You might have heard a lot about how cryptocurrencies are a convenient store of value for people who have a great eye for investment. But when it comes to spending the same cryptocurrencies that these people have amassed and then waiting for their price to go up, then it becomes a completely different topic altogether.
At present, there are potentially very low opportunities when it comes to spending cryptocurrencies to buy stuff or to pay for services. You can, however, convert your crypto into fiat alternatives and then use that cash to purchase whatever you want. But what about using your crypto as is? Is there a way to do so?
Yes, there is, and you can use your crypto without having to convert it into fiat currencies with the help of a crypto debit card.
Introduction to Crypto Debit Cards
As stated earlier, it is not feasible to convert your crypto into fiat currency and then have it transferred to your credit card just for the ease of spending it. It takes a lot of effort and time, and in this digital age, no one can afford to do so hence the dilemma.
You can solve this dilemma with the help of crypto debit cards. This way, you can send all your crypto tokens into the crypto debit card with just a single click and then spend it however you would like to. If not for this crypto debit card, then you would have to take a long way home, which consists of the following steps;
- First of all, you would have to send crypto from your hard or cold wallet to any centralized crypto exchange whose services you are enjoying at the moment.
- Then initiate a request over the exchange to wire you the money
- When the money has been wired, that needs to be sent to your payment account
- And from your payment account, you can utilize it to buy stuff
As you can see, it is a long and hefty process and, in the long run, not worth it, but with the help of the crypto debit card, you would be able to bypass the whole thing. The only debacle that you would have to face here is when you put out a request to withdraw your crypto; other than that, you are golden.
Advantages of Crypto Debit Cards
There are plenty of advantages that you can reap from your crypto debit card. The most prominent is the instant availability of the funds.
It means that your funds are readily available to you, and there is no third party that is in charge of wiring you money or tackling the withdrawal requests that you tend to put down for them to tackle. Following are some more interesting benefits of using the service;
Using Crypto in Everyday Shopping
Your crypto trading account could be linked directly with your crypto debit card. This means that you can use the balance that is available in your trading account for all kinds of purchases and stuff. You can buy things right from your crypto debit card, pay for services and use that debit card as your fiat debit card without any issues.
In the neat sense of the word, you would be able to replace your daily use credit card with the help of your crypto debit card. The only drawback that you might think of is the fact that it is a crypto debit card and not a credit.
It means that you would have to transfer the funds into the card before it can be used for the sake of making purchases and whatnot. And if you are low on crypto tokens, then sadly, you can’t ask for more from whatever exchange that you are using.
The reason is that they won’t credit you the tokens because of the whole decentralized nature of the crypto tokens. You can only use what you have at hand.
If you really look into it, then there is an upside to using the crypto debit card, and that is the fact that you won’t ever have to deal with overdrawing your account as you would with the help of a casual credit card issued by a centralized banking authority.
Instant Integration with Crypto Services
The most annoying aspect of using crypto for purchases which is converting your crypto balance into the fiat alternative, is being taken away from you here. This means that you won’t have to tackle the issue of converting your crypto into fiat currency and then using this balance. The whole process takes place on its own in an effortless manner.
Whenever you put down a request to use your crypto tokens for the sake of making a purchase, your crypto card is actually going to convert the balance into dollars and complete the transaction. You won’t have to do anything, as the debit card will complete the process on your behalf.
Another upside to this whole thing is that if you want, you can have your salary sent over to your crypto debit card, and you would receive it into whatever crypto of your choosing. But you would still have to pay the taxes on your salary that you owe as that is something that doesn’t linger away as a loophole of using the crypto debit card.
Earning Loyalty Points and Cashback
Most of the crypto debit cards out in the market are already using a cashback program. This means that whenever you make a purchase using your crypto debit card, you would instantly receive some cashback in the form of the same crypto token which you used for the sake of making the purchase. This is something that is not prevalent anymore in the conventional banking sector.
Sure, you do still receive some aspect of cashback on purchases that you have made using your credit cards, but at the end of the day, these are not as lucrative as the cashback on debit crypto cards.
Most of the time, you are going to get almost 1-8% of the total amount that was billed to you, and at others, you would receive tons of discounts for the streaming services and other plan-oriented purchases that are not just present with the conventional credit cards.
And for some businesses, whenever you are using a debit crypto card, they would waive the ATM service fee, which makes your transaction kind of free in terms of paying taxes. If you do your research, then you can find all kinds of cashback programs and other lucrative deals that are present essentially for crypto debit card users.
This is because those businesses out there are actively fighting to extend their customer base, and they will offer you a generous service for you to become their loyal customer.
Disadvantages Associated with Crypto Debit Cards
There are a majority of different disadvantages that are prevalent with crypto debit cards. Some might not be a big problem for you, while others might be a deal breaker; at the end of the day, it usually depends on what your preferences are with your crypto debit card and how you would want to align them too.
Limited Availability
Unlike your credit cards or the current bank account that is accessible to you from every part of the globe, these crypto debit cards are limited in their accessibility. You can use these in a geographical territory that is lenient towards the use of crypto tokens or where crypto trading is not an issue. But at places that have regional restrictions over the use of crypto tokens, it is a sure thing that your crypto card is not going to work.
