More than being a store of value, where users hope for increased gains, cryptocurrencies represent financial tender that can be spent – even though they aren’t globally legal yet. If you see your crypto assets as some form of money, you would be interested in using some for grocery shopping or some other regular spending.
Indeed, you may be interested in making purchases with your crypto assets; however, you may hit a deadlock, as your preferred cryptocurrency store may have a no-crypto policy, and this is where crypto debit cards come in. They bridge the gap between cryptocurrency and fiat currency, enabling you to spend Bitcoin, Ethereum, or your favorite cryptocurrencies, while the recipient store gets the fiat equivalent in Dollars, euros, or some other fiat currencies.
What Is A Crypto Debit Card?
A crypto debit card is an electronic device that allows users to make cryptocurrency payments at points of sale, enabling the cardholder to spend cryptocurrency directly without manually converting it into fiat. They work like regular debit cards; however, instead of spending fiat, cryptocurrency is deducted, and the card service provider instantaneously converts the crypto into fiat, allowing you to complete a purchase.
How Do Crypto Debit Cards Work?
Your crypto debit card should be pre-funded with some cryptocurrency, after which payment can be made at a physical or online store. Once payment is prompted, the card services provider (which is connected to the exchange) will immediately convert the crypto into fiat and make a payment from a bank account connected to the card. Instead of manually carrying out a series of steps, crypto debit cards instantaneously allow you to complete transactions.
Want to Use A Crypto Debit Card? Read This!
Check For Availability: Crypto debit card services aren’t available in all locations for several reasons; in some countries like China, Qatar, Bolivia, and Iraq, cryptocurrency is outrightly banned. Hence, providing crypto debit card services in such jurisdictions could lead to messy legal headaches.
Secondly, some fiat currencies are unstable and very prone to inflation; hence, the conversion process may be accompanied by irregularities that may lead to some losses for the cardholder or service provider. As a result, crypto debit card services are hardly available in such locations.
Be Aware of Local Regulations: In the United States, the IRS considers cryptocurrency as digital assets, of which you must report your losses and gains; hence, your crypto spending may be subject to taxes in the United States and some other countries.
Advantages and Disadvantages of Crypto Debit Cards
Advantages of a Crypto Debit Card
- Crypto debit cards facilitate ease of cryptocurrency use for everyday payments
- They allow easy conversion of crypto to fiat
- Since it’s a sparingly used service, companies encourage users to use crypto debit card services by offering discounts, cash back, and other benefits.
- It can be used in several countries across several currencies
Disadvantages of a Crypto Debit Card
- It isn’t available in all countries
- It isn’t optimal in credit-based societies
- It could be taxed