How To Use Bitcoin: From Payments To Investments

Bitcoin, the first and most popular cryptocurrency. Its emergence has brought the financial industry to a new level of development. Bitcoin is revolutionary in a decentralized system, as well as a new level of security in making payments. Such unique properties of bitcoin as transparency, low fees and protection from censorship make it a convenient means for international transactions and an attractive asset for investors. Let's look at the main areas of bitcoin use, from its role in everyday payments to investment opportunities. Here you will learn how bitcoin can change the approach to payments and investments in the future.

What is bitcoin used for?

Bitcoin is the first digital currency to become practical. It is based on blockchain, a technology that allows transactions to be carried out without the involvement of intermediaries such as banks or governments. The blockchain is based on a decentralized network of nodes (computers) that confirm each transaction. The main mechanism for ensuring the security of the network is the Proof of Work (PoW) consensus algorithm, which requires miners (network participants) to solve complex mathematical problems in order to add new blocks of transactions to the blockchain.

Bitcoin was created in 2008 under the pseudonym Satoshi Nakamoto. His idea was to create a currency independent of government institutions and traditional financial systems. Since its inception, bitcoin has gone from an experiment for tech enthusiasts to a globally recognized asset. One of the key advantages of Bitcoin is its decentralized structure, which makes it resistant to censorship and ensures the security of transactions through data encryption.

Main use cases of bitcoin

• International payments. Bitcoin makes cross-border transactions much easier and cheaper, especially for businesses and individuals who want to avoid high bank fees, other costs and delays. Using bitcoin, you can send money anywhere in the world almost instantly, without the need for intermediaries. For example, traditional bank transfers can take several days and require significant fees, while bitcoin transactions are faster and cheaper, even for large amounts. The introduction of second-layer protocols such as the Lightning Network speeds up the processing of micropayments and reduces their cost to a few cents.

• Payment for goods and services. Today, thousands of companies around the world accept bitcoin as a means of payment. Among them are Microsoft, Tesla, McDonald's and many other famous companies. Microsoft allows you to use bitcoin to purchase digital content on the Xbox platform, and Tesla and McDonald's have integrated cryptocurrency payments into their systems in some countries. Even luxury brands like Gucci and Balenciaga have joined the ranks of companies accepting bitcoin for payment.

• Financial inclusion. One of the key benefits of bitcoin is its ability to provide access to financial services to people who do not have access to traditional banking systems. In countries with unstable economies or in regions with limited access to banks, bitcoin can act as an alternative system for storing and transferring funds. For example, in El Salvador, bitcoin is recognized as an official currency and is open to citizens of this country for transfers and payments without the need for bank accounts or expensive money transfer services.

How to use bitcoin in investments

• Bitcoin as an investment asset. Bitcoin has earned the nickname "digital gold" due to its gold-like properties, especially as a store of value. Its limited supply of just 21 million coins makes it a scarce asset, which appeals to investors seeking protection from inflation and the volatility of traditional currencies. Like gold, bitcoin is seen as a way to protect capital during times of economic uncertainty and unlike gold, bitcoin can be transferred quickly and cheaply anywhere in the world, making it an even more versatile savings tool.

• Investor examples and inflation hedging. Institutional investors such as BlackRock have begun to actively consider bitcoin as part of their investment portfolios. Bitcoin has already attracted significant amounts of capital from major players who see it as a hedge against inflation as the world's money supply continues to grow. Some investors use bitcoin for diversification, much like gold, especially in times of high inflation when traditional currencies lose their purchasing power.

• Bitcoin trading. However, bitcoin remains a highly volatile asset. Over the past few years, bitcoin has shown both sharp rises and rapid falls. Moreover, its price can fluctuate significantly even within a single day. This makes it a risky investment for those who are not prepared for sharp changes in the asset’s value. But due to bitcoin’s high volatility, it is possible to earn significant profits.

Bitcoin trading is an active form of earnings based on buying and selling cryptocurrency in order to profit from its price fluctuations. Bitcoin trading can take place on various cryptocurrency exchanges, where traders make transactions based on current market trends and technical analysis.

There are several approaches to trading:

1. Short-term trading (day trading) — traders make transactions within a single day, trying to benefit from small price changes.

2. Medium-term trading (swing trading) — trades can last from several days to weeks, focusing on larger market fluctuations.

3. Long-term trading (hodling) — buying an asset for a long term in anticipation of its growth in the future.

Here are some proven and safe exchanges where you can trade bitcoin and other digital assets.

