What can Bitcoin be used for?
I’ve heard it’s mainly for making money, but are there other uses too?
While Bitcoin often makes headlines for its price fluctuations, it has various applications beyond just investment.
Services are being developed that take advantage of Bitcoin’s unique features, such as the ability to operate without a central authority and low transaction fees, as well as the capability to send amounts smaller than one yen.
In this article, I'll show you what bitcoin can be used for in "everyday life," "investment," and "for advanced users.
Supervisor: Koji Higashi
A pioneering figure in the domestic industry, engaged in Bitcoin-related businesses since the early days in 2014.
Co-founder of Diamond Hands／Operator of the YouTube channel "Bitcoiner's Hanseikai".
This article was written in Japanese and converted to English using a translation tool.
Date of writing (Japanese version): October 2023
What Can Bitcoin Be Used For in Everyday Life?
Bitcoin is a digital asset that can be transferred over the internet, allowing you to send it to others or use it for purchases.
Unlike traditional cash or electronic money, Bitcoin doesn’t require going through banks or payment processors. This means lower fees and faster transactions.
Bitcoin has unique characteristics that make it different from traditional currencies such as the yen or the dollar!
Let's explore how Bitcoin can be used in everyday life.
- Low-Fee International Money Transfers
- Urgent Donations to Disaster Areas
- Payments in Stores and Online Shops
- Micro-Tipping on Social Media
- Legal Tender in Some Countries
Low-Fee International Money Transfers
With Bitcoin, you can send money to anyone, anywhere in the world, as long as you have a smartphone or computer and an internet connection.
Sending traditional currencies overseas requires going through financial institutions like banks, which incurs costs such as bank fees and intermediary charges. In contrast, with Bitcoin, as long as you know the recipient's Bitcoin address, you can send money quickly and cheaply, directly to them.
This makes Bitcoin useful for remittances from migrant workers sending money back home or for paying employees in global companies.
People in developing countries who don’t have bank accounts could potentially use Bitcoin for international transfers!
Urgent Donations to Disaster Areas
Bitcoin can also be used for donations to disaster-stricken areas that require immediate support, such as during natural disasters or conflicts.
Since Bitcoin can be sent directly to the disaster area without intermediaries, the donation reaches the destination quickly. If the disaster area accepts cryptocurrency donations and has a public wallet address, anyone can donate Bitcoin instantly.
You can send Bitcoin from an exchange or directly from your Bitcoin wallet.
Being able to support disaster areas directly is amazing!
It's convenient to help those in need quickly.
Payments in Stores and Online Shops
You can shop with Bitcoin.
渋谷で@ch0meji さんのキッチンカーで人生初BTC Lightning決済DONE！
— 初期ちゃん (@icchinakka) September 28, 2023
ユースケース提供されてる方ほんと凄い。@ch0meji さん、ありがとうございました！#BTC #LN#LightningNetwork pic.twitter.com/1gQKjY0xUU
An increasing number of stores are adopting Bitcoin as a payment method, both for in-store and online shopping. As a global currency, Bitcoin offers the advantage of being able to pay abroad without the need for currency exchange.
Individual shops and food trucks are starting to accept Bitcoin payments, aiming to attract foreign tourists and new customer bases.
The tweet above shows how Bitcoin payments are used in Japan.
It’s as easy as electronic money, with the transaction completing after a short wait!
The “Lightning Network” technology for Bitcoin enables fast and inexpensive payments.
The Lightning Network Flea Market in Koenji
高円寺ライトニングフリマでBTC LN決済をたくさんしてきました。思った以上に盛り上がっていてビットコイナーのパワーを感じました。#高円寺ライトニングフリマ pic.twitter.com/J4lqTOLY5Q
— BBB（本物） (@project_bbb) November 19, 2023
初めてのLN決済！うれしい#高円寺ライトニングフリマ #bitcoin pic.twitter.com/ukyvfcexpB
— とうにゅう (@tonyu_stepn) November 19, 2023
高円寺BTCライトニング決済体験したぜ、PayPayくらいの早さ#高円寺ライトニングフリマ pic.twitter.com/gT0Zpi3Qcj
— 仮想NISHI (@Nishi8maru) November 19, 2023
Micro-Tipping on Social Media
Easy and Casual Tipping
Sending Zaps on Nostr using Kollider Wallet.
