By now, most people have heard of bitcoin; the decentralized digital currency is all the rage among new-technology geeks. But anyone can use bitcoin, and frugal consumers might want to pay special attention. Buying goods and services with this alternative to cash and credit cards can save a good hunk of change -- 5 percent or more on Amazon purchases, for example, and 20 percent on Starbucks coffee.
Bitcoin is alike and different from the money we use every day. It can be used to buy things (although not everywhere -- yet), held as a form of savings, and transferred between consumers with bitcoin wallets. But unlike traditional currencies issued and managed by a centralized authority, bitcoin uses advanced cryptography and new technology called "the blockchain" to control how many bitcoin units are issued. Moreover, bitcoin is accepted worldwide, so there's no need for pesky foreign currency exchange on international transactions. It transfers from one account to another nearly instantaneously. And the fees are trivially low, almost to the point of nonexistence.
These properties make bitcoin a good deal for merchants. Credit card companies charge vendors up to 3 percent of the sale price when customers pay with credit cards. Bitcoin, by contrast, is like cash; there are no fees for the seller. Moreover, bitcoin transactions significantly reduce the risk of chargebacks when scammers pay with a credit card and then report the transaction as fraudulent -- a ploy that costs merchants dearly. (To get a bitcoin refund, consumers deal directly with the seller. They can't just claim fraud and ask to have the transaction voided.) The upshot: Some merchants offer significant discounts when consumers pay with bitcoin. Shopping through intermediaries may bring even bigger savings.
Bitcoin for Amazon Purchases.Although Amazon currently does not accept bitcoin, shoppers can turn to a marketplace called Purse to buy anything on Amazon at a discount. The process is simple: Create a public wish list in a personal Amazon account and then copy the URL to Purse. State the desired discount, place the order, and wait for someone to purchase and have it shipped to you.
Discounts on the order of 20 percent are common, and purchases usually are made within 24 hours of placing the order. It's possible to stipulate discounts greater than 20 percent, but they generally take longer to fulfill, and in some cases are never completed. Most people who make purchases from a stranger's wish list belong to Amazon Prime, so the order arrives within a couple of days. If speed matters, Purse can buy the item directly, but the discount is set at 5 percent.
Bitcoin for Coffee.For consumers dependent on their daily cup o' joe, using the mobile app Fold nets a 20 percent discount at Starbucks when paying with bitcoin. Transfer bitcoin to Fold in advance and scan the barcode at the register. The builders of this app aim to bring Bitcoin discounts to Whole Foods and Target. Keep an eye out for new deals.
Bitcoin for Gift Cards.Use the digital currency to purchase gift cards from major retailers at Gyft or eGifter and get 3 percent back in points. This may not seem like much, but it adds up quickly.
CardCash sells already discounted gift cards (that consumers no longer want) and cuts the price an additional 2 percent when buyers pay with bitcoin. It's easy to use on the spot: See something at a store, use bitcoin to purchase a gift card with a smartphone, and present the digital card to the cashier.
Direct Discounts.More and more merchants are accepting bitcoin directly from consumers and offering discounts for payment with the virtual currency:
- Gamers get 5 percent off used video games and game consoles at JJGames when using bitcoin (use the promo code "bitcoin" at checkout). This is a cheap way to find old video games that aren't available in most brick-and-mortar stores.
- Players of the board game Go receive a 5 percent discount from Go Game Shop when paying with bitcoin.
- Subscribers to Mantry, an artisanal food subscription service that specializes in so-called manly food, receive a 10 percent discount when using bitcoin. 3
- D printing lets art lovers bring home a cool sculpture at a cool price. Telemetry 3D gives bitcoin users 10 percent off 3D printing orders.
- Purchase electronics from Duty Free Digital with bitcoin and save 5 percent on the order. The company offers duty-free prices and free shipping to more than 40 countries on orders greater than $99.
- Jewelry and clothing from Locher's Paris cost 20 percent less when purchased with bitcoin.
- Bitcoin nets a 10 percent saving on vintage, antique, or estate jewelry from Maejean Vintage.
- Lawyers who want to advertise their services can join Lawyer.com at 10 percent off when paying with bitcoin.
To reap these savings from a bitcoin wallet, shoppers first need to acquire some digital currency. This is easy to accomplish through an online exchange, such as Coinbase or Circle, that converts traditional currency (such as dollars or euros) into bitcoin. The going rate in mid-January: about $430 for one bitcoin.