This question was part of my survey involving 1,000 Bitcoin users, with the majority responding prior to the recent surge in Bitcoin’s value. Despite its significance, this topic has been largely overlooked in mainstream media discussions.
I remain skeptical of the popular narrative that Bitcoin’s origins lie solely in facilitating illicit transactions or mundane purchases like pizza.
Bitcoin’s unique attributes set it apart from traditional currencies, and these differences inevitably influence how it’s utilized by its community.
Bitcoin’s gift economy
Let’s start with my favorite takeaway from the survey results. When users were asked how they had spent their Bitcoin (from a list of options), the most common answer was “Gifts/Donations,” cited by 36% of respondents. Beyond the high-profile movements like Wikileaks, Anonymous, and Occupy, Bitcoin donations also play a crucial role in supporting smaller social initiatives.
These include causes like net advocacy, hackerspaces, and open-source software projects, highlighting Bitcoin’s potential as a tool for grassroots activism and community support.
Bitcoin has also fostered a vibrant tipping culture, especially on platforms like Reddit, where tips range from casual tokens of appreciation to acts of headline-worthy generosity.
In most cases, these tips are given anonymously or pseudonymously, preserving the privacy Bitcoin inherently provides.
Beyond Reddit, Bitcoin tipping jars have started appearing across the web, and in some corners of the blogosphere, Bitcoin tipping is even more prevalent than platforms like Flattr.
Personally, readers of this blog have generously gifted 1.5 BTC, or as I like to frame it, 150 million satoshis—an amount for which I am deeply grateful.
From an anthropological perspective, gift exchange has often been studied in the context of non-market societies, where such practices blur the boundaries of kinship, ownership, and politics.
A distinction is typically made between gifts (exchanged between individuals) and prestations (exchanged between larger groups or communities). Both forms of exchange thrive within the Bitcoin ecosystem.
Gifts in Bitcoin often transfer wealth from early adopters—some of whom have amassed significant holdings—to evangelists, developers, and cautious newcomers.
Meanwhile, prestations occur on a broader scale, fostering a sense of shared purpose that strengthens the overall Bitcoin project. This culture of giving demonstrates not just the utility of Bitcoin as a currency but also its ability to reinforce community values and collective growth.
Bitcoin’s vice economy
One of Bitcoin’s most talked-about applications has been its role in the online narcotics market. While its significance in this space is often exaggerated, it has undeniably contributed to Bitcoin’s early market development.
By providing a marketplace with substantial liquidity, these activities allowed early adopters to convert their digital wealth into tangible assets, likely accelerating Bitcoin’s adoption.
Bitcoin’s pseudonymous nature grants users a degree of privacy not typically found with traditional payment methods.
While this privacy facilitates the purchase of drugs, it also enables spending on anything users might prefer to keep private—whether from a spouse, a parent, or a nosy local official. According to survey results, only 11% of respondents reported using Bitcoin to buy drugs, but 23% admitted to gambling with it, and 4% listed the ominous “other non-legal goods.”
Altogether, 32% of users have spent Bitcoin on at least one of these activities—what might collectively, and without judgment, be categorized as “vice.”
This raises an intriguing question: does this group overlap with those who use Bitcoin for altruistic purposes, like gifting and donations? Or with the segment of users who primarily purchase everyday goods and services? The duality of Bitcoin’s use—as a tool for both vice and virtue—speaks to its flexibility and the broad spectrum of values and priorities within its user base.
These nuances reflect the complexity of Bitcoin’s adoption and highlight the diverse motivations driving its usage.
How have you spent your bitcoins?
(Gifting vs Drugs/Gambling/Non-legal)
The percentages presented here are derived from self-reported data on Bitcoin usage among respondents, categorized by the types of transactions they engaged in. To provide clarity:
- “Virtue”: Includes transactions for gifts and donations, highlighting Bitcoin’s use for altruistic or community-driven purposes.
- “Vice”: Encompasses activities like gambling, narcotics purchases, and other non-legal goods, showcasing Bitcoin’s use in more controversial areas.
- “Other”: Refers to legal goods and services such as computer hardware, software, and other general purchases.
This segmentation provides a snapshot of the diverse ways Bitcoin is utilized, reflecting the flexibility and broad appeal of the cryptocurrency to cater to vastly different needs and motivations within its user base.
A significant overlap exists between those who use Bitcoin for “Virtue” (gifts and donations) and those who use it for “Other” purposes, such as purchasing legal goods and services where traditional currency could suffice.
These two groups often share an emotional connection to Bitcoin, viewing it as more than just a tool—they are personally invested in its success and philosophy.
In contrast, users who rely on Bitcoin’s pseudonymity for “Vice” activities, such as gambling or purchasing non-legal goods, form a distinct subgroup.
