How is it different from the bank credit card? Know how it works

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Cryptocurrency is one of the most discussed assets, even in conventional investment portfolios. The new buzz in town and likely the future of money, cryptocurrency, is emerging exponentially as the market for this digital token currently stands at around $2 trillion.

In India alone, crypto investments have increased to $10 billion in November 2021. The digital token almost mimics conventional cash, and hence, there are debit and credit cards available that can help you transact cryptocurrency. So let’s find out what exactly crypto credit cards are and how they work?

Cryptocurrency credit cards work like traditional credit cards. But the only difference is that transactions made through crypto credit cards are favored by cryptocurrency. These credit cards will also allow you to obtain benefits on your purchases, either immediately or at the end of each month.

The issuer may also design a system where you can pay from the crypto tokens available in your account rather than the tokens provided by the card issuer. In these scenarios, the card functions as a hybrid, in which the card serves as both a credit card and a debit card.

Crypto credit cards are currently issued by BlockFi, Brex, Venmo, SoFi, Gemini, among others. These credit cards are supported by MasterCard and Visa, currently the largest financial network in the world.

how they work

If you want to make a transaction and buy something, you will use the crypto credit card and make the purchase. The card issuer will issue the tokens on your behalf, which you must pay at the end of the month. On your purchases, the issuer will give you a reward. Rewards also work the same way as a conventional credit card. Here you are rewarded with crypto tokens. Each issuer differs when it comes to granting rewards to the customer.

A crypto credit card does not transact directly in cryptocurrency. Indeed, your cryptocurrencies are first converted into fiat currencies and then sent to issuers. These cards can be in physical or digital form.

Awards

The rewards depend on the merchants. For example, BlockFi returns 1.5% of the transaction in crypto rewards. The reward is 3.5% for the first 90 days. Gemini offers instant rewards on your transactions and directly deposits the digital token into your account.

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