How Does Bitcoin Currency Work? A Small Guide On Bitcoin Debit Cards

How Does Bitcoin Currency Work

Today, most people have credit cards or debit cards to pay for their types of spending but some also have Bitcoin currencies. You might also wonder sometimes what are Bitcoins, how they are useful, or what is a Bitcoin Credit or Debit card or which is better to use? Is it right?? If you are also one of those curious businessmen who want to know about this new trend, you are in the right place.

What Do You Mean By Bitcoin?

Bitcoin is a type of Cryptocurrency in which digital tokens are sent electronically from one person to another. Like Dollars or Rupees, Bitcoins can also be used to finance any transaction if the respective person or business accepts Bitcoin as their payment method. In other words, it is an online way to transfer assets, also known as “Digital Cash”. The key benefit of Bitcoins is that they are not owned by any government or any other authority, rather work as the normal currency in online transactions. But this works as the main disadvantage also. Due to a lack of guarantee by official entities, people use it hardly on goods and services.

A Quick Round To Bitcoins

Bitcoin transactions are not currently widely accepted. Satoshi Nakamoto, inventor of Bitcoin considered this “A Peer-to-Peer Electronic Cash System” in his original white paper. The price of a single bitcoin fluctuates constantly depending on the market bidding just like in stocks, gold, and foreign currencies, etc. In Dec. 2017, the value of the Bitcoin was $19,000 while as of May 31, 2020, it was priced at $9,553.36. The thing that makes these Bitcoin transfers easier and a go-to option is a decentralized network of computers where all the Bitcoin transactions are stored on the computers of every person who verifies them.

To initiate Bitcoin transactions, you need a digital wallet with a unique ID. If you want to send Bitcoins to a person, then you must receive a unique address from that person generated by the currency exchange platform. Just copy the address into your Bitcoin exchange platform, enter an amount, and press send. Within a few minutes, your transfer will be completed.

What are Bitcoin Debit Cards?

Currently, there are no Bitcoin credit cards available but they will be out there in the market soon. As of June 2020, there are Bitcoin Debit Cards available. So, let’s read about what Bitcoin Debit Cards are and how they work, etc.

You may be wondering about what Bitcoin Debit Cards are. Let us tell you that Bitcoin debit cards are prepaid debit cards you can load up with a Bitcoin Limit. It allows users to pay for their everyday purchases via online Bitcoins platforms for various goods and services. Most shops and services do not accept Bitcoin as payment so, the easier way to pay it in Bitcoins, you must trade it for a fiat currency which is widely accepted ie. US dollars or euros. It is a convenient, easier, and faster way of doing online Bitcoin transactions. They work in the same way as any other cryptocurrency debit card or a quite similar way to any other prepaid debit card.

How do Bitcoin Debit Cards work?

First, you need to open a Bitcoin wallet and connect it to your Bitcoin Wallet. When you first top-up the card with Bitcoins from your wallet, it will automatically convert that Bitcoins into fiat currency. You can use your Bitcoin Debit cards to merchants that accept these transactions.

1. First, create a Bitcoin wallet with the company offering these services.
2. Apply and Buy Bitcoin from your preferred exchanges such as Wirex, Coinbase, Bitpay or Cryptopay, etc.
3. After getting approval, connect your Bitcoin wallet to the application or desktop interface that your preferred exchange provides.
4. Then, load your card with Bitcoins from your wallet.
5. After charging fees by the company, your card will immediately be topped-up with fiat currencies like USD or Euros.
6. Now you can use your prepaid card whenever wherever they are accepted.

The fee applied with Bitcoin debit cards will vary so you must pick the amount that suits your situations and expenses requirements. Make sure to compare rates, fees, and other charges before making the decision. It is also important to keep a track of the amount in your Bitcoin wallet as the price of Bitcoin fluctuates.

Types of Bitcoin Debit Cards

There are simply two types of Bitcoin debit cards — Virtual and Physical Cards. Before considering any of them, consider your financial situations and other requirements.

1. Virtual Cards — If you are more likely to spend your bitcoin online, this is the most suitable card for you. Just add this card to your smartphone or computer wallet and use it to pay for online purchases. These types of cards are usually cheaper.
2. Physical/Plastic Cards — If you want to use your bitcoin debit card to complete physical transactions, then you should consider this type of Bitcoin debit card. You can use this card to withdraw cash from an ATM. It is an expensive option to choose one.

In short, physical cards are used for both online and in-store at any retailer, restaurant, or any other merchant accepting credit card transactions. On the other hand, virtual cards give you a credit card number with a security pin to only be used online.

Things To Consider While Choosing Bitcoin Debit Cards

As Bitcoin debit cards work similarly, there are some main differences such as — the companies offering them, fees charges, and the Bitcoin wallet they are linked with. So, there are a few things which you need to keep in mind while considering a Bitcoin debit card. Let’s find out what are they:

1. Due to the fluctuations in Bitcoin’s value, the spending's from your Bitcoin wallet will reduce any profit you can make from it if they rise in value.
2. All the additional benefits can vary depending on the card providers as some options include additional facilities such as free Netflix subscriptions and cash-back options.
3. Different cards come with different cash withdrawals limits. So you need to make sure with the card provider.

Why Should We Have Bitcoin Debit Cards?

Though there are some other methods of transferring your Bitcoins into fiat currency such as centralized exchanges or leverage services like Bitcoin ATMs, Bitcoin debit cards are an easier, faster and convenient way of converting bitcoin to the fiat currency of your choice. They have a distinct advantage of funds showing immediately on your card.