— Kollider⚡ (@kollider_trade) February 13, 2023
Instant, global, p2p value transfer. In just a few clicks. Natively integrated into a decentralized social network.
The possibilities are mindblowing 🤯 pic.twitter.com/yF5M9IF1wB
On decentralized social media apps like "Nostr," you can easily tip in units as small as 1 Satoshi (1 Sats = 0.00000001 Bitcoin).
(Decentralized means that there is no central authority; instead, data is shared across multiple scattered computers.)
Bitcoin supports the development of "micro-payments," allowing for ultra-small transactions, including tips of less than one yen. New systems are being devised for tipping with the ease of pressing a "like" button on Twitter or during live video streams.
With the previous payment systems, very small payments were impractical considering the cost.
The development is underway with Bitcoin, which has its own unique features that are different from conventional money.
I see that during the live streaming of the Youtube channel "Bitcoiner Hanseikai," there is also a real-time bitcoin throwdown!
Some countries use it as legal tender.
QR codes for bitcoin payments are in place.
In El Salvador, Central America, bitcoin is used as state-recognized "legal tender.
In some stores, it is possible to make payments using bitcoin.
Although not yet widely accepted, bitcoin is extremely well known, and some foreign companies are moving into the country to educate people about bitcoin.
It will be interesting to see how the use of Bitcoin will expand in El Salvador, the first country in the world to make Bitcoin a legal tender.
What can bitcoin be used for? How to Use it for Investors
I didn't know bitcoin could be used in everyday life.
But I guess a lot of people try to make a profit by buying or selling them.
Some Bitcoin investors are using Bitcoin for more than just buying and selling.
- Aiming for profit by buying and selling bitcoins
- Earn a yield from lending services
- Hold bitcoin for the long term as an asset that is resistant to inflation
Profit from bitcoin trading
Compared to financial instruments such as stocks and gold, bitcoin's price fluctuates more rapidly (high volatility), which is why many people trade bitcoin as an investment.
If you buy bitcoin when it is cheap and sell it when its price rises, you can obtain profits from the increase in price.
Some people make short-term trades, buying and selling within a day, while others buy and sell over a period of several years in anticipation of bitcoin's soaring price.
Why does bitcoin fluctuate so much in price compared to other financial instruments?
Gold, for example, has been bought and sold by many people for a long time, and many people think it's worth a lot, so its price is stable.
On the other hand, Bitcoin is a new currency that was introduced in 2009, and its market is not mature enough yet.
Earning Yield with Lending Services
Bitcoin can be managed (i.e., assets can be used successfully) using the lending service "Lending".
Lending is an investment method to earn a yield by lending out your virtual currency holdings, and domestic virtual currency exchanges offer services with annual rates of around 1-5%.
Some people who aim for investment gains on purchased bitcoins also make use of lending services.
Lending allows you to increase your bitcoin holdings, but keep in mind that you also risk losing your assets if the service's operator goes bankrupt.
Hold for the long term as an inflation-resistant asset.
Bitcoin has an issuance cap of 21 million and is a currency that some people hold for the long term as a protection against inflation.
General currencies such as the yen and the dollar are subject to "inflation," a decrease in the value of the currency due to an increase in the amount issued as a result of government policy.
Bitcoin, on the other hand, is structured in such a way that it cannot be issued beyond its maximum limit, and some consider it to have a scarcity value similar to gold, which has limited reserves.
When inflation occurs, people can no longer buy goods for the same amount of money as before, as in "an ice cream that used to cost 100 yen will now cost 170 yen.
