What are Bitcoin debit cards?

A Bitcoin debit card allows you to spend your Bitcoins online or at retail stores without manually transferring coins from Bitcoin to fiat (or regular) currency via a crypto exchange. When you swipe your Bitcoin debit card at a store (or use it online), the payment partner directly connects with your cryptocurrency exchange, and the two settle the transaction.

There are two types of Bitcoin debit cards. One is a prepaid Bitcoin debit card, and the other connects directly to your Bitcoin wallet.

If you choose a prepaid Bitcoin debit card, you need to top up your Bitcoin debit card in advance using Bitcoins you own. Once you’ve added Bitcoin to the card, you can spend these coins via the card. The Bitcoins you use to top up the card are exchanged for fiat money that you can spend.

You could also choose the second type of Bitcoin debit card, which you connect to your Bitcoin wallet. Every time you use the debit card, Bitcoins are deducted from your wallet and exchanged for fiat cash. This is then deposited into the receiver’s account (much like a conventional bank-issued debit card). 

Irrespective of the type of card you choose, you may receive a physical card, a virtual card, or both. This will depend on your card provider and also your preference. A physical card is much like a regular debit card or credit card. In contrast, a virtual card is held in your digital wallet and can be used online or through your smartphone or similar device.

The most obvious advantage is that it makes it easy and convenient for you to use your stored Bitcoins. Prior to Bitcoin debit cards, if you had to pay for a product or service in Bitcoin, you would need to log in to your crypto wallet, add the receiver’s wallet address, and send them Bitcoins. This is assuming they accepted Bitcoins as a payment. If they only accepted fiat cash, you would need to log in and exchange Bitcoins for fiat currency and then transfer the fiat currency to the vendor. Bitcoin debit cards simplify this scenario to a single swipe or tap. 

The second advantage is that these debit cards allow you to spend your Bitcoins (and other cryptocurrencies) more widely and at any store. It used to be that only select stores or businesses would accept Bitcoin or other cryptocurrencies as payment. The debit card deducts crypto from your wallet directly, exchanges it for fiat currency without you needing to do it manually and then deposits money in the vendor’s account in local currency. This means you don’t have to worry about any vendor not accepting crypto as a payment method.

If you use a Bitcoin debit card or any other crypto debit card, you might also benefit from reward programs run by some of the companies that issue these cards. Before selecting a Bitcoin debit card, you can check for any cashback or points-based reward system offered by various providers. However, don’t forget to compare the fees and charges vis-a-vis the benefits offered to ensure you don’t end up paying more than you need to.

Some of the drawbacks of using a Bitcoin debit card are, like other cards, acceptability and high fees and charges. Although Bitcoin debit cards make it easier to spend your crypto at more places, not all Bitcoin debit cards are accepted everywhere. Like different credit card types, there are some stores that will not accept Bitcoin debit cards, so you might still find it hard to spend your cryptocurrencies in-store. Additionally, each debit card only supports specific cryptocurrencies, and if you own any crypto coins that are not supported by the card, you cannot use them on the card. 

You may also find that Bitcoin debit cards have high transaction charges. But different card issuers have different fee structures, so like with any other card you should compare the available offers and choose one that’s best suited for you. ​​

You should also remember that crypto is a highly volatile asset, and the value of your coins can change from day to day or even hour to hour. The cryptocurrencies that are debited from your account are converted into fiat money using the exchange rate at the time of use. It means you could end up losing money if the price of the crypto shoots up after you have spent it. 

Even though Bitcoin debit cards are getting popular, they are still not very widely available in Australia. You can check with your crypto exchange whether it provides users with a bitcoin debit card or not. For instance, CoinJar presently offers a Mastercard debit card that lets you spend your crypto like cash. If you’re looking for a Visa card, Crypto.com is known to offer a Visa prepaid debit card. There are a few other companies in Australia that currently offer crypto credit cards, so shop around and see.

Just like you should compare cryptocurrency exchanges in terms of the features, benefits and fees they offer, it’s also worth comparing the debit cards offered by different companies. Check the applicable fees, benefits (such as any rewards program), and features of each card. Once you decide which card you want, you can follow the steps mentioned on the card provider’s site to apply for the card. Card issuers will require some identity documents for verification before the card is issued. 

If you don’t already have any, you’ll need to purchase Bitcoin (or any other cryptocurrency) to use it with your debit card. But as mentioned earlier, cryptocurrencies are an extremely volatile asset. The values can change in a flash. Keep this volatility in mind when deciding on how much to invest. It’s advisable to limit your investment to an amount you can afford to spend. If you’re investing in crypto for the long term, you may also want to set some limits while spending your crypto tokens or coins with your debit card, as it will reduce your crypto balance.