While crypto has been around since 2009, in early 2020, cryptocurrencies became mainstream after major companies began recognizing them as acceptable forms of payment. Today, a number of retailers, including Microsoft, PayPal, Etsy, and even Starbucks, accept cryptocurrency, namely Bitcoin, as a form of payment. Should you buy your next car with crypto, though?
Before we can talk about purchasing a vehicle using cryptocurrency, we first have to understand what cryptocurrencies are. While many people are familiar with Bitcoin, it’s not the only type of crypto out there. Coinmarketcap.com lists 1,583 different types of cryptocurrency, with thousands of transactions between global users taking place every day. Despite this, many digital coins floating around, and big-name players like Bitcoin, Ethereum, and Tether are the dominating players in the crypto market.
Unlike tangible cash, cryptocurrencies are decentralized currency that is not regulated by any bank or agency. Instead, they use blockchain technology to maintain the digital asset’s authenticity and act as a ledger that records transactions whenever individuals trade these digital currencies back and forth.
How to Purchase a Vehicle Using Cryptocurrency
So you’ve got some crypto in your digital wallet, and you’re ready to buy a vehicle. Unfortunately, it’s not as simple as forking over your coins and purchasing your new ride.
You first need to start by finding a dealership that will actually accept crypto as payment. Most vendors accept Bitcoin only, while others take Ethereum and even Tether.
Unfortunately, for many residents throughout the United States, you won’t be able to pop into your local Honda, Toyota, or Chevy dealer and purchase a vehicle with crypto, as a majority of dealerships just haven’t made that leap yet. If you live in parts of the East or West Coast, there are certain dealerships that will accept crypto as a form of payment. Even then, you’ll have to do research to figure out whether there are limitations and whether there are specific coins that they accept. Typically, if a dealership or retail accepts crypto, it’s likely going to be Bitcoin. The nation’s most iconic EV brand, Tesla, has gone back and forth between accepting Bitcoin as a form of payment and denying it. If you’re planning to purchase a Tesla with Bitcoin, you’ll need to do extensive research and plan accordingly to make sure you can actually make it happen.
Using Your Crypto Assets
Because digital currencies are not kept in a bank account and are instead kept in a digital wallet, you’ll need to transfer your funds into a crypto debit card like the Coinbase Visa card or BitPay Mastercard. This will allow you to swipe your card at a dealership and have the crypto funds removed directly from your digital wallet. Still, while cryptocurrency has begun to establish a name for itself in the financial markets, that doesn’t quite mean you can just pop into your local dealership and purchase a new or used car using cryptocurrency. Many dealerships are not equipped or simply don’t want to accept these crypto cards as a form of payment.
Should I Buy a Car With Crypto?
While you can purchase a vehicle using cryptocurrency, the next question becomes, should you? Cryptocurrencies are hands-down the most volatile asset class around. During its peak, Bitcoin hit an all-time high of $65,000 per coin. As of late, Bitcoin has struggled to move past $20,000 per coin during the past couple of months.
So why is this volatility important? Well, if you’re purchasing a vehicle during a time when cryptocurrency is at its all-time high, you might end up paying more than your vehicle is actually worth or more than you can actually afford. Depending on how you make your purchase, whether you make a lump-sum purchase or take out a loan using a monthly payment via Bitcoin, you may be paying more than you should to get into the vehicle of your dreams.
It’s this intense volatility that has left many dealerships and retailers in general wary of whether or not they should accept cryptocurrencies as tender. For those dealerships that do accept cryptocurrencies, there are often strict rules and detailed guidelines that make the purchase an extreme hassle.
Will Cryptocurrency Be the Future of Car Buying?
While the world still juggles how it will accept cryptocurrency into its economic markets, it seems that purchasing a vehicle using crypto may not be the best move, at least for now. When it comes to the future of cryptocurrencies and the car buying process, however, there is plenty of hope for this new digital asset to be the future of car buying. Until then, it’s best that you stick to cold hard cash and traditional loans when purchasing your new vehicle.
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