New sites launching this month make it easier to shop online with bitcoin or send money to your friends. The QuickCoin app lets you send bitcoin directly to people on Facebook, and Santa Cruz, Calif.-based PayStand, which launched last week, allows consumers to shop from 2,000 retailers using bitcoin. Square, the San Francisco mobile payments company, said last week it would start accepting bitcoin on its online marketplace, Square Market.
As the number of bitcoin websites and apps grow, so does the bitcoin culture. In February, San Francisco held its first bitcoin fair, a festival of music, food, beer and arts vendors all accepting bitcoin.
Just because it’s easier to get and spend bitcoin doesn’t mean consumers should start cutting up their credit cards, some finance experts say.
“Typically you want to get rid of uncertainty, but you’re investing in it with bitcoin,” said Mark Schwanhausser, a financial services director at Pleasanton, Calif.-based Javelin Strategy & Research.
In February, the world’s largest bitcoin exchange, Japan-based Mt. Gox, filed for bankruptcy after it lost more than 750,000 bitcoins — and then found 200,000 of them in what it said was a forgotten wallet. Even the Bitcoin Foundation, a nonprofit group set up to promote Bitcoin’s legitimate use, was marred after one of its board members was charged with money laundering.
Another deterrent to consumers came last month when the Internal Revenue Service announced it would treat bitcoin as property, not currency, and could impose taxes on some bitcoin transactions. If you buy a $5 beer with bitcoins you bought for $2, but the bitcoin value had inflated, then that purchase would trigger a capital gains tax.
“Do you want to do the math of capital gains in order to figure out how to buy a beer at a ball game?” Schwanhausser said. “You’re either going to say screw it, and hope the IRS doesn’t come and find you, or figure out a different way to pay.”