so learn as much you can with my book in paperback, eBook and audiobook. The Ultimate Bitcoin Business Blog™ is also a must read. When someone asks, "what is bitcoin used for?", you'll be able to answer and then some.
Kirk Phillips, The Bitcoin CPA
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