Updated 9 July 2020
Bitcoin is a cryptocurrency, currently the most well known. Cryptocurrency is a way to transfer assets online and some people refer to it as ‘digital cash’.
The key benefit of cryptocurrency is that it is not owned by the government or any other authority; it acts the same way as normal currency but only exists online.
This is also the main disadvantage, as bitcoin and other cryptocurrencies are not guaranteed by any official entity therefore they can be hard to spend on goods and services.
Bitcoin debit cards will allow you to spend your bitcoins on goods and services. This article will explore the different types of bitcoin debit cards, things to consider and how to get one.
Most shops and services will not accept bitcoin as payment so, if you wish to spend your bitcoin, the most usual way is to trade it for a fiat currency that is accepted (such as US dollars or euros).
A convenient and fast way of doing this is to open a bitcoin debit card.
A bitcoin debit card works in the same way as any other cryptocurrency debit card and in a largely similar way to any other prepaid debit card.
However, there will be processing and conversion fees that you will need to consider.
Instead of topping it up from your ordinary bank account, you transfer funds from your bitcoin wallet. The card automatically converts your bitcoin to the fiat currency of your choice.
The bitcoin debit card can then be used anywhere that major credit cards are accepted and this includes physical as well as online shops.
There are two different options for bitcoin debit cards – virtual cards and plastic/physical cards.
When considering which option is better for you, think about your current spending habits and patterns.
If you are more likely to only want to spend your bitcoin online, a virtual card is the better choice.
You can add your virtual card to your smartphone or computer wallet and use the card to pay for online purchases.
Virtual cards are usually the cheaper option for a bitcoin debit card.
Note: for obvious reasons you cannot use a virtual card to withdraw cash.
If, however, you mainly want to use your bitcoin debit card to complete physical transactions, you will want to consider the plastic, or physical, card option which comes with a chip and pin.
You should also opt for the plastic card if you want to withdraw cash from an ATM.
As you would expect, it is usually a more expensive option to have a physical card.
To get a bitcoin debit card you will need to have a bitcoin wallet with the company offering the bitcoin card.
You open an account and purchase the card from your selected company (such as Wirex, Coinbase, Bitpay or Cryptopay).
Fees will vary and you should pick an account that suits your circumstances and spending habits. Make sure to look around and compare the various fees, rates and so on before making your decision.
Once you have made your decision as to which card is right for you, you can make an online application and pay the correct fees.
As bitcoin debit cards all work in pretty much the same way, the main differences between them are:
As with all debit cards, there are major providers which are safer, as well as less well-known companies which may be more risky or even fraudulent. There are also various inactive cards which should, for obvious reasons, be avoided.
When choosing between them, you can either start by looking at the cards associated with your current wallet, or look at the various charges and open a wallet with the company which you feel gives you the best deal based on your circumstances and spending habits.
Key fee differences to look out for are whether you are charged per withdrawal/transaction or as a monthly fee.
You should also remember that the actual value of bitcoin fluctuates daily, the amount of bitcoin required to complete a specific transaction will also vary – therefore you should keep an eye on your bitcoin wallet daily to ensure you have sufficient funds to complete the transaction and pay the applied charges.
If you have bitcoins that you want to spend for physical or online transactions you’ll find that most places do not accept unconverted bitcoin.
Instead, you need to first convert it into the fiat currency accepted where you wish to spend.
You’ll find that it is not easy or straightforward to cash-out your bitcoin account as you cannot just make an online transfer to your bank account.
A bitcoin debit card makes it much easier and quicker to convert your bitcoin without the need to use a third-party exchange or local seller for each transaction.
If you regularly travel abroad or carry out transactions in a currency different to your home currency, bear in mind you can use a bitcoin debit card in any country worldwide – just convert your bitcoins into the desired fiat currency.
Other benefits include the ability to hold multiple fiat currencies simultaneously.
When getting a bitcoin debit card there are other things to consider:
Bitcoin debit cards can be a convenient and fast way of converting bitcoin to the fiat currency of your choice, although you should bear in mind that not all providers work in all countries.
You should also consider that the reputable providers have different levels of cards and accounts, much like any other bank, at differing price points for differing benefits.
You should consider carefully where you wish to use your cryptocurrency debit card, for what purpose and in what currencies before comparing the various rates and charges and making a final decision.
WikiJob does not provide tax, investment or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
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