This contingent shows minimal overlap with the gifters, highlighting a clear divide in motivations and priorities within the Bitcoin community. These differences underscore the diverse use cases and value systems that coexist within the ecosystem.
Bitcoin’s virtual economy
The reason I dismiss the “drugs and pizza” myth is that both are physical goods, and Bitcoin’s true strength lies in enabling transactions that don’t require any physical interaction between buyer and seller. Consider ordering a pizza: eventually, the delivery person will knock on your door.
In such cases, Bitcoin provides no clear advantage over paying cash on delivery. In fact, prepaying with Bitcoin can be a disadvantage—anyone who has experienced a late or incorrect pizza delivery knows the frustration of having already paid.
Most of my own spending involves transactions that don’t require this kind of physical exchange. Payments for rent, taxes, insurance, electricity, phone services, software, music, or donations all benefit from Bitcoin’s efficiency.
For these types of transactions, Bitcoin shines as a fast and effective alternative. However, when it comes to more tangible goods—whether it’s pizza or alpaca socks—Bitcoin’s advantages become diluted, if not entirely irrelevant.
Does the data bear this out?
How have you spent your bitcoins?
(Gifting/Gambling/Software vs Drugs/Hardware)
Hypothesis confirmed.
I’m not denying that people use Bitcoin to purchase physical goods—there are plenty of interesting reasons why someone might choose to buy a pizza with Bitcoin, and those reasons are worth exploring.
However, Bitcoin’s electronic nature gives it significant advantages for virtual goods, which is where the majority of its use lies. Any meaningful study of Bitcoin should prioritize this aspect, as it represents the core of its utility and appeal.
Some people don’t buy anything…
The non-spending group spans a broad range, from those seeking profits to those treating Bitcoin as a long-term financial asset.
According to the survey, 30% of users reported no spending activity with Bitcoin, indicating that a significant portion sees it more as an investment vehicle than as a medium of exchange.
Supporting this perspective, 60% of respondents identified themselves as Bitcoin “Investors,” second only to the 78% who self-identified as Bitcoin “Users.” This highlights the dual role Bitcoin plays in the ecosystem: as both a speculative asset and a digital currency.
Other novel uses
Behind these broad categorizations lies a fascinating diversity of Bitcoin use cases, as highlighted by survey respondents. While these examples may lean anecdotal, they offer a glimpse into the creative and practical ways people incorporate Bitcoin into their lives.
Kinship and Relationships
Bitcoin is often used to strengthen connections within families and social circles:
- “I pay my kids’ allowance in BTC to teach them about currency exchange, trading, and saving.”
- “Intra-family payments.”
- “It’s great for casually passing money around between friends, especially with Android integration.”
- “I organized a group holiday, and one attendee paid me in bitcoins after I jokingly suggested it.”
Novelty Purchases
Some users enjoy the quirky nature of using Bitcoin for unique or fun transactions:
- “Bought an inflatable remote-controlled shark.”
- “I like buying food with BTC—George’s Famous Baklava, for example.”
- “Also, alpaca socks.”
- “Paid for an ayahuasca retreat in Peru, booked an Airbnb in LA, and bought beautiful handmade jewelry.”
Practical Applications
Other respondents highlighted practical uses that demonstrate Bitcoin’s utility in professional or everyday contexts:
- “Payroll to globally distributed employees.”
- “I essentially buy comments on my blog.”
Unconventional Uses
Some uses are more somber or unconventional, reflecting Bitcoin’s role in deeply personal choices:
- “I bought my first bitcoins after realizing I could use them to purchase a lethal amount of barbiturates on Silk Road, planning my suicide. I haven’t made any purchases and likely never will, but knowing I have that option gives me peace of mind.”
Examples from BitcoinTalk
Additional use cases shared on BitcoinTalk forums further illustrate the versatility of Bitcoin:
- Recipe for Chinese herbal medicine.
- VPN services, dog tags, and web design services.
- Hard drives, t-shirts, hosting, advertising, games, Casascius coins, and even honey.
- “Only some Litecoins so far.”
Takeaway
These examples reveal Bitcoin’s adaptability, serving everything from everyday practicalities to highly personal needs, and even whimsical indulgences. Whether fostering relationships, fueling creativity, or enabling global commerce, Bitcoin continues to reflect the diversity of its users’ motivations and needs.
Author’s Note
In anthropology—and really in any field—it’s important to disclose your own relationship to the subject matter to help readers understand any potential biases. Personally, I’ve used Bitcoin for various purposes: making donations to tech-related causes, paying for this domain, tipping on Reddit, and even giving BTC to friends who wanted to experiment with it.
While I categorize gambling as a “vice,” I’ll admit I’ve dabbled in poker myself. As for my current stake in Bitcoin, I own approximately 1 BTC. This small holding shapes my perspective as someone who has engaged with Bitcoin in both practical and exploratory ways, rather than as a significant investor or speculator.
