Making purchases with Bitcoin is really gaining popularity. Not only is buying things with Bitcoin really easy, but more and more merchants are accepting Bitcoin as a payment method.
How You Buy Things From a Merchant With Bitcoin
If a merchant or shop accepts Bitcoin, they will usually display the orange and white Bitcoin logo, or some other notice such as “Bitcoin Accepted Here”. This might appear in a shop window, or in the footer or checkout page on their website. If it’s unclear if the merchant accepts Bitcoin, your best bet is to just ask them if they do.
When making the payment for your goods or services, the merchant will present you with a total price and a Bitcoin address to send payment to. The payment amount and Bitcoin address may also be displayed as a QR code that you can scan with a Bitcoin wallet on a mobile device. Otherwise, you’ll have to manually copy/paste the address and amount into your Bitcoin wallet to make the payment. Be careful when doing so: make sure both the Bitcoin address and the amount of bitcoin are exactly correct prior to hitting the “Send” button. Bitcoin transactions are irreversible!
Many merchants utilize a payment processor (like Bitpay or Coinbase) to handle incoming payments. This means you may be directed to another website that will display the Bitcoin address and payment amount.
Finding Merchants That Accept Bitcoin
spendabit.co — a search engine for products you can purchase with Bitcoin. They’ve got nearly 2 million product available from over 15 Bitcoin supporting merchants (such as Newegg, Overtstock.com, and TigerDirect.com).
Buy Stuff From Other People On a Bitcoin Marketplace
Bitcoin marketplaces connect people who want to directly sell their possessions to other people for Bitcoins. They’re basically like Craigslist and Ebay for Bitcoin. Take a look at the list of Bitcoin marketplaces to find a person-to-person deal on the things you want to buy.
Buy Stuff on Amazon
Although Amazon.com doesn’t accept Bitcoin, you can still use Bitcoin to buy stuff from them. Purse.io allows you to buy items from Amazon.com with Bitcoin by having someone else make the actual purchase for you (i.e. with their own debit or credit card) and have the order shipped to your address. In return, that person gets an amount of your bitcoins, which can be equal to or less than the price of the order (you get to choose the discount percentage). Purse.io acts as both the exchange and escrow provider for spenders and buyers. To get a better idea of how it works, checkout this video:
Your other option for buying things on Amazon is to purchase a gift card using Bitcoin (see below).
Buy Gift Cards With Bitcoin And Use Them At Major Retailers
These online gift card providers will sell you gift cards for Bitcoin. But they don’t ship out physical gift cards to you. Instead, you can download or get emailed “eGift cards”, which will just be a unique number that give you a certain amount of store credit. Some gift card providers have mobile apps that display a barcode representing your purchased eGift card.
You can eGift cards to purchase things both online or in-store. When making an online purchase with an eGift card, just copy/paste the number during the checkout process. When checking out in-store, you can either have the cashier scan the barcode on your mobile app or give the number to the cashier and have them manually enter it into their register.
Gyft — Gyft may be the most popular gift card reseller. They sell gift cards for over 200 retailers (i.e. Amazon.com, Target, Walmart) for Bitcoin, and offer a 3% points rewards program that you can use towards your next gift card purchase.
eGifter — eGifter also has a large selection of retailers (CVS, Bass Pro Shops, Gamestop) and also offers a 3% points rewards program when you pay with Bitcoin.
Cryfter — accepts various cryptocurrencies for eGift cards. Cards are offered for retailers such as Apple, Fandango, and Hulu.
GiftCardBTC — sells only Amazon gift cards for Bitcoin.
Bitcoin Gift Cards — an Australian gift card reseller offering vendors such as Google Play, Dymocks, and Bunnings Warehouse.
Major Companies That Accept Bitcoin
Dell.com — the largest online marketplace to accept Bitcoin (so far). Dell.com sells electronics and computers from a variety of vendors. Unfortunately, Bitcoin payments are only available to US customers. Dell.com started accepting Bitcoin on July 18, 2014 via Coinbase.com.
Taxes (in the United States)
Recently in the United States, the IRS has declared that Bitcoin is to be treated as property, not currency, for tax purposes. That means any Bitcoin holdings are subject to capital gains tax, even if you’re using them to make a purchase. So if you obtained your bitcoins at a price of $100 per BTC, and then make a purchase using bitcoins when they’re worth $200 per BTC, you’ve made capital gains income of $100 per BTC. So if your purchase cost 1 BTC, and you had held on to that Bitcoin for over a year, you’d owe $15 of capital gains tax (15% for securities held over a year).
This should not be construed as legal advice or instruction, contact a tax attorney for that.