Cryptocurrency is one of the most discussed topics in the financial sector these days. The adoption of cryptocurrencies is increasing day by day; meanwhile, the industry is adding more opportunities to its list of services. Crypto cards are one of the emerging trends of the industry. These cards allow crypto holders to shop more conveniently. Many people are still not sure how exactly crypto cards work. Probably it is because they do not know much about digital cash. Therefore, we have prepared a comprehensive blog to discuss how crypto cards work and a guide to digital cash.
What is digital cash?
Digital cash is any form of money that does not exist in physical form but only in electronic form. It can be traded and transferred using electronic codes. The most prominent form of digital cash is cryptocurrency.
Cryptocurrency is a digital currency that is designed as a medium of exchange. It exists through blockchain technology, a distributed network of a large number of computers. It uses cryptography to secure and verify transactions on the network. Unlike fiat currencies (USD, GBP), it is not issued or controlled by central authorities. So, cryptocurrencies are free from government involvement and manipulation.
Bitcoin is the first and the most expensive cryptocurrency, created in 2009 by an anonymous group called Satoshi Nakamoto.
How does cryptocurrency work?
Cryptocurrencies exist virtually on the internet. Their supply and demand determine their value. If the demand increases faster than supply, prices go higher. For example, in 2010, the price of 1 Bitcoin was $0.0008, when few or no people knew about it. But in 2021, its price reached ever highest of $68,000. Currently, there are more than 70 million Bitcoin users globally.
Cryptocurrency is created through a process called mining, which employs the power of computers to solve computational problems and earn coins.
You can easily purchase cryptocurrency from exchanges or brokers, which you can store and use for purchases through crypto cards.
What are crypto cards?
You have been using bank cards to make purchases using fiat currencies. But what if you own cryptocurrencies and you want to purchase a cup of coffee paying in crypto? Well, you can do this using a crypto card.
Crypto cards allow crypto holders to use their cryptos to make real-world purchases, whether coke or buying a car. Like traditional cards, crypto cards can either be crypto credit or debit cards. Though in contrast to traditional cards, crypto credit cards are independent of the banking sector and transactions are made by using an anonymous alphanumeric address that changes with every transaction. The key feature of crypto cards is the high level of security as there is no risk of being hacked since the payment directly goes to the party you are paying,
These cards are supported by VISA and MasterCard and are issued by brokers with the license. You can pay with these cards at any store accepting VISA and Mastercard payments.
How do crypto cards work?
As issued under VISA and MasterCard, Crypto cards follow the same regulations and restrictions.
To use the crypto card for purchases, you first need to connect your card with a wallet that can be your personal wallet or platform’s wallet. Once it is done, your card is ready for use.
You must know that you are not directly paying with cryptocurrencies with crypto cards. But the cryptos are first converted into our local currency and then is paid to the retailer.
What are the fees associated with crypto cards?
Crypto cards may vary in fees associated with them. But in general, with crypto cards, you will have to pay minimum fees compared to traditional bank cards.
- The annual membership fee is low. Some crypto card issuers waive the yearly fee if you spend a certain amount of crypto within a year.
- Crypto cards do not charge foreign exchange fees. But transactions do apply standard VISA and MasterCard fees.
- Some crypto cards do not charge ATM fees either. At the same time, others charge a minimum ATM withdrawal fee.
Top crypto cards available in the market
Following are the top crypto cards available in the market.
- Crypto.com Debit card
- BlockFi Credit card
- Coinbase Debit card
- Binance Debit card
Both crypto credit and debit cards are doing great. You can earn certain cashback, rewards, and perks with these cards. However, each card is different from others with specific specialties. If you plan to start using a crypto card, do your research to find the card that best matches your requirements.