Elon Musk may have hit the headlines with his dramatic U-turn on accepting Bitcoin as payment for his Tesla electric vehicles, but this hasn’t put a dampener on the crypto car market.
It’s totally possible to buy a car using Bitcoin in the UK, with many dealers now accepting cryptocurrency as a way to appeal to the growing number of people using digital tokens.
There are a number of services that connect buyers with the dealers and give the car prices in cryptocurrency, for example Auto Coin Cars based in Romford.
Auto Coin Cars is effectively an advertising portal that enables dealers to showcase the vehicles they have for sale to crypto users.
According to the company’s website, since launching in 2019 they’ve sold a “huge number” of vehicles both to UK buyers and overseas clients.
The cryptos that people have used to buy cars include Bitcoin, Bitcoin Cash, Litecoin and Ethereum.
How do I buy a car with Bitcoin?
As far as we’re aware no dealers are accepting Bitcoin or cryptocurrency as direct payment, yet.
Which is why companies such as Auto Coin Cars are thriving as they act as middlemen between the buyer and seller.
The way it works is that a potential customer visits the dealer’s showroom as they normally would, views the car and takes it for a test drive.
If they’re happy to proceed with the deal they pay the current market rate for the vehicle from their Bitcoin wallet.
Often the price quoted is only valid for a short period of time, such as 30 minutes, as crypto markets are notoriously volatile.
Once the transaction has received the necessary number of confirmations – a crucial part of any crypto transaction – the customer can drive away in their new car.
The intermediary firm receives the crypto and pays the dealer in FIAT currency, ie pounds sterling.
Can I sell my car for Bitcoin and what scams should I know about?
Yes. There’s nothing stopping you listing a car for sale and stating that you’ll accept crypto as payment.
You might want to make it clear that the price of the vehicle may be dependant on the market rate at the time of purchase, rather than when you advertise the vehicle.
A potential scam – or worse – surrounding selling cars (or anything for that matter) for crypto has been highlighted by Reddit users.
Some sellers have reported people contacting them and asking for their wallet address before they’ve even viewed a vehicle. Often these people are not even in the same country as the seller.
The possible explanations given for this are:
- It’s impossible for someone to steal your Bitcoin with just a wallet address, but they can see how much Bitcoin you hold. The theory is that if you hold a lot of coins someone may try to locate you and rob/blackmail you, however unlikely this sounds.
- Also, it’s potentially possible for them to see where some of the transactions relating to your wallet have come from. Although unlikely, there are concerns about what they might do with this information.
If you’re planning to transact with strangers via a crypto wallet do not reuse an existing address.
Instead, set up a fresh, empty address with no transaction history associated with it for each transaction you make.
There are potentially 2^60 Bitcoin addresses – that’s 1 followed by 47 zeros – so don’t worry about running out!
If you’re really paranoid about a transaction being followed, you could always run the coins received through a Bitcoin mixer, but using these services can bring with it its only set of problems.
What kind of cars are people buying with crypto?
It seems to be mainly prestigious marques that are being sold for Bitcoin, such as Lamborghini, Maserati and Ferrari.
This is perhaps not entirely unexpected given the fortunes some people have been lucky enough to make due to the soaring value of digital assets.
Additionally, many BMW, Audi and Mercedes dealers have signed up to services enabling the vehicles to be sold for crypto, despite the environmental concerns that Mr Musk has voiced.
In March, Tesla announced that it would accept Bitcoin as payment for its popular electric vehicles and had bought US $1.5 billion worth of the crypto, causing the price to soar.
But just two months later, Mr Musk announced that the plans had been reversed, citing climate change concerns surrounding the energy intensive nature of Bitcoin mining and the fact that it often uses cheap, ‘dirty’ power.
The original deal was only open to US residents so then, as now, you can’t buy a Tesla with Bitcoin in the UK.
Buying a car with crypto will appeal to tech-savvy, often young people, who see digital currency and blockchain as the future.
It also offers far more anonymity than paying from a traditional bank account, and for some that will have its own benefits.
Buying a car with crypto is completely legal in the UK, but make sure you’ve paid all the tax due on your crypto gains before splashing out.
Crypto is subject to various taxes in the UK, such as Capital Gains Tax and potentially income tax depending on how you’ve acquired it.
When buying cars with Bitcoin, or anything for that matter, make sure you stay within the law to avoid HMRC breathing down your neck.
Adam is the founder of The Crypto Adviser which offers experts guides and reviews on all things related to Bitcoin and cryptocurrency.
Adam is Diploma for Financial Advisers (DipFA) Level 4 qualified, a Member of the London Institute of Banking and Finance (MLIBF), and has worked for many years as a journalist and PR consultant, having studied with the National Council for the Training of Journalists (NCTJ).