As cryptocurrency explodes in popularity it’s clear we are in the dawn of a new financial age including crypto debit card.
A number of early crypto adopters saw crypto as the first step towards a complete decentralized financial system, marking a significant shift from the traditional form and structure of finance. Cryptocurrency became legitimate when early adopters correctly predicted where it would be. Their failure to predict was how traditional financial products would be used to legitimize crypto.
Legacy finance has proven resilient in recent developments. Among all the exciting developments at the intersection of crypto-verse or metaverse as we know it and traditional finance, crypto-funded debit cards rank among the top. So how are crypto-funded debit cards changing the game? Discover what they are here.
What is a crypto debit card?
While most of us know what a debit card is, it’s still worth defining as a crypto debit card is based on the same premise. A debit card is a plastic card with your relevant account information embedded into the card via a chip or scannable barcode. Unlike a credit card, a debit card allows you to electronically pay for goods or services with the money in the attached account.
In essence, a debit card connects processing companies with your checking account, allowing merchants to process payments using the funds in your account.
As for a crypto card, well—it’s exactly what it sounds like. A crypto debit card connects a cryptocurrency payment processing company with your crypto wallet.
This type of card enables you to settle transactions at any merchant that accepts debit cards using the funds in your crypto wallet.
A big difference between a crypto card and a traditional debit card: a crypto debit card automatically converts the crypto you’ll be spending into the preferred fiat currency.
How do crypto debit cards work?
So, now that we’ve touched on the basics of crypto cards, let’s explore how they work in more detail.
For starters, using cryptocurrency in the real world today still has its limitations. You can’t walk into any shop and pay for your order with Bitcoin as most merchants are unwilling to accept the crypto.
Retailers are cautious about digital currencies for several reasons, including uncertain legal status for payment processors, exchange rate volatility, and a still-underdeveloped understanding of blockchain–the cryptocurrencies powering technology–for most of the general public.
Thankfully, crypto debit cards and other “traditional” financial products seek to further legitimize cryptocurrency as valid forms of payment. How do they do this? Here’s an example:
John walks into a local coffee shop that, like most, accepts debit cards. Because a Bitcoin debit card works just like the one you get from your local bank, John has the choice to use his regular debit card or the brand new crypto-based debit card.
John decides to give his crypto debit card a test run. While the coffee shop does not accept cryptocurrency, it certainly takes debit payments. The cashier hands John his cup of coffee, swipes the card and hands him his receipt.
When the cashier swiped the card, the processing company reached into the card’s crypto wallet and took the dollar amount of crypto needed for the cup of coffee. The processing company then converted the crypto into regular fiat currency and delivered it directly into the coffee shop’s account. This all happened in a manner of seconds, and highlights one more way that crypto is becoming a more accessible form of payment in the real world.
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Frequently asked questions
Q. Can a crypto debit card replace my normal debit card?
It depends. Generally speaking, yes. If you hold value in crypto and want to spend crypto as your main source of funds, then yes. Most crypto debit cards are issued by traditional networks like Mastercard or Visa and are accepted anywhere those cards are accepted.
Q. Does it cost money to use a crypto debit card?
It depends on the nature of the transaction. While there are generally no additional fees charged for using your debit card, you will incur fees for selling your crypto when you spend it. Additionally, there may be fees when you withdraw funds from an ATM.