Bitcoin – a term that was unknown to many people for a long time. Since the enormous appreciation in winter 2017 and the spectacular crash at the beginning of 2018, cryptocurrencies have been the talk of the town. Although the prices were able to stabilize again in the summer, there was another significant damper in recent days. A major drawback: payments with cryptocurrencies are still rare or complicated. Popular as an investment object for quite some time, direct payment is only possible in very few places.
The Bitcoin credit card represents the solution. It combines the advantages of a cryptocurrency with the high acceptance of credit cards. This is because all providers rely on the two global market leaders Visa and Mastercard. We show you what to look for when choosing the right Bitcoin credit card.
What models of Bitcoin credit cards are there?
There are two models of Bitcoin credit cards that differ fundamentally. The rather simpler variant is the prepaid credit card. Here, the credit card can be loaded with Bitcoin and the amount is then available in the desired currency on the credit card. The exchange rate at the exact time of the top-up is used as a basis.
This means that you cannot flexibly access your cryptocurrency with this form of credit card, but only via the selected, loaded amount. On the other hand, one can freely determine the time of the conversion of Bitcoin into the desired currency and thus also set the time to the most favorable exchange rate possible. Thus, it is always clear how much cryptocurrency is loaded on the card. The modern alternative: a credit card that works like a wallet. The cryptocurrency is transferred directly to this credit card.
The conversion can be handled differently depending on the provider, although two options have become established. With some providers, the conversion takes place at the exchange rate at the moment of purchase. So if you shop online at Amazon and use the credit card, the euro price of the product is converted at the current exchange rate. Other providers leave it up to the cardholder to decide when to convert the Bitcoins. So you can also exchange a certain amount in advance and store it on the card. This can be done simply via app.
A decision about which variant makes the most sense for one personally must be made individually and is certainly also up to the use. Both variants offer great advantages. If the exchange rate is converted immediately, you always know exactly how much equivalent value is on the card. Thus, this variant is much safer. The other variant is riskier, but more promising in terms of profit.
How do you load a Bitcoin credit card?
With almost all providers, the Bitcoin credit card is loaded right away. By registering with the respective provider, one gets access to the wallet. Bitcoin credit can then be sent to these wallets. Now there are the already mentioned above two ways how the conversion works.
On the one hand, there are providers like Wirex, where the Bitcoin credit is immediately converted into euros at the currently valid rate and the credit card is ultimately loaded with euros. On the other hand, there are providers like Tenx that take a different approach. With these providers, the credit card is immediately filled with the crypto credit and only at the moment of purchase is the Bitcoin credit converted into the currency to be paid.
How to manage your Bitcoin credit card
All available cards are managed via apps. All this means that in order to make full use of the Bitcoin credit card, one needs a smartphone with the appropriate app. This empowers one to make full use of the bitcoin credit card and also get the appropriate protection, for example, by notifying one when the credit card is used. As with the use of all banking apps, one should be mindful of the security of their phone and avoid public hotspots.
With a few providers, such as Wirex, you also have the option of editing everything on the computer. Ultimately, however, the operation is optimized for the app. Each of the apps includes a wallet to which you can send the cryptocurrencies, and you can also see how much credit is on the card at any time.
The latter is especially interesting if you have chosen the option where the currency is only exchanged upon payment. Because with this option, you would otherwise hardly know your exact assets due to the current exchange rate fluctuations. Furthermore, the credit card offers the possibility to use it only in its basic function as a wallet.
Various other settings can also be made in the app. For example, the card can be temporarily or permanently blocked via the app. In addition, it is immediately displayed when the card is used. This offers you a high level of protection or an alarm before and in the event of misuse. A few conventional credit cards also rely on this service via app or SMS. In countries like the US, this service is already standard for security reasons.
Advantages of a Bitcoin credit card
The acceptance for bitcoin credit cards is high. Many Bitcoin credit cards are accepted wherever Visa or Mastercard are accepted. This makes up for one of the biggest shortcomings of cryptocurrencies. They become usable in commerce via credit cards. As a result, it is possible to pay with bitcoin in various stores, restaurants, and public transportation as much as if you were spending conventional money.
Most Bitcoin credit cards are free of charge. Some cost a small fixed amount per month, such as 1.20 euros. Many bitcoin credit cards offer you a cashback program. So for using it, you get credited with some kind of bonus. This cashback ranges from 0.5 to two percent with the various providers. Another advantage is the partially free cash withdrawal at classic ATMs.
The amount available can range from 200 euros to 1,000 euros. Beyond that, fees are then due. However, these are often still lower than the fees of conventional credit cards and are around two euros. Three examples:
- The Visa card from WireX allows 0.5 to two percent cash back.
- With WireX, cash withdrawals are free of charge up to 250 euros per day, after which fees of 2.25 euros per transaction apply.
- The Visa card from Monaco (MCO) allows up to USD 1,000 to be withdrawn free of charge.
Disadvantages of a credit card for Bitcoin
The biggest disadvantages of a credit card for cryptocurrencies are, on the one hand, the fact that sometimes only smaller amounts (sometimes only up to 250 euros) can be withdrawn free of charge from the ATM per day and, on the other hand, that the balance is immediately stored in euros with some providers. The latter is both a curse and a blessing, depending on how the rates will develop.
However, the demand for bitcoin credit cards remains high. Consumers want a way to spend their cryptocurrency as well. Credit cards represent the best way in this regard. The fees are low and the handling is familiar and easy. This is another reason why demand seems to continue to rise.
Development of bitcoin credit cards
With the advance of cryptocurrency into society, the desire to integrate the currency into everyday life came more and more to the fore. An important step in this process is the development and establishment of a credit card. However, various hurdles have to be overcome in the process.
On the one hand, one has to join an existing credit card with many acceptance points in order to integrate it into everyday life in the best possible way. On the other hand, various cryptocurrencies must be combined on one credit card so that one does not need a credit card for each one when owning several digital currencies.
For now, the focus has been placed on the two largest cryptocurrencies, Bitcoin and Ethereum. However, the will to integrate other cryptocurrencies into the payment method with credit card is present and will be expanded.
What’s next for bitcoin credit cards?
Despite the crash, the idea of a credit card for cryptocurrency is far from dead. Rather, interest continues to grow. Currencies like Bitcoin have stabilized after the rapid price drop at the beginning of the year. Nevertheless, only a few providers have entered the market so far, but the list of interested parties is very long. Many companies are experimenting and planning to issue their own credit card.
Swiss start-up Volinex once set out to offer a solution to the wave crest problem via debit cards. Earlier this year, however, Volinex also had to stop trying and end its business. The combination of pressure on fees and uncertain regulation is like a minefield. Blockchain startup Decoin, on the other hand, announced just a few weeks ago a new attempt to offer services such as bitcoin credit cards and more. Decoin is actually developing an exchange platform where crypto investors will share in the revenue.