The cryptocurrency, a blockchain-based digital currency that has attracted the attention of investors and financial services companies, has a challenge. It can be difficult to get this currency out of the ordinary. But there are new services on the horizon that help people use bitcoin and other digital coins in their main ways.

See how to use these banking services for crypto, as well as their advantages and disadvantages.

What is Cryptocurrency Banking?

The term crypto banking can be misinterpreted because the exchange companies and organizations that provide these services are not technical banks, but generally refer to ways in which consumers can manage their crypto balances. At this stage, this type of banking service allows people to keep their money in a digital wallet or withdraw it as a traditional currency.

Benefits of Cryptocurrency Banking

The main advantage of this type of banking service at this time is crypto debit cards. Instead of keeping it as an investment, they allow you to use your digital coin balance just like any other currency to make daily purchases or withdraw money.

Before these debit cards are available, you can only withdraw your cryptocurrency directly from retailers of your choice to receive or sell in dollars. Financial technology companies now work with partner banks and / or debit card issuers to use their partner’s logistics and control framework to sell their laptops in the background and convert them into dollars for retailers. This means that your digital money will be accepted where many standard debit cards are.

Barriers to Cryptocurrency Banking

Probably the biggest obstacle to borrowing and issuing cryptocurrency is flexibility. The same barrier to investing is that you have to accept the saying, “If you lose your coin, you will lose a lot of money.” Financial Services Analysis Organization.

Many banks rely on stable exchange rates to borrow, lend, or raise interest rates, but currently those things cannot be done in a stable or secure way with cryptocurrency.

And to spend your digital coin, you have to accept the risk that the price will go up after you withdraw it, because your transactions are based on the real-world value of your coin at that time. For example, after you buy a $ 5 sandwich, the price of your secret crypto has doubled, which means you have effectively spent $ 10. But the value can be reduced, making good purchases better.

Another obstacle to consider is that regulators are still reviewing Cryptotech Fintex. The U.S. Securities and Exchange Commission (SEC) recently announced plans to sue Coinbase, one of the world’s largest credit card companies, and Coinbase has canceled the launch.

Consumers should know that using a crypto debit card is an internal tax service event because the cardholder is technically selling it when making transactions with their debit card. Some card issuers may automatically generate 1099 forms for their customers to use when filing taxes, but consumers are still responsible for monitoring their tax liability.

How to try Cryptocurrency Banking

To start using this type of banking service, you must first purchase a currency. It is easy to buy and sell a laptop, even in small quantities, and store it in a digital wallet.

If you want to easily withdraw your balance, you will need to open an account with a company that offers crypto debit cards and use the same type of digital currency you have. Coinbase, First, has a special debit card that allows customers to withdraw any of their Coinbase assets and receive cryptocurrency rewards, but there is currently a waiting list for new customers. BitPay, another company, offers a prepaid MasterCard debit card that customers can use to spend their digital money. There are others, but not a large bank.

In the future, cryptocurrency may have the potential to become a peer-to-peer loan source where individuals can quickly and securely lend to each other, according to CB Insights Research. This is a huge area of ​​untapped potential but currently the world of cryptocurrency banking is limited by a small set of players with some very new products and services.

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This article was presented to the Associated Press by Nard Wallet, a personal finance website. The content is for educational and informational purposes only and does not include investment advice. The author has no place in the warranty mentioned at the time of its publication. Chanelle Bessette is the author of NerdWallet. Email Cbessette@nerdwallet.com Twitter: @crbessette

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