Bitcoin in the gaming and entertainment industry

Bitcoin is widely used in online gambling platforms and gaming services due to the speed of transactions and anonymity. Cryptocurrency casinos such as Mega Dice and Flush offer users the ability to instantly fund their accounts and withdraw winnings in bitcoin and other cryptocurrencies. These platforms also offer integration with popular applications, such as Telegram, which makes the process even more convenient. The advantage of using bitcoin in online casinos is the increased transparency of transactions and the absence of the need for intermediaries, which reduces fees and speeds up payouts.

The role of bitcoin in the play-to-earn and metaverse industries

In the play-to-earn (P2E) industry, bitcoin plays an important role in providing real value to digital assets. In many popular games that have earned a name and stability among users, you can earn tokens that can be exchanged for bitcoin or other cryptocurrencies. This allows players to not only enjoy the gameplay but also earn real money. Virtual assets such as characters and in-game items are created as NFTs that can be traded on open markets.

In metaverses such as Decentraland and The Sandbox, users can buy virtual land plots as well as items using bitcoin. Such assets have real value due to their uniqueness and resalability, creating an entire digital economy within virtual worlds. The development of such platforms shows how bitcoin and other cryptocurrencies are becoming an important part of the gaming ecosystem, linked to the virtual and real economies.

Use bitcoin for international trade and transfers abroad

Anastasiia Chabaniuk Author, Financial Expert at Traders Union

One often overlooked option with bitcoin is staking or participation in decentralized finance (DeFi) platforms. Unlike traditionally storing bitcoin in a wallet, Bitcoin staking allows you to earn passive income by providing liquidity or supporting the network.

It is also worth considering that bitcoin can be effectively used for long-term planning, especially if you are engaged in international trade or frequently transfer funds abroad. Currently, the price of bitcoin is more predictable compared to previous periods, so bitcoin can become a stable means for hedging currency risks in the face of geopolitical instability and fiat currency fluctuations. For businesses that operate in international markets, the ability to conduct fast and cheap transactions with minimal fees can be extremely beneficial compared to bank transfers.

It is also worth paying attention to the integration of bitcoin with metaverses and P2E platforms. This area is only developing, but projects are already emerging that allow not only to invest in virtual assets, but also to receive income from their use in gaming ecosystems. This segment is still young, but its potential is huge, and early investors can find themselves in a winning position if they continue to follow the trends in this area.

Conclusion

Bitcoin has already proven its value as a versatile tool that can be used for a variety of purposes, from everyday payments to long-term investments. Its decentralized nature ensures security and independence from traditional financial institutions. For investors, bitcoin has become a reliable asset that can help protect against inflation and diversify a portfolio. At the same time, its use in the gaming and entertainment industries opens up new opportunities for income generation in the digital economy. As technology advances, bitcoin’s role in the financial world will only increase, making it an important element for both users and businesses.

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Team that worked on the article

Mikhail Vnuchkov

Author at Traders Union

Mikhail Vnuchkov joined Traders Union as an author in 2020. He began his professional career as a journalist-observer at a small online financial publication, where he covered global economic events and discussed their impact on the segment of financial investment, including investor income. With five years of experience in finance, Mikhail joined Traders Union team, where he is in charge of forming the pool of latest news for traders, who trade stocks, cryptocurrencies, Forex instruments and fixed income.

Learn about our editorial policies

Chinmay Soni

Developmental English Editor

Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.

As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.

Mirjan Hipolito

Cryptocurrency and stock expert

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).

Glossary for novice traders

Swing trading

Swing trading is a trading strategy that involves holding positions in financial assets, such as stocks or forex, for several days to weeks, aiming to profit from short- to medium-term price swings or "swings" in the market. Swing traders typically use technical and fundamental analysis to identify potential entry and exit points.

Diversification

Diversification is an investment strategy that involves spreading investments across different asset classes, industries, and geographic regions to reduce overall risk.

Investor

An investor is an individual, who invests money in an asset with the expectation that its value would appreciate in the future. The asset can be anything, including a bond, debenture, mutual fund, equity, gold, silver, exchange-traded funds (ETFs), and real-estate property.

Leverage

Forex leverage is a tool enabling traders to control larger positions with a relatively small amount of capital, amplifying potential profits and losses based on the chosen leverage ratio.

Volatility

Volatility refers to the degree of variation or fluctuation in the price or value of a financial asset, such as stocks, bonds, or cryptocurrencies, over a period of time. Higher volatility indicates that an asset's price is experiencing more significant and rapid price swings, while lower volatility suggests relatively stable and gradual price movements.