With cryptocurrency gradually changing the face of the world’s monetary system, it is no surprise that cryptocurrencies are finally going mainstream, and proof of that is the availability of crypto debit cards such as the new Ledger Crypto Card.
• Crypto debit cards have been able to make payment methods easier and much faster than traditional debit cards.
• You can only make use of a crypto debit card in regions where cryptocurrencies are allowed.
• Make sure that the crypto debit card you are using supports cryptocurrencies that are acceptable as a means of payment in crypto allowed regions.
• With the current adoption of cryptocurrencies, there is hope for the future that it will eventually be globally accepted, and in turn, crypto debit cards may replace traditional debit cards.
What is a Crypto Debit Card?
The crypto debit card is a plastic card embedded with a chip that allows you to pay for goods and services with the money in your crypto account.
These cards are different from the traditional debit and credit cards you are familiar with as instead of paying with your bank account, you pay with the cryptocurrencies in your crypto account.
Note: By the term paying with your crypto, I mean that whatever amount you owe, will be calculated in crypto, for instance, if you owe $5,000, this amount will be calculated in your crypto (Ethereum) for instance, and an amount say 0.05 ETH will be debited from your crypto account.
How do Crypto Debit Cards work?
A Crypto debit card works just like your traditional debit card but one major problem you might face here is that while the traditional debit card is accepted in all major marketplaces worldwide, the crypto debit card is only limited to marketplaces that recognize crypto debit cards as a means of payment.
This is the case because of several reasons ranging from crypto volatility to skepticism about crypto in some quarters, non-regulation, and others.
Notwithstanding, efforts are being put in place to ensure that cryptocurrencies gain wider acceptability and that in a matter of time, cryptocurrencies will be used as a means of payment by all and sundry.
Moving on, let me illustrate with an example, showing you how the crypto debit cards work:
Henry walks into a supermarket to buy groceries, after buying them, he proceeds to the cashier to pay, and he brings out his crypto debit card, the cashier collects it and swipes the card against the point of sale.
When this happens, Henry’s crypto account is debited by the dollar amount he owes then the crypto is then converted to fiat and sent to the cashier’s account in a seamless process.
All these take place within seconds and Henry proceeds to exit the store, as simple as that.
Now that we understand how the crypto debit card works, just like any invention or technology, there are always drawbacks that come with them and the crypto debit card is no exception to this rule.
Common Crypto Debit Card problems and how to fix
- Limited Geographical Acceptability
One major problem that is usually faced by crypto debit cards is the fact that they are only useful in locations where they are generally accepted.
For instance, a crypto debit card will not be of any use to you in a place like China, where cryptocurrencies are banned.
As such, the only solution, in this case, is for you to check your location to make sure that crypto debit cards are accepted over there before you proceed to make use of it as a means of payment.
- Payment of Taxes
One other challenge you will face as a result of you owning a crypto debit card is the fact that you have to pay taxes.
The Internal Revenue Service (IRS) of countries where crypto is supported view cryptocurrencies as financial instruments.
This means that you would have to pay taxes when making a payment with the card especially if your crypto has witnessed an increase at the time of payment than when you initially acquired it.
The only solution here would be to declare your crypto as income or make use of a traditional debit card if you wish to avoid paying these taxes.
- Limited Supported Cryptocurrencies
One of the problems with crypto debit cards is that some of these cards do not support cryptocurrencies that are widely accepted.
For instance, a crypto debit card may not have support for only a few widely accepted cryptocurrencies such as Bitcoin, Ethereum, Litecoin, etc. This limits your ability to make payments effectively.
The only way out of this problem would be to check the number of supported cryptocurrencies of any crypto debit card and make sure that popular cryptocurrencies such as Bitcoin and Ethereum are supported by it before you proceed to make use of it in making payments.
- Exorbitant Fees
Charging exorbitant fees is also one of the problems that come with owning a crypto debit card.
Some crypto debit cards charge transaction, deposit, and withdrawal fees which may be too much for the user to bear.
This is why the only solution here is to take a good look at the crypto debit card you choose to use.
If possible, contact their support team to know what to expect in terms of the fees they charge, if they charge fees at certain amounts of transaction and if there are any waivers available.
This information is quite important as it would help you properly manage your crypto finances and know how to properly make use of the debit card without worrying about unexpected debits.
Frequently Asked Questions (FAQs)
Are Crypto Debit Cards safe?
Yes, Crypto debit cards are as safe as your traditional debit cards. You only need to make sure that you keep it in a safe place so that it doesn’t get stolen or misplaced.
How do I get a Crypto Debit Card?
You can get a crypto debit card from a crypto exchange such as eToro or a crypto payment service provider.
Can I use Crypto Debit Cards anywhere?
No, you can only use crypto debit cards in regions that accept crypto debit cards. Some regions do not support cryptocurrencies so crypto debit cards won’t be of any use in those places.
Crypto debit cards are an even better way of getting payments done easier and faster.
Hopefully, cryptocurrencies will become even more mainstream and will be generally accepted all over the globe. Once that happens, the limits of the crypto debit card will know no bounds.
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