Bitcoin price movements put off shoppers as investors rush in

Volatile cryptocurrency Bitcoin’s value has increased five-fold in the past year, and its use as a traditional currency is likely to rise.

Bitcoin’s record-breaking climb this year has created a fresh surge of interest in the world’s biggest cryptocurrency, but Australians remain limited in what they can buy with it.

Billionaire Elon Musk’s announcement this month that his company Tesla would accept Bitcoin payments helped put another rocket under the Bitcoin price, sending it soaring above $US58,000 on Monday before falling sharply since.

Australians wanting to use Bitcoin as a traditional currency for purchases have slim pickings in terms of retailers to shop with, although recent moves by PayPal and MasterCard to accept it this year are tipped to change the landscape.

Elon Musk’s Bitcoin comments and moves have dramatically shifted Bitcoin prices. Picture: Britta Pedersen-Pool/Getty Images

Cryptocurrency exchange Independent Reserve’s CEO, Adrian Przelozny, said the initial idea of Bitcoin as electronic cash “hasn’t grown the way people expected” because of its performance as an investment.

“When you have an asset that keeps appreciating in price, there’s a reluctance to use that asset,” Mr Przelozny said.

“It’s become more of a store of value than a currency people want to use.”

A year ago Bitcoin was trading below $US8800, and its price has trebled since December.

Mr Przelozny said PayPal and MasterCard were “massive networks with a lot of users and a lot of merchants” that would help drive more Bitcoin spending.

Australians can currently spend Bitcoin at dozens of restaurants, bars, cafes and technology shops, but large retailers do not accept it.

Global businesses accepting Bitcoin include Microsoft’s online store, Subway, Starbucks and now Tesla.

Research group Canstar said website Coinmap.org contains a list of all the places people can buy Bitcoin in Australia.

Canstar spokeswoman Effie Zahos said small businesses accepting Bitcoin payment included some gyms, hairdressers and dentists.

“The number of places accepting cryptocurrency, like Bitcoin, as payment in Australia and all over the world is growing but at a pretty slow pace,” Ms Zahos said.

“Digital currency is still young and it’s fraught with volatility.

“As cryptocurrency becomes more popular in Australia, the range of items you can spend it on or services you can pay for it with is likely to get bigger.”

A new survey by cryptocurrency exchange BTC Markets found one-third of Australians see Bitcoin as a currency to make purchases, but 93 per cent have never done this.

It found more Australians invest in cryptocurrency than gold, silver or fixed interest assets.

BTC Markets CEO Caroline Bowler said companies such as MasterCard and major global brands embracing Bitcoin would stop many people from dismissing it as a currency.

Ms Bowler said more people were understanding “it’s nothing to be scared of” but she did not expect serious market penetration with retailers for at least 18 months.

“More than half of our cryptocurrency investors are holding it for at least one to three years … people are buying it to invest for the longer term.”

@keanemoney

Originally published as Bitcoin price movements put off shoppers as investors rush in