Four years ago I tried to make a living bitcoin for a week and failed. It was too difficult to find companies that would accept it as a payment method.
Bitcoin was traded in the $ 2500 range at that time in 2017. Later that year, it rose to a then record high value of almost $ 20,000. In 2018, it lost 80% of its value.
With bitcoin rising 2220% since $ 2,500 per coin – most recently over $ 58,000 – I decided to try it again.
But before I embarked on my new adventure, I looked back at the things I could pay for in bitcoin in 2017, and how much that amount of bitcoin would be worth in last month’s record prices.
Then I found a bitcoin holder in a chat room who agreed to meet me at Penn Station and sell me a New York City MetroCard in exchange for bitcoin. I ended up paying him $ 20 in bitcoin. If I had kept the $ 20 in bitcoin, it would have been worth $ 464 now.
The $ 10 salad I paid for in bitcoin at a French restaurant on the Lower East Side four years ago would now be worth about $ 232.
The ice cream sandwich from Melt? It cost me $ 6.50 bitcoin in 2017. That amount of bitcoin would be worth about $ 150 at the peak in February.
But that was then, and it is now.
I reduced my last experiment to just a few days due to the health risks under Covid, the city’s virus restrictions and the closure of a number of restaurants due to pandemic.
In 2017, I had a hard time buying coffee directly with bitcoin. In 2021, this is possible thanks to Bakkt Cash, a platform for digital currency Starbucks tests via a limited program.
This is probably one of the biggest changes from four years ago, a growing number of third-party apps that make it easier to spend your bitcoin. Instead of putting a credit card in the apps, you choose to pay with bitcoin. In general, the apps show you prices in dollars and draw on your bitcoin as a source of payment.
However, Flexa told CNBC that a majority of the transactions on its platform, more than 60%, are for coffee, tea and other fast service products. It charges no user fees.
In the same way as four years ago, there are solutions including gift cards that bitcoin holders can buy with their bitcoin. However, these sites usually have transaction fees that vary depending on a number of factors. Currently on bitinfocharts.com, the average transaction fee is $ 15. Two weeks ago, it was about $ 30.
Expensive transaction fees are one of the many reasons why bitcoin holders told CNBC that they do not see it as real currency. Based on a Chainalysis report, only 8% of bitcoin transactions in the US were for trading services last year.
Using a popular service, I was able to purchase a $ 5 gift card to use on Amazon by connecting my crypto wallet. The process was a bit time consuming and the transaction side did not break out the service fee.
What can redefine how cryptocurrency enthusiasts see bitcoin is PayPalsuccess in launching supporting technology that enables its customers to use bitcoin as a payment tool with its nearly 30 million merchants.
“PayPal’s commitment should make it much easier for merchants to become comfortable accepting bitcoin, especially since it essentially enables PayPal to accept the cryptocurrency. Palmer, CEO of fintech and digital assets at BTIG, to CNBC.
David Grider, head of digital asset strategy at Fundstrat, said reduced bitcoin volatility, lower crypto-to-fiat exchange rates and wider cryptocurrency use are generally needed before cryptocurrency payments reach mainstream adoption.
Until then, most experts said that bitcoin will be widely seen by holders as a store with value versus a currency. It is often called digital gold.
Before you start preparing your phone with apps that allow you to use your bitcoin, however, beware of two things: regulation and taxation.
Just last week, Minister of Finance Janet Yellen alerted to the use of cryptocurrencies in illegal activities as a “growing problems” raise some concerns as to whether digital coins, which are by nature decentralized, should be regulated in any way.
As for the issue of taxes as April 15 approaches, investors should be aware that the IRS classifies bitcoin as a property, not a currency. So yes, capital gains taxes can apply.
Only time will tell if I should kick myself four years from now to buy things with bitcoin or thank my lucky stars. It all depends on whether the sky-high prices go even higher.
– CNBC’s George Manessis contributed to this report.