Bitcoin Debit Cards: An all-in-one debit card primer

Debit cards are a preferred means of electronic payment in many parts of the world. With debit card in hand, users have access to the funds in their bank accounts 24 hours a day, seven days a week, and can use it on their favourite gambling site.

It turns out that Bitcoin users have access to similar cards. But what if you could combine both fiat and cryptocurrencies in a single card? Now you can. The all-in-one debit card is just beginning to emerge.

Hybrid fiat-crypto debit cards are by no means the norm and they are still in their infancy. Yet there is a lot of potential here. An all-in-one card that gives access to all a consumer's preferred currencies would eliminate virtually all barriers to spending across geopolitical boundaries. Such a card would also offer incredible flexibility for managing cryptocurrencies in order to stay ahead of price fluctuations.

This post will discuss the implications of an all-in-one card. You will learn how standard debit cards work, how crypto debit cards work, and what a hybrid card would look like, and why you should play Mega Moolah using a Bitcoin debit card. Needless to say, the environment for an all-in-one card already exists. We have both the technology and infrastructure. What we might not have is the general will to make it a reality.

We have written extensively on Bitcoin and crypto debit cards before, check our Cryptocurrency news tag for articles, including our crypto debit card comparison.

Debit Card basics

At the risk of explaining something you might already know, a debit card represents one of the most basic ways to access personal funds electronically. A debit card represents money being held somewhere. Let us start with a bank-issued debit card. You might have one yourself.

A bank-issued debit card is linked to your bank account. Whether it is a savings or checking account, you use your debit card to make payments from the linked account. Let us say you spend $50 at your online casino. You present your debit card for payment. Your card contains the information necessary to send a digital bill to your bank. The bank then transfers money from your account to the casino's account.

All of that happens electronically and seamlessly. And of course, actual cash is not being transferred between banks. Rather, the banks exchange the equivalent of electronic credits that represents fiat. Fiat only enters the equation when one of the parties actually needs physical cash.

Payment settlement

What many people do not realise is that debit card payments are not settled instantly. A debit card payment goes through a payment processor tasked with making sure the debit institution gets debited and credit institution gets credited. The payment processor then passes the transaction off to a settlement network that finalises everything.

The result of all this network action is that your gaming transaction is not finalised for days. It is instantaneous to you inasmuch as you get a receipt saying your deposit has been paid for and you can play. But your bank account, as well as the casino's, reflects a pending transaction until settlement is complete.

Your payment transaction is not actually official until final settlement. That can take several days, sometimes. In the meantime, both banks are operating on the good faith and credit of the other. The casino's bank is trusting your bank to make good on the payment while your bank is trusting the casino's bank.

In closing this section, a prepaid debit card works the same way except that the money you use to load it is held in the issuer's bank account rather than yours. Everything else remains the same.

Cryptocurrency Debit Cards

All the basic principles that apply to bank-issued debit cards also apply to cryptocurrency debit cards. A Bitcoin debit card represents bitcoins you already possess. Either those coins are stored on an exchange or they are held by the issuer of the card. You use your card to spend the coins just like you would fiat.

Buying something with your Bitcoin debit card normally facilitates a transaction that is sent through a payment processor. Although using payment processors is technically not required in the cryptocurrency universe, merchants often go through payment processors to protect themselves against price fluctuations.

Let's say you pay for your gambling action with a Bitcoin debit card instead of a bank-issued card. Now there is an extra step involved. The payment processor sends a bill to the entity that holds your coins. Those coins are transferred to the payment processor within minutes. The payment processor converts them to fiat, subtracts a service fee, and forwards the remaining balance to the casino's bank account.

There are instances in which merchants accept Bitcoin payments directly without having them converted to fiat. They are the exception to the rule, however. Most go the conversion route as it is safer that way.

Cryptocurrency settlements

Despite the many differences between fiat and cryptocurrency, settlement is still required in the crypto world. Settlement is simply the practice of verifying all the information about a given transaction and, following confirmation, making the transaction permanent. One of the advantages of cryptocurrency transactions is that settlement occurs more quickly.

Settling fiat transactions can involve three or more networks depending on how many times a transaction gets passed off. The typical cryptocurrency transaction only involves two networks at most: the payment processor's network and the cryptocurrency network. If a transaction occurs without a payment processor, then the only network required is that of the cryptocurrency itself.

With fewer organisations passing off transactions, settlement is faster. Moreover, settlement is immutable. Unlike digital transactions in fiat, you cannot delete or modify a cryptocurrency transaction once settlement has occurred. A settled transaction becomes a permanent part of the record that cannot be undone.

The All-In-One Debit Card

Now we get to the all-in-one debit card. As you might imagine, it combines the best of the bank-issued debit card with all the benefits of a crypto debit card. Its most prominent feature is the ability to hold multiple fiat and digital currencies in a single, master account.

Imagine an all-in-one card that supports the U.S. dollar, the British pound, the Euro, and five cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and XRP. Do you have to purchase all eight currencies and store them in a single account to use the card? No. That's the beauty of an all-in-one card.

You could fund your account entirely with Bitcoin. Should you decide to purchase something from a Canadian merchant who only accepts CAD, no problem. The network that supports your debit card would do the math, convert the required amount of Bitcoin to Canadian dollars, and complete the transaction.

A true all-in-one allows for converting between currencies on-the-fly. The one caveat here is that traditional banks do not support all-in-one cards at this time. So your account would fundamentally be a cryptocurrency account. Still, that is not a bad deal.

Buy, Sell, Trade

Another great aspect of the all-in-one card is that it allows you to buy, sell, and trade cryptocurrencies in real time. In other words, you can use the card to facilitate how you manage different cryptocurrencies. You can use it to create a basket of cryptos that can be managed in any way you see fit.

Maybe you have a bunch of Bitcoin along with a small amount of fiat in your account. You notice Bitcoin's prices falling while Litecoin appears to be surging. Just use your card to buy some Litecoin. You can choose to have the purchase funded with either your Bitcoin or fiat balance. Smart money says use Bitcoin. Doing so would protect you against some of the loss you are seeing as Bitcoin's price falls.

There is a caveat in all of this. Remember that the issuer of your all-in-one card has to both make money and protect itself against significant loss. You can bet you will be charged a transaction fee every time you use your card. Therein lies the biggest difference between cryptocurrency debit cards and their bank-issued counterparts.

While you can use an all-in-one card to buy, sell, and trade cryptocurrencies, every transaction you conduct will incur a fee. As such, large volumes of transactions have to be worth your while. You must pay attention to cryptocurrency prices to ensure you are not losing a lot to gain very little in return.

The future of all-in-one cards

It should be plain to see that all-in-one cards have a lot to offer. In a world that is gradually transitioning from fiat currencies to digital alternatives, it is not beyond the realm of possibility that all-in-one cards will one day be the norm. Imagine the possibilities.

All-in-one card standardisation would mean virtually unlimited cross-border transactions. Standardisation would lead to better payment systems, wider acceptance of cryptocurrencies among retail merchants, and stiff competition among card issuers to win market share.

Will a standard all-in-one card ever be the norm? No one really knows. We already have a head-start on the technology and infrastructure to make it happen. What we do not have is a willingness among players in the financial sector to work together on it. That may be the one thing that keeps the all-in-one card in the background as a niche product for a select few.