Considering this, we would be able to understand why speed is likely to be paramount for buying and selling of bitcoins, especially for those who would like to speculate and make use of the quick and small movements that are seen in the bitcoin prices. This is the reason why such traders prefer to use their credit card as it is very easy for them to deposit and withdraw the funds using their credit cards. What’s more, it also helps them to add points based on the usage of the credit cards and hence for them, this is a double bonus as they can make profits out of the bitcoin trading and also they can make use of the extra points earned based on their credit card usage.
Although not via bitcoin exchange, the fastest way to buy bitcoin with a credit card being via a CFD’s broker such AvaTrade. Buying bitcoin via AvaTrade does not provide you a legal possession of the coin, however, it allows you speculate on bitcoin’s price fluctuations.
Types of Credit Cards You can Buy Bitcoin with
As we had mentioned earlier in the article, the credit card companies are yet to take a very strict view of the usage of their cards for the purpose of purchasing bitcoins. One of the major reasons is the fact that most of the regulatory authorities are still only in a period of discussion and contemplation and have not yet taken any action against the bitcoin industry. So, with the legality of this industry hanging in the balance in many countries, the credit card companies have not yet had the need to ban the usage of their cards for purchasing bitcoins.
That is the reason why we are seeing the cards from various companies, including Visa and MasterCard being used by traders to purchase bitcoins at various exchanges and we believe that the card companies could continue to allow this to happen for many years to come as it is highly unlikely that there would be a total global ban on this industry anytime soon.
Credit Card Bitcoin Exchanges
The bitcoin exchanges around the world have also realized the preference of retail traders and investors for the usage of credit cards to buy bitcoins and that is the reason why we are seeing more and more bitcoin exchanges allowing traders to fund their accounts with them using their credit cards. We can see that Visa and Master cards can be used at exchanges like Binance, Coinbase and CEX.IO to buy bitcoins and this trend is only going to grow more and more as lots of retail traders begin to jump into this industry in the short and medium term.
The trader also has to choose whether he wants to take delivery of the bitcoin and hence use an exchange or whether he wants to just speculate in which case, he could do that at a broker like Avatrade which also allows the trader to use credit cards to fund their accounts with them. It would be foolish for any major bitcoin exchange not to give the choice of credit cards as a funding mechanism for its clients.
Is it safe to Purchase Bitcoin with Credit Card?
As far as the legality of purchasing bitcoins using credit card is concerned, the scenario is the same as with using wire transfer or any other payment method and hence if it is fine for a trader to use wire transfer to buy bitcoins, then it should be fine for him to use his credit card to buy bitcoins as well. But, of course, traders have to make sure that they are careful while using credit cards as bitcoin exchanges and other places where bitcoins are used and purchased are always under the eyes of various hackers. The bitcoin industry has gained a lot of attention from hackers in recent times due to the fact that it provides anonymity and is also proving to be an industry where a lot of funds are being used in an unregulated environment.
With the industry spreading and with many untrained developers also entering into the industry, it opens up the vulnerability of this industry to hackers and that is why it is important for the traders to safeguard themselves while using credit cards to buy bitcoins. It opens up the possibility that their bitcoins could be stolen along with card information and hence it is important for the traders to be aware of the same. But, as long as the traders stick to the major bitcoin exchanges, which have a good track record and have high security, it should not be a major safety issue.
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Pros and Cons of Buying Bitcoin with Credit Cards
The biggest advantage of buying bitcoins using a credit card is the speed of the entire transaction. As we had discussed before, the bitcoin market is a volatile one and in such markets, speed is paramount. It is important that the funding of the trader’s account at the exchange and the withdrawal takes place in a quick and seamless manner so that the trader can take full advantage of the price movement in bitcoin and this is facilitated by credit cards.
Traders can fund their accounts instantly using their credit cards and can continue to top up their account as long as the credit card has the right limits set. This helps to buy and sell bitcoins quickly and as said before, this also adds up the usage points in the credit card which is an added bonus as these points can then be redeemed at various outlets. Also, the fact that credit card payments can be done within the next 30 days ensures that the traders’ deposits, make profits and withdraw them and use these profits to pay back the credit card balance.
The disadvantage is the security aspect of the transaction as more and more exchanges come in and some of them are quite vulnerable to attacks from hackers. So, the trader needs to be very careful in choosing the right exchange so that his credit card information is secure. Also, if the trader is caught in a loss, it becomes very difficult for him to repay the credit card balance and the interest that is charged on this compounds the situation.
Tips on Buying Bitcoins Online with Credit Card
- Make sure that you only deposit that amount which you can afford to lose.
- Do not deposit your life savings using a credit card.
- Ensure that you pay off your credit card balance every month.
- Be careful about the exchange that you choose and ensure that it has good security.
- Do not give out your credit card details to any person at the exchange or if any person calls and asks for it.
- Ensure that you have a trading system in place before buying bitcoins.
- Check if your card details are stored in a secure manner and if you are not sure, you can remove the details from the exchange and add it later, when you are going to deposit again.
As can be seen, buying bitcoins using a credit card is one of the quickest and simplest ways of doing so. It does not need the trader to be tech savvy and at the same time, it provides a great opportunity for nimble traders to buy the bitcoins within short notice and profit from it. The fact that the card company gives you 30 days to repay your balance ensures that the traders can make a profit out of the transaction and then repay the balance and the volatility in the bitcoin market ensures that this entire trading cycle is completed within 30 days.
On the other hand, care should be taken to ensure that the trader does not get himself caught in the credit card noose and that he repays his balance promptly. As long as the trader chooses a highly secure exchange where his card information is safe, using a credit card to buy bitcoins is probably the best way.
This article was originally posted on FX Empire
Source : https://finance.yahoo.com/news/buy-bitcoin-credit-card-140735386.html