You may also be charged a small fee each time you convert your Bitcoin to cash. What are the fees for Bitcoin debit cards?ĭepending on the provider, your Bitcoin debit card may or may not have an annual fee. Link your Bitcoin wallet to the card such that each time you make an online or in-store purchase, you're effectively selling the required amount of bitcoin for cash.In this case, you spend the cash as you make purchases using the card. Top up your card by selling Bitcoin to cash in lump sums.The two methods for funding Bitcoin debit cards are: Many Bitcoin debit cards also allow you to take out cash from ATMs. You either enter your card details or swipe your card to make a payment, and merchants receive cash in their local currency. You can use them to make payments in person or online exactly like you would with any other credit card. How do Bitcoin debit cards work?īitcoin debit cards are like prepaid credit cards. Therefore, for the time being at least, Bitcoin debit cards help make Bitcoin useful as a medium of exchange while layer two solutions are still in their infancy. Unfortunately, Lightning Network is even less widely deployed than the standard 'layer one' Bitcoin network, meaning the places you can use it to actually buy things are few and far between. This is similar to how the Visa/Mastercard network functions in that millions of small transactions can go through quickly while final settlement occurs in large batches at a later stage. Note that so-called 'layer two' solutions like the Bitcoin Lightning Network solve the above-described challenges by enabling 'off chain' transactions. Depending on the fees paid and the current level of network congestion, it takes anywhere from a few minutes to an hour for most Bitcoin transactions to confirm 'on chain' - and only when a transaction is confirmed on chain, meaning it's included in at least one block, can final settlement be considered to have occurred.įor these reasons, Bitcoin's use as a medium of exchange (on layer one) is currently restricted to higher value items where transaction times and costs are less consequential - like buying a car, boat, or house. (2) Transaction times are significantly longer than with status quo payment networks. (1) Transaction fees are often significantly higher than with status quo payment networks like Visa and Mastercard. If your local furniture store doesn't accept bitcoin, you'll have to pay via another method! Further, Bitcoin (at least in its current state on 'layer one') isn't particularly useful as a medium of exchange for small-value items like your morning coffee or daily groceries. While Bitcoin enables people to transact peer-to-peer, this feature can only be taken advantage of within the network itself. Isn't Bitcoin supposed to be peer-to-peer cash? Why would I need a credit card?
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