In this article, you will learn how credit and debit cards work for Bitcoin and how they are used in everyday transactions. We will also provide a quick overview of Bitcoin and frequently asked questions about the topic.
Bitcoin Credit Cards
Bitcoin credit cards operate on the same principle as traditional credit cards, but instead of earning miles or cash back as rewards for using the card, you will earn Bitcoin. The value of the rewards earned in Bitcoin can be higher than its cash equivalent due to the general appreciation of Bitcoin that surpasses its cash value. However, it also experiences a lot of volatility, meaning its value at any given moment is unpredictable.
BlockFi
BlockFi introduced the first Bitcoin credit card, which pays 1.5% of the purchase value that BlockFi converts into Bitcoin. The reward increases to 2% after you spend $30,000 in a year and you will get back 1.5% on the anniversary of the card’s issuance. You can also earn rewards for referring friends and purchasing other cryptocurrency assets. The card has no annual fee.
Gemini
The second Bitcoin card is called the Gemini Credit Card, which is currently on a waiting list for release in 2021. Gemini cardholders will earn up to 3% of the purchase value in cryptocurrency, with no annual fees. Rewards can be sent to the digital wallet of your choice without exchange fees.
Bitcoin Debit Cards
While Bitcoin credit cards are not yet ready for consumer use, there are a few Bitcoin debit cards available, including the Coinbase Fold Card and Bitpay Cash Card. Note that Bitpay, one of the first Bitcoin debit cards, ended its partnership with Visa on December 31, 2020, and has now partnered with Mastercard. If you have a remaining balance on a previous Bitpay card that was linked to Visa, you can contact the program manager at 855-884-7568 to retrieve your remaining balance.
To use a Bitcoin debit card, you will need to open a Bitcoin wallet and then link the debit card to your wallet. After that, you can use the debit card anywhere you would use a bank debit card. For purchases made with the debit card supported by a major processing system, you will receive the same level of fraud protection as you would with regular credit card purchases.
There may be fees associated with Bitcoin debit cards similar to what you would pay when using a prepaid payment card. For example, you might incur fees for withdrawals, transactions, or a monthly account with the Bitcoin debit card. You should keep in mind that the amount of Bitcoin needed to complete a transaction can fluctuate, even on the same day.
It is important to monitor the amount of Bitcoin and US dollars in your wallet so you know if you have enough to complete a transaction. It might be a good idea to have an alternative payment method in case the merchant does not accept the Bitcoin debit card or you lack the funds necessary to complete the transaction.
When using Bitcoin, whether with a credit or debit card, you should take your precautions. Cryptocurrencies are volatile assets, and there is still much to be done to regulate them and ensure their safety from fraud and scams.
A Quick Look at Bitcoin
The value of a single Bitcoin fluctuates constantly based on market supply and demand (similar to stocks, gold, and foreign currencies). Bitcoin reached a value of over $64,000 in November 2021, surpassing the previous record value of $19,650 in December 2017.
What makes Bitcoin unique is that the Bitcoin network – where Bitcoin is transferred – is not controlled by any individual or company but is managed by a centralized network of computers. All Bitcoin transactions are stored in a ledger on the computers of everyone participating in verifying Bitcoin transactions.
Stored
Bitcoin is stored in a digital wallet that has a unique identifier. To send Bitcoin to another user, they must send you a unique address generated by a currency exchange platform. You can then copy the address to your Bitcoin exchange platform, enter the amount, and send it.
Frequently Asked Questions (FAQs)
How can I buy Bitcoin using a debit or credit card? There are several ways you can buy Bitcoin using a debit or credit card. You can link an accepted payment method to a cryptocurrency exchange platform. For example, Coinbase allows funding Bitcoin purchases using a debit card. Traders using the KuCoin platform can use third-party purchasing options to buy Bitcoin with a credit card. There are also Bitcoin ATMs that allow you to buy or sell Bitcoin using a card.
How can I activate my Coinbase card? You will use the Coinbase app to activate your debit card. Once the card arrives at your address, go to the “Payments” tab in your Coinbase app. From there, you will see your card information, and by clicking on those details, the section dedicated to your debit card will open. You will find options to activate your card, track past transactions, and more.
Source: https://www.thebalancemoney.com/how-do-bitcoin-credit-cards-work-4173215
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