, CA in a Tesla Model S paid for in bitcoin—just under 92 bitcoins, to be precise, worth over $100,000 at the time. Compare that to the first-ever known purchase of goods for bitcoin, a pizza delivery that cost 10,000 bitcoins, and it’s easy to see an emerging narrative about the value and utility of bitcoin.
Despite skeptics and setbacks, the value of bitcoin continues to rise, and every day more and more people come around to learning about how cryptocurrencies work, recognizing that they aren’t just some shady underworld scrip. However, spending bitcoin continues to be a considerably greater challenge than hoarding it.
The Challenges to Bitcoin Transactions
Some countries are banning the use of bitcoin as payment outright, and even where it’s legal, there are logistical hurdles. While there are tech-savvy companies that have implemented bitcoin payment options for their customers to make use of, accepting bitcoin as payment for groceries, gasoline, dinner, or a cup of coffee still isn’t feasible for many business owners.
That story about the Tesla Model 5? It makes for good bitcoin PR but there’s a little caveat. The dealership didn’t accept the bitcoin payment directly; a payment processing company exchanged it for dollars first. Similarly, Starbucks has begun accepting bitcoin, but only in partnership with a third-party app that handles the conversion. Point-of-sale transactions continue to be a stumbling block for many bitcoin users.
Why is this? On the consumer end, there’s a pretty strong incentive not to spend bitcoins, and therefore no critical mass of pressure to get ordinary businesses to find ways to take them.
That first bitcoin pizza delivery perfectly explains why: Those 10,000 bitcoins would be worth millions today. With bitcoin value continuing to grow exponentially, it’s hard to justify spending bitcoin on a round of beers or a night at the movies when they could be worth ten times their current value the following year. It just makes more sense to hold on to them as an investment.