Ever heard of the term bitcoin? Well, bitcoin is a cryptocurrency, or digital medium of exchange, that is increasingly popular with folks seeking privacy when making purchases or performing financial transactions. You can buy and sell Bitcoin anonymously, without identification or paperwork, using a digital Bitcoin wallet.
Bitcoin uses a peer-to-peer payment system that occurs directly between two individuals without intermediaries such as banks. On the other hand, a traditional debit card is one way in which people transact directly from their bank account, backed by the balance in their bank account.
So, what exactly is a bitcoin debit card?
Think of it as the lovechild of anonymous cryptocurrency and a convenient bank debit card. In actuality, a bitcoin debit card is closer to a prepaid card, because you don't actually need a bank account to use one. But that convenience might come at the price of privacy.
A bitcoin digital wallet is typically how untraceable bitcoins are stored and remain anonymous, but if you want a plastic bitcoin debit card, you have to provide a mailing address to receive it, thereby compromising anonymity.
Many bitcoin debit cards are issued using the Visa payment system, which means they are accepted at more than 38 million merchants across the globe.
The first Visa-branded bitcoin debit card was debuted in 2015 by Shift in partnership with Visa and Coinbase, a popular bitcoin wallet. The Shift Visa debit card is available to residents in 24 states. If you use the card for international payments, you'll have to pay a currency conversion charge.
Bitcoin debit cards not associated with Visa use alternate payment networks. These cards may have no logos, a plus for privacy-conscious consumers. Of course, the account number will be embossed on the card, but not your name or other identifying information.
The Shift Card allows users to spend funds from any store of value they control, from bank accounts, prepaid funds to airline miles and alternative currencies such as bitcoin. When you connect your Coinbase wallet to the Shift card, you have the ability to spend your bitcoin at merchant locations and also through online purchases.
During a transaction, Shift converts bitcoin to local currency, such as the U.S. dollar. The conversion amount depends on the current exchange rate between bitcoin and the local currency, which is constantly changing.
There are two modes to use a bitcoin debit card. If you wish to maintain your anonymity, the debit card will have daily and lifetime spending limits. If you choose to identify yourself, you can enjoy higher spending limits, but that means your privacy will be compromised to a certain extent.
If you wish to maintain anonymity but have the debit card mailed to you, you can use a post office box, or perhaps have the card mailed to a friend on your behalf.
Bitcoin debit cards such as Shift typically cost just $10 to obtain, and annual fees are not part of the equation. Domestic transactions also are free, but an ATM charge of $2.50 applies per use domestically, while it'll cost you $3.50 per ATM withdrawal overseas.