Anatomy Of A Bitcoin Transaction: Buying A Used Subaru

Bitcoins can buy you a TAG Heuer watch, a cross country flight or a meatball marinara sub. But really, how does it work?

Purchases with bitcoin and other digital currencies remain rare relative to cash and credit cards. Many bitcoin holders value it more as an investment than a day-to-day currency.

And the complex workings behind the notoriously volatile currency can be off-putting to neophytes. What are the fees? Are there taxes? How do you spend a currency that can devalue dramatically between ordering appetizers and paying the check?

Buying with bitcoin can be as easy as tapping your phone, though there are some cautions.

A look at a single bitcoin transaction, the sale of a 2017 Subaru from an upstate New York car dealer to a buyer from Virginia:

IN BUSINESS WITH BITCOIN

Eugene Rubinchuk didn’t get into digital currency for the anonymity or to strike a blow against centralized banking. He was just looking for more business.

Rubinchuk and his father, who goes by “Mike the Russian,” already ham it up in local TV commercials for Michael’s Auto Plaza wearing furry hats. Digital currency is just another potential edge.

“It’s just a way to reach customers we normally couldn’t reach, that normally wouldn’t think of us,” he said.

Buying with bitcoin can be as easy as tapping your phone, though there is a learning curve. Bitcoin miner fees have dropped markedly this year, and advocates say congestion issues are being solved by new technologies. (Feb. 27)

The cars and truck on the lot near Albany are priced in U.S. dollars. Rubinchuk simply signed up for one of the services that allowed him to accept digital currencies if a bitcoin buyer came along.

CASHING IN CRYPTOCURRENCY

Jonathan Cypert got into bitcoin early and made out well.