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Recently I have seen a few online stores starting to accept bitcoin as a payment method, but I can't think of a reason why I would ever want to pay in bitcoins.

Since I get paid in GBP then I would need to convert that into bitcoins somehow. Most likely by buying them from an exchange. Surely this just creates an unnecessary step since I could just pay the merchant directly using the same method that I purchased the bitcoins from the exchange with.

Even if you are worried about anonymity you could just send cash through the mail directly instead of first sending it to an exchange. I mean, ultimately you need to convert the currency you are paid your salary into bitcoins one way or another. Why not just use that method to send the money directly?

  • There are lots of other ways to get bitcoins besides sending money through the mail to an exchange. (For instance, you could run an online store that accepts them!) And even if you do send cash to an exchange, you could do it once and buy a lot of bitcoins, rather than sending cash to each individual merchant you want to buy from. – Nate Eldredge Aug 27 '14 at 15:53
  • I guess it's similar to paypal in some ways. However paypal makes it MORE convenient for the end user whereas bitcoin seems to make it less. For most situations I think traditional payment methods or paypal would be less of a hassle to use when purchasing goods. – Wilson Aug 27 '14 at 16:26
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    For someone completely new to Bitcoin you are probably right. It is after all an experimental currency. But for someone who has a little experience and already owns some bitcoins (or is buying or earning them regularly), buying something with bitcoins is really very easy - at least as easy as using a credit card - and has much lower total costs. (You pay a very small transaction fee, or in some cases none, and the merchant pays nothing - compare to credit cards, Paypal, or mailing a cheque, where the transaction costs are pretty substantial.) – Nate Eldredge Aug 27 '14 at 17:39
  • @NateEldredge Perhaps you should extend your comments to an answer. – Murch Aug 29 '14 at 10:20
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This is an interesting question, and certainly one to which the answer will evolve before Bitcoin adoption could hit the mainstream.

On an abstract level, it is trivial to answer: In order for you to want to pay in Bitcoin, it must give you an advantage compared to other payment methods, or it must be the exclusive path to some good or service.

There are a number of concrete reasons, although maybe none of them will apply to you personally.

Tipping and Donating

  • Like sending money in the mail, it is possible to offer monetary support without providing your identity or address. Additionally, with Bitcoin the receiving party doesn't have to provide its personal information.

  • The low transaction fees make it economically feasible to send smaller amounts than by mail. This is especially true if the receiving party is located in another country. It's easy to send just a few cents to another internet user to commend him for an insightful contribution.

Buying digital goods

  • Buying access to a newspaper article, a movie, or an mp3-download currently requires you to create an account with the merchant and, often, to create a balance first. Bitcoin could allow such purchases without exchange of personal information for a global market.

  • Especially for small purchases, it would be likely that merchants would offer a discount, as receiving bitcoin payments is significantly cheaper, easier to implement, and less hassle, since they can't be charged back. On the other hand, any sufficient reputable service would not be interested in scamming the customers for cents, potentially alienating its userbase.

  • For example, I could easily see Bitcoin become a much used payment method for computer game vendors such as Steam or GOG, as it already has become for HumbleBundle.

Online Gambling, Pornography, and Drugs

  • While we might not like it, Bitcoin as a payment method has advantages for services of questionable morality and legality, so there are some that operate solely on Bitcoin or at least offer it as an alternative payment method.

  • It might be preferable to users to pay by Bitcoin, than to have a pornsite's charge on the credit card, while pornsites have a lot of trouble with chargebacks due to buyer's remorse and for other reasons.

Bitcoin is a fast and cheap way to send money to a private person abroad

  • Definitely faster than an international wire, or even TransferWise.
  • Likely cheaper than Western Union or PayPal (depending on exchange courses and amounts).

You don't need a bank account

  • For a lot of people it is significantly easier to gain access to Bitcoin (just internet access), than to get a credit card or even a bank account. Currently, not having access to banking is a major hurdle in order to participate in online markets.

Travelling

  • Far down the road, it might be easier to carry just Bitcoin while traveling than to exchange to the local currency for each country. Already, one can pay taxis, hotel rooms, air fare, and food delivery in Bitcoin.
  • Mirch you neglected to mention one of the most significant advantages and insurmountable hurdles the Bitcoin protocol tackles like Richard Sherman on blonde day. We are currently facing a very real war, that of net neutrality. Whereby our most basic rights are being throttled and seemingly choked to death if continued persistence is tolerated. – TheGenesisBloke Sep 3 '14 at 17:04
  • @TheGenesisBloke: I've read your comment thrice now, but I still don't get what you are trying to tell me: What does Net Neutrality have to do with Bitcoin? – Murch Sep 4 '14 at 13:04
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In Britain it is possible for private people to make domestic transfers from their bank accounts free of charge. So for the questioner, I would list the IMMEDIATE practical benefits of Bitcoin as these:

  1. The ability to make cheaply small payments to people overseas, e.g. charity payments, crowd funding projects, small mail-order purchases.

  2. making a distance payment (e.g. for pornography) where the payer does not want the purchase tied to a bank account.

  3. where money is going backwards and forwards between people, all of whom use Bitcoin.

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