Cryptocurrency when handled correctly can be a great tool for investment. The only issue with this, however, is that you aren’t using cryptocurrency for its main reason.
Looking at the actual name itself, crypto is meant to be used as a form of currency, therefore having something like bitcoin work to end up replacing USD for example.
The problem here however is that many places simply do not accept cryptocurrency when you are trying to pay. Going to the store to buy some donuts and coffee?
Good luck using your cryptocurrency to pay for that.
Many exchanges and websites have realized this, and are actually coming up with an option for you to be able to spend your cryptocurrency as you see fit through a crypto debit card.
What is A Crypto Debit Card?
Crypto debit cards work to take advantage of a traditional form of payment and then use your crypto to fund it.
As we mentioned above, shops will not accept cryptocurrency as a form of payment, however, they will accept fiat cash.
When you have a crypto debit card linked over to your wallet, when you swipe the card, the correct amount of cryptocurrency is converted into fiat cash and then used to complete the purchase.
This allows you to pay for anything you want using the cryptocurrency that you are holding in your wallet.
How Do You Use a Crypto Debit Card?
In order to use a crypto debit card, you are first going to have to own some cryptocurrency on a website that offers a crypto debit card.
Exchanges such as Nexo, and Crypto.com have figured out ways to create these crypto debit cards for you and they are quite easy to use.
Once you have created an account and have it loaded up, you are simply going to request a physical card that you can use to shop around with.
We recommend that you have bitcoin in your account when planning on using a crypto debit card, however, we want to point out that it works with many different coins as well.
Now that all of this is done, you are ready to use your crypto debit card and swipe away.
As mentioned before, the merchant will instantly receive fiat cash for their purchase while you will have the correct amount of cryptocurrency subtracted from your account.
This all sounds cool, but the next question to ask is why should you be using a crypto debit card? Are there any inherent advantages that come with them?
What about the disadvantages? We are going to spend the next bit of this article covering all the specific elements of crypto debit cards and how they can work for you.
Why Use a Crypto Debit Card?
The biggest question to ask is why should I be using a crypto debit card over something like a VISA or a standard debit card?
One of the biggest reasons why you should look to use a crypto debit card is to avoid pesky foreign transaction fees.
If you are traveling and are outside of the country, using your VISA to pay for a transaction that uses a different currency is going to hit you with a foreign exchange fee.
These can be quite costly and can add up, especially if you are planning on being in that country for an extended period of time.
If you have a crypto debit card, however, you don’t have to worry about these fees as they are often reduced or even waived.
This is because cryptocurrency is decentralized and can easily be converted into whatever currency is needed.
When you swipe your crypto debit card, the transaction will be completed in the most convenient fiat available, allowing you to not have to worry about anything at all.
Another benefit of using crypto debit cards is that your ATM withdrawal fees might be waived or reduced as well. We have all been in a situation where we go to a bar or restaurant and find out that they are cash only.
As we are in a digital age, most people don’t bother carrying cash with them and are forced to make a withdrawal on the ATM at the location, resulting in hefty fees from the bank.
You can expect these fees to either be reduced or waived completely when making the withdrawal with a crypto debit card.
The final positive we want to talk about when it comes to crypto debit cards are the cash-back rewards that you can expect. Because this is a fairly new endeavor, companies and websites are trying to persuade you to make the switch by offering incentives.
With most crypto debit cards, we have noticed that you get a significantly larger amount of cashback than you normally would with your bank card.
This can help top up your crypto in the account, and while you won’t get a ton of crypto back, any amount helps.
While there are definitely some advantages to using a crypto debit card, there are a few disadvantages that we want to talk about as well. This can give you a good idea of what you are getting into.
Why Not Use a Crypto Debit Card?
The biggest reason why you would not want to use a crypto debit card is simply because of the volatility of the investment.
Every time you choose to use your cryptocurrency to purchase something, you are reducing your investment.
Bitcoin jumps around quite frequently and while bitcoin is currently suffering a large loss, at the start of the year it essentially doubled, providing people with a lot of money.
Let’s say you make a purchase using a crypto debit card for $1000 of bitcoin. In a few weeks that $1000 could be worth $2000, or even more.
That is the nature of crypto and it is one of the main reasons why people look to invest in it. Now of course the exact opposite can happen and you can find that $1000 being worth $500, but once again that is the risk that you are taking.
Many people are reluctant to spend crypto and use a crypto debit card for the reason of it being an investment.
The other big downside of crypto debit cards is that there are some geographical restrictions in effect. While it will work in a major country like the United States, you might not be allowed to use it in a smaller country.
As the technology is fairly new, you can’t expect it to be readily available for use around the world.
Crypto debit cards are an interesting piece of technology that is going to continue to grow and see usage as exchanges make improvements.
For now, there are some advantages to using them, but there are also disadvantages.
Should you make the switch over to a crypto debit card right now?
We can’t make that decision for you, but we would probably tell you to wait a few years for everything to iron itself out.
We like keeping cryptocurrency as a form of investment, and the last thing you want is to spend $1000 of bitcoin only to find it worth $10,000 two years down the road.
If you remember back in 2010, the first real-world bitcoin transaction was made, with a man buying two pizzas for 10,000 bitcoins.
If he had held onto that today, he would have had about $600 million. There are advantages to using a crypto debit card, but the fear of missing out on a big rise in price makes us slightly nervous to spend our cryptocurrencies.