Bitcoin is a digital asset designed to work in peer-to-peer transactions as a currency.[3][189] Bitcoins have three qualities useful in a currency, according to The Economist in January 2015: they are "hard to earn, limited in supply and easy to verify".[190] Per some researchers, as of 2015, bitcoin functions more as a payment system than as a currency.[29]

Economists define money as serving the following three purposes: a store of value, a medium of exchange, and a unit of account.[191] According to The Economist in 2014, bitcoin functions best as a medium of exchange.[191] However, this is debated, and a 2018 assessment by The Economist stated that cryptocurrencies met none of these three criteria.[182] Yale economist Robert J. Shiller writes that bitcoin has potential as a unit of account for measuring the relative value of goods, as with Chile's Unidad de Fomento, but that "Bitcoin in its present form ... doesn't really solve any sensible economic problem".[192]

According to research by the University of Cambridge, between 2.9 million and 5.8 million unique users used a cryptocurrency wallet in 2017, most of them for bitcoin. The number of users has grown significantly since 2013, when there were 300,000–1.3 million users.[135]

Dish Network, a Fortune 500 subscription TV provider, has been described as the first large company to accept bitcoin, in 2014.[193]

Bloomberg reported that the largest 17 crypto merchant-processing services handled $69 million in June 2018, down from $411 million in September 2017. Bitcoin is "not actually usable" for retail transactions because of high costs and the inability to process chargebacks, according to Nicholas Weaver, a researcher quoted by Bloomberg. High price volatility and transaction fees make paying for small retail purchases with bitcoin impractical, according to economist Kim Grauer. However, bitcoin continues to be used for large-item purchases on sites such as Overstock.com, and for cross-border payments to freelancers and other vendors.[194]

In 2017 and 2018, bitcoin's acceptance among major online retailers included only three of the top 500 U.S. online merchants, down from five in 2016.[195] Reasons for this decline include high transaction fees due to bitcoin's scalability issues and long transaction times.[196]

As of 2018, the overwhelming majority of bitcoin transactions took place on cryptocurrency exchanges, rather than being used in transactions with merchants.[195] Delays processing payments through the blockchain of about ten minutes make bitcoin use very difficult in a retail setting. Prices are not usually quoted in units of bitcoin and many trades involve one, or sometimes two, conversions into conventional currencies.[29] Merchants that do accept bitcoin payments may use payment service providers to perform the conversions.[197]

Bitcoins can be bought on digital currency exchanges.

Per researchers, "there is little sign of bitcoin use" in international remittances despite high fees charged by banks and Western Union who compete in this market.[29] The South China Morning Post, however, mentions the use of bitcoin by Hong Kong workers to transfer money home.[198]

In 2014, the National Australia Bank closed accounts of businesses with ties to bitcoin,[199] and HSBC refused to serve a hedge fund with links to bitcoin.[200] Australian banks in general have been reported as closing down bank accounts of operators of businesses involving the currency.[201]

On 10 December 2017, the Chicago Board Options Exchange started trading bitcoin futures,[202] followed by the Chicago Mercantile Exchange, which started trading bitcoin futures on 17 December 2017.[203]

In September 2019 the Central Bank of Venezuela, at the request of PDVSA, ran tests to determine if bitcoin and ether could be held in central bank's reserves. The request was motivated by oil company's goal to pay its suppliers.[204]

François R. Velde, Senior Economist at the Chicago Fed, described bitcoin as "an elegant solution to the problem of creating a digital currency".[205] David Andolfatto, Vice President at the Federal Reserve Bank of St. Louis, stated that bitcoin is a threat to the establishment, which he argues is a good thing for the Federal Reserve System and other central banks, because it prompts these institutions to operate sound policies.[45]: 33 [206][207]

The Winklevoss twins have purchased bitcoin. In 2013, The Washington Post reported a claim that they owned 1% of all the bitcoins in existence at the time.[208]

Other methods of investment are bitcoin funds. The first regulated bitcoin fund was established in Jersey in July 2014 and approved by the Jersey Financial Services Commission.[209]

Forbes named bitcoin the best investment of 2013.[210] In 2014, Bloomberg named bitcoin one of its worst investments of the year.[211] In 2015, bitcoin topped Bloomberg's currency tables.[212]

According to bitinfocharts.com, in 2017, there were 9,272 bitcoin wallets with more than $1 million worth of bitcoins.[213] The exact number of bitcoin millionaires is uncertain as a single person can have more than one bitcoin wallet.

Peter Thiel's Founders Fund invested US$3 million in BitPay.[214] In 2012, an incubator for bitcoin-focused start-ups was founded by Adam Draper, with financing help from his father, venture capitalist Tim Draper, one of the largest bitcoin holders after winning an auction of ₿30,000,[215] at the time called "mystery buyer".[216] The company's goal is to fund 100 bitcoin businesses within 2–3 years with $10,000 to $20,000 for a 6% stake.[215] Investors also invest in bitcoin mining.[217] According to a 2015 study by Paolo Tasca, bitcoin startups raised almost $1 billion in three years (Q1 2012 – Q1 2015).[218]

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The price of bitcoins has gone through cycles of appreciation and depreciation referred to by some as bubbles and busts.[219] In 2011, the value of one bitcoin rapidly rose from about US$0.30 to US$32 before returning to US$2.[220] In the latter half of 2012 and during the 2012–13 Cypriot financial crisis, the bitcoin price began to rise,[221] reaching a high of US$266 on 10 April 2013, before crashing to around US$50. On 29 November 2013, the cost of one bitcoin rose to a peak of US$1,242.[222] In 2014, the price fell sharply, and as of April remained depressed at little more than half 2013 prices. As of August 2014 it was under US$600.[223]

According to Mark T. Williams, as of 30 September 2014, bitcoin has volatility seven times greater than gold, eight times greater than the S&P 500, and 18 times greater than the US dollar.[224] Hodl is a meme created in reference to holding (as opposed to selling) during periods of volatility. Unusual for an asset, bitcoin weekend trading during December 2020 was higher than for weekdays.[225] Hedge funds (using high leverage and derivates)[226] have attempted to use the volatility to profit from downward price movements. At the end of January 2021, such positions were over $1 billion, their highest of all time.[227] As of 8 February 2021, the closing price of bitcoin equaled US$44,797.