The way Bitcoin is being utilized is changing as well. Because the fees to process a transaction in Bitcoin can be steep and varied -- they peaked at $54 in December, but are down to less than $1 today -- not many people are using the coins for small transactions, like buying a cup of coffee. They are spending the virtual currency more to pay vendors like freelancers located overseas: For those cases, using Bitcoin can be cheaper and faster than using traditional financial services.
“In the last six months we’ve seen a large uptick in crypto companies paying their vendors in Bitcoin, including law firms, hosting companies, accounting firms, landlords and software vendors," according to Sonny Singh, chief commercial officer of processor BitPay. His company has seen a five-fold increase in crypto companies paying their bills from last year, he said.
Bitcoin faithful continue to buy bigger-ticket items such as furniture, and still the occasional sports car. At Overstock.com Inc., crypto-based sales are up two-fold in the first half of this year versus a year ago, the company said. Top items bought with cryptocurrency include living-room furniture, bedroom furniture and laptops, according to the site.
Many people, however, are only speculating with Bitcoin or selling off small amounts to convert it into a fiat currency, and use that to pay for goods and services. Long-time advocate Graham Tonkin said he converts his Bitcoin and Ether from time to time to cover credit-card bills.
"I assume many people are like me, where you won’t be doing your everyday transactions in it," said Tonkin, who is chief growth officer at crypto finance research company Mosaic. “I don’t believe [it] fits the characteristics of money very well."
This article was provided by Bloomberg News.