Bitcoin as Money: Buying Things Online

Bitcoin as Money: Buying Things Online

Somewhere nestled in the question of “What should a Bitcoin be worth?”  Is the question of whether it is or can be an actual currency.  With this in mind I wanted to do a several post series on how Bitcoin is (and isn’t) like a currency today.  This is the second part of an envisioned 6 in this series:

  1. Bitcoin in the Real World: A Primer On The Rules
  2. Bitcoin as Money: Buying Things Online
  3. Bitcoin as Money: Buying a Sandwich In Person
  4. Bitcoin as Money: Giving Bitcoin to a Person
  5. Bitcoin as Money: Visiting an ATM
  6. Bitcoin as Money: Where Do We Go From Here?

I decided to buy myself an espresso machine for Christmas and thought… why spend dollars on it when I found these bitcoin in my pocket!  In this post I’ll try to cover my actual experience buying that espresso machine and what it all might mean for the future of bitcoin.

Where Can I Buy Stuff Online With Bitcoin?

The days of Bitcoin being used primarily on the dark web to buy drugs are gone!  The internet is the easiest place for legitimate transactions with Bitcoin to start to really grow.  This is because with an online transaction that will be shipped, a little bit of latency isn’t a big deal.  Add the fact that there are a bunch of early Bitcoin enthusiasts/investors who have a fair bit of spending power in their Bitcoin wallets and online retail was bound to start offering people this option.

Some of the options right now are probably offering bitcoins because people would prefer to use a wallet that’s difficult to link to their name.  For example, you can pay for premium services on 4chan with bitcoin or use them to buy things on Pirate Bay.  There are some companies where you would think that they are making a strategic play and trying to be leaders in case Bitcoin takes off like Mint, Fidelity, and Microsoft.  Then there are a large number of e-commerce companies that are just happy to give you another way to spend money; OKCupid, Dish Network, Bloomberg, and, my personal favorite, Virgin Galactic (in case you made so much easy money on Bitcoin’s rise that you want to buy a ticket to space).  There’s one that sticks out as somewhere in between the last two categories; Overstock.  They now have a whole business unit devoted to blockchain… but when it comes to their website, they mostly just want your money any way they can get it.

A Cheap Espresso Machine

As I mentioned, I decided back on 12/26 to buy myself an Espresso machine for Christmas.  I paid .0384 bitcoin for the espresso machine.  This number is notable for two reasons.

  • First, it doesn’t really roll of the tongue.  This is because espresso machines are not priced in Bitcoin yet, they’re priced in dollars.  Today, if you want to “spend Bitcoin” you still (effectively if not in practice) have to turn the Bitcoin in to dollars first.
  • The second thing that’s notable about the .0384 bitcoin is that it’s a cheap fully automatic espresso machine.  The machine was $599.95 on Overstock.com on 12/26 and today .0386 Bitcoin is worth $292.78.  Of course that’s not great news for the rest of my Bitcoin.

How Did It Actually Work?

As I mentioned, things aren’t actually priced in Bitcoin.  So the transaction worked much like one would have in dollars.  I put the espresso machine in my cart.  Pressed checkout.  On the checkout page I have the option to choose Bitcoin:

Once I have selected Bitcoin, I am then prompted with this screen:

You have two options from this screen.  Most people who have Bitcoin have downloaded a piece of software for their phone that manages their wallet.  If you have that software you can scan the QR code above which will populate the address listed above and the amount.  Then all you would have to do is hit submit and the transaction would be ready to be entered in to the blockchain.  In the case of Overstock, they are partnered with Coinbase which would allow you to just enter your Coinbase login.

So This Means Bitcoins a Thing Now?

Well that depends on whether you’re an optimist or a pessimist.  On the pessimistic side it’s easy to ask, “What kind of currency doesn’t have things priced in it?”  On the optimistic side, you can point out that an actual infrastructure used by actual companies to conduct transactions is quite a development.  Like most things with Bitcoin, there are both good signs and bad.