This is going to hinder your access to your crypto funds, thus making crypto debit cards extremely limited in their functionality. This kind of defeats the purpose of always having your crypto debit card with you wherever you go and making a purchase as you would with your credit card.
For the majority of users that are in the US or in Europe, this is not an issue whatsoever, but it could differentiate into a deal breaker for people in Asia or other territories that have anti-crypto policies in effect.
Your Crypto Card is not Your Credit Card
The literal meaning of the word ‘credit’ gets defied with the crypto debit card. As it is only ‘debit’ which means that you would have to transfer funds into your crypto card for it to work. You can’t lend crypto tokens whenever you want to as you would from your regular bank that did issue your credit card.
This kind of roots out the prospect of using the debit crypto cards for big purchases but on the other hand, if you want to deflect overdrawing and have some financial discipline, then it is the best thing for you.
As the whole setup is completely decentralized, it means that there is no single provider sitting behind every plausible transaction vouching for your solvency which means that there is no credit for you whatsoever. This reduces the functionality of a debit crypto card to simply day-to-day purchases; it is not going to be an ideal solution for financing a house or getting yourself a new car.
Paying Taxes on Certain Purchases
People who are actively using their credit cards for all kinds of purchases are aware of the fact that sooner or later, they might stumble into a transaction that might be a taxable event. People who use crypto debit cards, on the other hand, might think that this element doesn’t apply to them, but that is not true at all.
Many US citizens are already aware of the strict penalization of the crypto taxes by the IRS because the agency thinks of crypto as a capital asset rather than a currency. It means that on certain purchases that you do make with your crypto debit card, you would have to pay taxes to the IRS.
Suppose you had bought Ether when it was for $500, and then you are spending the token when it goes all the way to $1000, then it means that you have encountered a capital gain. And therefore, you are liable to taxation from the IRS.
In other words, you can use your crypto debit card for the sake of offsetting some of the losses as well, but all in all, this is a rather sensitive topic to discuss with the crypto debit card holders that reside in the US particularly. For Europe and other regions, you would simply have to check out the present rules and regulations in effect.
Top Crypto Card Providers
You must know that both Visa and MasterCard offer crypto debit cards in their own capacity. This means that you won’t run into any issues when making a specific selection. But for your ease following are some other third-party providers that are offering pretty decent deals on their crypto debit cards and returns in terms of bonuses whenever you make a purchase using their debit card.
Crypto.com
Crypto.com is offering the most extensive crypto debit card on the market, as this card can support more than 100 cryptocurrencies at the same time. It is also one of the most elegant and widely usable cards out there.
The card is active in more than 100 different countries out there, which makes it a truly versatile and popular choice all at the same time. There are different tiers for you to choose from, with the Obsidian card being the most popular among the rest.
Binance Visa Card
The largest crypto exchange Binance is also offering its own debit crypt card that is Visa. The only drawback is that the company is presently offering its crypto debit card to European customers at the moment, with the realization that the service will soon be launching in the US and other regions as well.
The card offers pretty high spending limits on a per-day basis; you can get more than 8% cash back on certain purchases, which is more than enough.
Coinbase Debit Card
The direct competitor of Binance, Coinbase exchange, is offering its own dynamic crypto debit card service. Some of the most interesting features of this card are that you don’t have to pay any sign-up bonus or fee, and also there is no ATM withdrawal fee as well.
Whereas the other competitors charge a fixed rate for the sake of converting your crypto into fiat alternatives and having the cash withdrawn. You can have 4% cashback with the XLM crypto, and with Bitcoin, the rate is 1%.
The card is primarily active in the US and other regions but, sadly, has a very low usage rate in Europe. European citizens, on the other hand, can have their hands on the card, but to be able to do so, they would have to pay an issuance fee and, on top of that, would have to pay an ATM fee on each withdrawal.
Because of its extreme security features, the Coinbase card is an ecstatic hit in the debit card market for cryptocurrencies. It might be the reason why people are essentially looking to sign up for this specific crypto debit card more than any other card on the market.
BlockFi Crypto Card
The most important aspect of this card is that it works just like the US credit card, which means that you can have a dedicated amount of crypto tokens that you have selected credited to your card and then use them however you like.
At first, when you sign up for the service and start using the card, you are entitled to almost 3.5% cashback on all your purchases, irrespective of the cryptocurrencies that you are using for the transaction; this is known as the promotional period.
When this period ends, you would then once again be redirected to a 1.5% cash back on all your Bitcoin purchases, which is still pretty nice given the fact that many are only offering 1% and not primarily on Bitcoin. Just as in the case of a conventional credit card, you are liable to pay the credit checks wherever these apply, especially when you are requesting the card.
Conclusion
The concept of the crypto debit cards is new and thriving, and with the cashback scheme lurking around the back, it is probably going to stay like this for a while. If you are someone who deals a lot in cryptocurrencies, then sure, this card is for you as you can use it for all kinds of purchases, but if you interact with fiat currencies more than the crypto tokens, then perhaps this is not a viable option for you.
But anyway, there is no harm in entertaining the possibilities that you have with the help of the crypto debit card and what it has to offer.