Can Bitcoin Be Useful For International Travelers?

Reader Steve C recently asked me on foXnoMad:

“How could Bitcoin be used during international travel? Is there any benefit? What type and how much risk might there be?”

Those are interesting questions about the digital currency a lot of people are talking about right now. There is a lot of confusion around Bitcoin and what it is exactly, so let’s start by clearing that up first, then looking at how travelers may (or not) be able to use it.

What Is Bitcoin?

Bitcoin is a digital currency whose value is derived from the fact that a growing number of people use it online. Like paper money, Bitcoin doesn’t have any intrinsic worth but is valuable because a lot of people use it. Bitcoin are created by computers after solving highly complex math problems – a process taking a lot of processing power – so your any-old-laptop isn’t going to cut it. Plus there are a lot of computing groups around the world pooling their resources which makes “mining” any appreciable amount of Bitcoin unpractical for most people. The simplest way to obtain Bitcoin for the masses is through purchases using standard money (e.g. dollars) on sites like Mt. Gox or Bitstamp.

How Much Is A Bitcoin Worth?

Bitcoin markets are very volatile and can swing several hundred dollars in hours. You can see just how active the Bitcoin market is by watching its rate versus other currencies in real time. It’s important to remember if you’re looking to trade Bitcoin for profit against another currency to know what you’re getting in to. Setting aside trading on the Bitcoin markets for the moment, if you simply want to use the digital currency for what it is and shop online, there are some options.

Get Set Up First

In order to use Bitcoin, you need a digital wallet. There are two ways to go about this, either create a wallet on your own computer or use a cloud service. Bitcoin wallets need protection jut like physical money wallets which is why for most people I recommend using a cloud service, akin to storing funds in a bank rather than under your mattress. Although a cloud service Bitcoin wallet like Blockchain is no guarantee of security it places the burden of protection on a company with theoretically better resources that you.

• Create Your Own Wallet – In case the cloud options above still don’t sit completely well with you, setting up your own Bitcoin wallet is free and simple. Those of you going this route should brush up on securing your Bitcoin wallet however.

Where Can I Spend Bitcoin?

Now that you’ve got a wallet which hopefully has some Bitcoin in it, there are a growing number of places where you can spend it. Bitcoin Magazine has a regularly updated list that also includes a travel section. You’ll notice there are hardly any major retailers but I suspect that will change as Bitcoin’s value stabilizes and governments figure out how to regulate it. Countries are well on their way to taxing Bitcoin, making other forms of involvement likely not to be too far behind.

Can I Use Bitcoin As A Traveler Right Now?

Technically yes, just not in a lot of places. Given that Bitcoin doesn’t have a physical incarnation (well, mostly) limits your transactions to a select set of online stores and services. Bitcoin’s value is also unstable, so investing any money in Bitcoin is risky as the worth could drop quickly. Think about the currencies around the world airports almost always convert to and from – dollars, Euros, British pound – because banks can reasonably be confident of their worth.

Bitcoin doesn’t have any security right now in terms of valuation and its appeal for many is that its difficult to trace. Unless you’re interested in moving large amounts of cash under a government’s taxing eyes or living in limited cyberspace during your next vacation, Bitcoin probably isn’t going to do you much good. Yet. As people, markets, and regulators begin to take Bitcoin seriously, there’s a good chance it might be a new widely accepted currency sometime in the near future.

I hope I’ve been able to clear up some of your traveling questions about Bitcoin and how it might be useful on your next trip. The topic of Bitcoin is a bit complex (to put it lightly) and I haven’t covered nearly everything – but I’m happy to answer any other questions you may have in the comments below.