If the value of the Japanese yen goes down, the value of the Japanese yen you have saved will also go down.
I see that some people who think "holding only yen is risky" diversify their holdings into financial assets such as bitcoin.
What Can You Use Bitcoin For? Advanced Edition
Bitcoin is used by both the general public and investors, right?
By the way, what would a very knowledgeable techie use bitcoin for?
I asked Koji Higashi, who has been involved in the bitcoin business since 2014, how he uses bitcoin.
- Take advantage of its programmable nature
- Issue stable coins with stable prices
- Storing image data
Take advantage of its programmable nature
The Bitcoin network has a programmable nature (programmability) that allows machines and computers to run automatically or follow specific rules.
Bitcoin has a strong image of "human-to-human transactions and transfers," but development is also progressing on systems for non-human interactions, such as computers and the IoT.
IoT: "Internet of Things. A system that connects various objects, such as cars and refrigerators, to the Internet.
In addition, the Bitcoin network has "extensibility" that allows new functions to be added, and further systems may be added in the future.
Examples of developments that take advantage of the programmable nature
- Electric vehicle charging authentication
→A system that can be easily introduced by owners of apartment complexes, etc., because it can determine "when and by whom" electric vehicles have been recharged with low fees. - AI-based payment currency
→Bitcoin is a currency that is digitized & can be used by anyone, automated AI systems could use bitcoin.
The bitcoin network is being looked at as a highly secure currency that runs 24 hours a day without a central administrator.
If the future comes when currencies are automatically exchanged between non-humans, bitcoin may indeed be a good match.
Issuing Stablecoins with Stable Prices
Recently, it has become possible to issue stable coins on the bitcoin network.
Stable coins?
Stable coins are coins that are stable in price.
They are linked to currencies such as the U.S. dollar and are easy to use for purchases and money transfers.
Stablecoins can now be used on the Bitcoin network using the Lightning Network, which allows for quick Bitcoin transfers.
Stablecoin issuance and transactions that have been done in the world of blockchain technology can now be done in Bitcoin.
It may become possible to exchange various stable coins, such as dollars and yen, on the highly secure bitcoin network.
Stablecoin, which is always worth $1, might be easier to use for payments than bitcoin, whose price fluctuates so much!
Instantaneous payment technology is also advancing, and it will be interesting when currencies from all over the world are traded on the bitcoin network.
Storing image data
Ordinals, which use the bitcoin network to store image data, are also being developed.
？？？
If you record the image data on the bitcoin blockchain, anyone can check the image as long as bitcoin exists.
Ordinals is a technology that writes data to the main bitcoin network.
The "NFT" mechanism, which is being developed in the blockchain world, is now available for Bitcoin.
NFT…digital data that is difficult to counterfeit or tamper with and can be bought and sold.
Ordinals can easily cause congestion in the bitcoin network, and the system is controversial even among technical experts.
Currently, most cases are used for speculative purposes, but there are many people who are interested in this as an example of the use of the Bitcoin network.
It's interesting that not only the coin "bitcoin" but also the "bitcoin network" is being used for various developments.
Maybe one day new technology will come along and the general public will use the bitcoin network without even knowing it.
Summary: What can bitcoin be used for?
What can bitcoin be used for?
- For daily life
→Remittance, donation, payment, and throwing money around - For investors
→Trading, lending, long-term holding - For developers
For Developers→Using the Bitcoin Network
I thought bitcoin was a coin for buying and selling and getting money, but it has many other uses!
I didn't know you could send money across countries without exchanging money, like international money transfers or online shopping.
There are new ways to use bitcoin that take advantage of its unique ability to transfer money quickly and without a central controller.
Be sure to check back for future developments in bitcoin development.
I thought Bitcoin seemed kind of difficult, but maybe it will become more familiar to us, and I wish I knew more about it.
I want to know more about bitcoin!
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Writer：Sigeru Minami
Creator of "Bitcoin-zukan.com."
Active as a handmade craftsman of Bitcoin goods.