Cryptocurrency is becoming more popular day by day. Bitcoins are more widely used for digital transactions. While bitcoins provide efficient and faster currency exchange, these are yet to be available in a wider range. To use digital money for daily money transfer or other commercial purposes, the need for a debit or credit card may arise. People would be able to use hard money from liquid ones. The sole purpose of such cards is to provide users with ready cash in exchange for bitcoins. The process would allow people to have freedom in using their money.
Learn more on Comparing Bitcoin and Ripple
How Do Bitcoin Debit and Credit Cards Work?
Bitcoin Debit Cards
The debit cards of bitcoin work like the prepaid cards of the traditional monetary system. The card requires pre-loading and as a bitcoin is given the prepaid card changes it into regular currency. So bitcoin debit cards are useful in ATMs, as these are either Visa or MasterCard.
The merchants are easily found so the process of using this type debit card is very simple. There are Bitcoin ATMs for easy withdrawal of money. Other methods of currency conversion include Coinbase or Gemini to convert Bitcoin. The money taken is then transferred to the bank account.
Function and Features
The bank balance is shown as the debit card is used. Even then a backup payment method is necessary if there rises with Bitcoin debit card acceptance or the fund is insufficient for complete transaction. The money transfer works through a procedure in case of purchases.
To make a purchase, the address of the Bitcoin exchange platform is given, the amount is entered and sent. The conversion of currency occurs following the present exchange rate. It takes about an hour for a Bitcoin transfer to complete. For purchases using ATM, the user needs to type the amount, scan a QR code, and press send.
The availability of ATM booths is limited. There are two types of Bitcoin debit cards, physical and virtual. The physical one is used hard cash transfers, while the virtual one allows online use by providing credit card number and security pin. Some bitcoin debit cards have apps while others don’t. It is better to take the ones that have apps to increase functionality.
Making Debit Cards
First, a bitcoin wallet is created for purchases. There are several bitcoin wallets available like Coinmama, Luno, Coinbase, Bitpanda, etc. that have immense popularity. This allows for the application of debit cards. This application is much like the one for regular credit cards without the need for credit history. As the debit card is dispatched, there will be an application or interface from a server connected to the bitcoin wallet. Personal details and the amount to be used need to be given. The bitcoin wallet is then used to load the prepaid card. The currency exchange, however, meets with a certain fee like withdrawal, transaction, or monthly account fees. The price of Bitcoins varies so the amount will not be the same.
Some bitcoin debit cards give cashback and cryptocurrency rewards. These debit cards are safe to use. It is important to look for well-known card issuers and also read the terms and conditions before accepting them. this will allow the security of the money and also safe from duplicity. All Bitcoin debit cards are quite similar in function; only differ by the fees and type of wallet.
Bitcoin Credit Cards
Bitcoin credit cards are yet to develop and be available like debit cards. Regular credit cards don’t have any access to digital currency. To use credit cards and pay with Bitcoin, the bitcoin needs to be changed into cash using a bank account. Purchase using credit cards is difficult and limited for restrictions from banks and card issuers.
But credit card companies have plans to develop Bitcoin credit cards. For example, MasterCard has allowed digital transactions using bitcoins on credit cards. American Express has filed a patent to use blockchain technology in its credit card transfers. The future still holds for a possibility of the establishment of bitcoin credit cards.
Features and Functions
The function of a bitcoin credit card is similar to debit cards. A user can make transactions in the same way with both debit and credit cards. A bitcoin wallet would allow the use of debit or credit cards. The process is the same, but debit cards are in small abundance and credit cards are heard very less.
Advantages and Disadvantages
The number of credit card use needs consideration to maintain credit limit percentage. Without proper management, three will be an effect on credit use and raise debts. So it is better to avoid buying bitcoins from credit cards. Debit or credit cards for bitcoins might not be the same for all countries, and many countries might not have such services.
High charges or other similar issues may arise for international currency exchange. Application for credit cards is only effective if a person has enough credits for clearing debts. This would also add credit bonuses to the user. The digital money stored in the account would then become an investment.
Many card companies claimed cash advances for the cryptocurrency process, which led to high charges, added interests and also loss of reward points. Before issuing a card, it is recommended to avoid companies that require cash advances. Bitcoin debit and credit cards also raise other problems in paying off the debts for credit cards and for not being maintained by Federal agencies.
Bitcoin debit or credit cards allow fast money transfers. For active bitcoin miners, a card would make transactions efficient and add value to the fund. There are also fewer difficulties in cryptocurrency. The procedure is similar to regular debit or credit cards. But many factors need consideration before making a debit or credit card.
Since digital money is still developing, the companies associated are vulnerable. It can’t be said in certainty the future condition of cryptocurrency investments. Though investments in digital money may lead to great profits if the credits are enough, it is always important to plan and research carefully before using crypto-currency like bitcoins.
Read more: How to Use Bitcoins!