The future of finance is here. More U.S. retailers are accepting cryptocurrency as payment, albeit with the added step of converting the coins into cash first. For instance, Walmart shoppers must first sell their bitcoin or ethereum holdings within the Walmart OnePay mobile app. Then, they can pay through the app by scanning the bar code at checkout (or paying online, of course).
Starbucks has accepted bitcoin and ethereum since 2021, using a similar process through the SPEDN mobile app, according to QZ.com. However, no retailer is currently accepting these instruments as a direct form of payment.
“I have not seen any of these stores actually advertise payment with crypto [directly], yet,” said Brian Spinelli, Co-CIO at Halbert Hargrove. “Walmart is starting to integrate it into the OnePay app.”
Even so, there’s a huge advantage for many people to convert their crypto holdings to cash as needed. Whether shoppers use it to buy baby formula or just a Frappuccino, the ability to tap into cryptocurrencies as needed or desired could change the world of digital finance for consumers and investors, alike.
“There are numerous people, even in the US, who are unbanked. They don’t use traditional banks, and this is going to make it easier for them to convert [crypto] holdings into a payment form,” Spinelli said. “If you don’t have a bank account, but you own crypto on your phone … This is bridging that gap to allow mainstream retailers to open to a consumer base that might not have access to free banking like a lot of us do.”
Selling crypto to cover expenses, however, could be a costly move you may regret if bitcoin continues to appreciate.
“Bitcoin [should] be viewed as an investment against the depreciation of the fiat currency,” said CK Zheng, cofounder and CIO of ZX Squared Capital.
You should also be aware of tax ramifications. Currently, the IRS taxes digital assets as property, not currency. That means any transactions must be reported as capital gains or losses.
“You’re going to have a lot of gain-loss scenarios where you might have a lot of transactions to report,” Spinelli warned.
This may be a lot to track, especially if you don’t have a tax accountant or financial advisor to help.
Plus, remember that if you sell your bitcoin to make a purchase and then return that merchandise, you’ll receive the cash value, which could mean a loss from your initial investment.
However, if it’s a choice of carrying a balance on a high-interest credit card or tapping into your crypto stores, Zheng said, “avoiding the high interest credit card is probably the better option.”
Overall, the adoption of bitcoin as a currency should help increase its value over time, which will be a positive for investors.
“Bitcoin currently behaves as a hybrid of a high-tech stock and a store of value like gold. Its volatility is driven predominantly by its perceived riskiness and its demand/supply processes,” Zheng said. “When bitcoin matures and is widely used as a currency, its volatility definitely will decrease.”
“The more adoption, the more people using it, the more people holding it, might stabilize it,” Spinelli agreed. “It’s been a pretty volatile asset, and it still is. But the more adoption that there is, that’s a good thing for bitcoin.”
This article originally appeared on GOBankingRates.com: Walmart, Starbucks and More Are Accepting Crypto Payments: What It Means for You
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