You took the plunge! After months or years of hearing all about bitcoin, you finally bought some of this cryptocurrency yourself. So, what do you do now?
Once your bitcoin is in your digital wallet, the next step depends on your goals. Is this a long-term investment for you? A foray into a new way to make transactions? Or perhaps, cryptocurrency is the solution to an ongoing challenge, such as moving money internationally.
Your goals will determine which of these options may be best for your new acquisition.
"We accept bitcoin." You may have seen this sign in the physical world or online. It's true—a growing number of merchants are accepting bitcoin as payment for goods and services.1 But how do you move a portion of your bitcoin out of your digital wallet and into the merchants' coffers?
That depends on the retailer. Some include an option for bitcoin payment at checkout. Overstock.com, for example, allows shoppers to enter a bitcoin address to pay, or use a digital wallet service. Other companies allow you to use bitcoin to buy gift cards, which you can then spend.
Wikipedia made news back in 2014 when it announced it would accept donations in the form of bitcoin.2 Since then, many other nonprofits have realized that accepting digital currency is a no-brainer.
Some nonprofits publish their bitcoin wallet addresses, leaving donors to decide what service to use to send their cryptocurrency gifts. Other charities include forms on their websites that may include a choice of wallet services for the transaction.
If you have a child in college overseas, or if you're working abroad yourself, you have probably already experienced the challenges of moving money across the world. Some people in this situation have found cryptocurrency to be a solution to the problems of high fees and slow international money transfers.
It cost an average of 6.4% to send a $200 remittance globally in the first quarter of 2021, according to The World Bank.3 Depending on the service you use, sending bitcoin across borders could be less expensive than using a traditional wire service.
Of course, you can also send crypto to friends in the U.S. Whether it's a birthday gift or a reimbursement for last night's dinner tab, bitcoin can be a convenient and novel way to move money. The Bakkt App can be used to send cash and crypto to friends and family domestically.
While no one can predict the future, many who have seen bitcoin's stratospheric rise in value wonder if it could go even higher. If that's your perspective, you can always hold onto your bitcoin for now—or forever.
Maybe you hope your children and grandchildren will someday thank you for having the foresight to invest in digital currency. If this is your plan, just make sure to keep good notes of where your bitcoin is stored so that future generations can access it.
Some folks see the volatility of this digital currency as an exciting opportunity. If the price dips today and you think it will bounce back next week, you can always buy and sell bitcoin as a form of speculative investing. Just remember that what happened in the past doesn't necessarily predict the future and keep an eye on transaction costs.
It's also a good idea to consult professionals about both your overall investment strategy, and to figure out what you owe the IRS on any bitcoin trading gains. An investment adviser can counsel you on limiting the amount of your capital used in speculative plays.
With all these options at your disposal, you just might find yourself buying more bitcoin, just so you can try different things. That's the new world of cryptocurrency—enjoy it!