How Do Bitcoin Debit Cards Work?

Banks Editorial Team · August 27, 2019

You may be wondering what are Bitcoin debit cards. But first things first, let’s start from the beginning. Bitcoin is a massive technological innovation that helped spark interest in cryptocurrencies and bring blockchain technology to consumers across the globe. From its historic highs of $20,000 per coin to its lows of $900, Bitcoin has been a unique investment opportunity for savvy crypto experts and the building block for thousands of cryptocurrency copycats. But, it’s always had a utilization problem. People don’t buy Bitcoin to spend it; they buy it to invest.

Research shows that only around 1% of Bitcoin transactions are for merchant payments. The vast majority of Bitcoin transactions are based solely on exchange trading. Since Bitcoin isn’t backed by any government and its value is particularly volatile, using Bitcoin for payment is unfeasible for many consumers.

 

 

Luckily, there are a few ways that you can turn your Bitcoin into cash for easy use. One emerging method is via Bitcoin debit cards. These debit cards act like other prepaid debit cards — but you can use Bitcoin to top them off.

What are Bitcoin Debit Cards?

Bitcoin debit cards are prepaid debit cards that you can load up with Bitcoin. So, when you first top-up your card, you will use Bitcoin from your wallet, and the prepaid card will automatically convert that Bitcoin into fiat currency (e.g., USD, Euro, etc.) This means that Bitcoin debit cards can be used at merchants that accept debit card transactions.

Most Bitcoin cards are either Visa or MasterCard — making it simple to find merchants and spend with your card. This makes Bitcoin debit cards extremely simple to utilize. After you buy Bitcoin and create a wallet, you can simply connect the debit card with your wallet and convert coins on-the-fly.

Why Use a Bitcoin Debit Card?

There are certainly other methods of transferring your Bitcoins into fiat currency. You can use centralized exchanges like Coinbase or Gemini to convert Bitcoin into cash and transfer it into your bank account. Or, you can leverage services like Bitcoin ATMs — which let you withdraw cash directly from your wallet.

But, Bitcoin debit cards have a distinct advantage over both of those options. The funds immediately show up on your debit card. Transferring Bitcoin to your bank certainly works, but it adds an additional step to your purchase cycle if you need your funds to purchase something from a vendor. And, Bitcoin ATMs — while hyper-convenient — are only available in specific physical locations.

How Bitcoin Debit Cards Work

Here is the standard Bitcoin debit card utilization flow.

  1. You create a Bitcoin wallet.
  2. You buy Bitcoin from your preferred exchange.
  3. Next, you apply for a Bitcoin debit card.
  4. Once you’re approved, you will connect your Bitcoin wallet to the application or desktop interface that your Bitcoin debit card service provides.
  5. Then, you will use your Bitcoin wallet to fund your prepaid card.
  6. Finally, after fees are applied, your prepaid card will instantly be topped up with fiat currency like USD or Euros.
  7. You can now use your prepaid card wherever credit cards are accepted!

2 Types of Bitcoin Debit Cards

There are two distinct types of Bitcoin debit cards.

  1. Physical
  2. Virtual

Physical cards are for use both online and in-store at any retailer, restaurant, or any other merchant that accepts credit card transactions. Virtual cards only give you a credit card number and security pin, and they are only for use online.

 

 

Where Can You Get a Bitcoin Debit Card?

Applying for a Bitcoin debit card is similar to applying for other credit cards. The primary differences are that Bitcoin debit cards typically do not leverage your credit history (since they are prepaid) and Bitcoin credit cards will require your Bitcoin wallet information.

There are also fees to take into account. Each Bitcoin debit card provider will have a unique fee structure. And, you should always shop around for the best possible deal. You should also think about app availability. Some Bitcoin debit cards have apps, while others do not. If you want the option to top-off your card on-the-go, you should look for one that provides a functional app that’s compatible with your smartphone’s operating system.

Bitcoin Debit Card FAQs

Do Bitcoin debit cards offer cashback?

Sometimes. As the Bitcoin debit card market evolves (it’s only been around for a few years) competition is increasing. Some of the leading Bitcoin debit cards offer cashback. And, some of them even offer crypto-cash-back rewards — which give you a percentage of each purchase back as Bitcoin.

What kinds of fees do Bitcoin debit cards have?

Like typical credit cards, Bitcoin debit cards often have fees associated with them. When you’re shopping around for Bitcoin debit cards, look for these types of fees.

  • Card price
  • Monthly fees
  • Online purchases
  • Declined transactions
  • Administration fees
  • Payment operations fees
  • Currency exchange fees
  • Loading fee
  • Third-party loading fee
  • Card replacement fee
  • Pin change fee
  • ATM fees
  • Physical card delivery fees
  • Activation fees
  • Account creation fees
  • Foreign currency conversion fees
  • Any other applicable fee

Are Bitcoin debit cards safe-to-use?

Yes! Like normal debit cards, Bitcoin debit cards are safe-to-use. Make sure that you are using a reputable card issuer since you will be linking to your Wallet. Also, it’s vital that you carefully read all Terms of Service and pay attention to all of the small fees associated with use.

If you’re looking to find a way to spend your Bitcoin, then Bitcoin debit cards may be a fantastic option for you. Once you buy Bitcoin, it can seem intimidating trying to spend it. With volatile market shifts and constant bear and bull runs, Bitcoin can feel more like an investment than a currency. But, with new services like Bitcoin ATMs, debit cards, and instant exchanges popping up, spending your coins has never been easier.

 

 

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