How to make cryptocurrency and bank accounts work
Cryptocurrency has gained popularity during the Covid-19 pandemic, as global digital transformation increases. Is there still growth available in the cryptocurrency market? Without a doubt. Indeed, the global blockchain market is expected to double in value from $4 million in 2020 to $39.7 billion in 2025. This amounts to a 67.3 percent CAGR increase within this time period. Keep reading to discover how to make cryptocurrency and bank accounts work.
If you’re new to cryptocurrency, you’re probably curious about how effectively it connects with traditional banking. Are you able to open a bank account for cryptocurrency? Or do you want to buy Bitcoin with a credit card?
However, this article will help you to analyze the intersections between the banking system and the cryptocurrency market, so you’ll have a clear understanding of what is possible, and also what good for your money. In addition, we have created a list of crypto banks to help you check if you are willing to open an account. Now let’s answer one of the questions most Americans ask about cryptocurrency and the banking system.
Does American Banks Support Cryptocurrency?
The influence of cryptocurrency on banks is a complicated topic. Given that cryptocurrency is a pretty recent financial medium, having launched in 2009. While Bitcoin and other popular cryptocurrencies have gained significant popularity, banks have reasonably seen them as highly volatile, as well as risky. Moreover, the anonymity and decentralization of cryptocurrencies have raised security and compliance concerns for banks and other financial institutions.
However, retailers, eCommerce sites, and individual investors have all hopped on the crypto bandwagon. Banks have been left with no other option than to accept that digital currencies are not going away anytime soon. Meanwhile, As consumers expect a seamless transition between traditional and digital banking, banks are exploring methods to include cryptocurrencies into their existing product offers.
Does Crypto Have Friendly Banks?
Without any doubt, cryptocurrency has some friendly banks. Meanwhile, while recent study shows that 69.2 percent of the American credit card market still refuses to accept Bitcoin, the shift toward banks that incorporate cryptocurrencies is really expanding. However, one of the primary roadblocks is that some bank has refuse to allow their customers to purchase altcoins with their credit cards. But, this is for a very good reason best known to them.
Due to the market’s volatility, the credit cards used in the purchase of cryptocurrencies are risky for both banks and customers. Because of the volatility of the value of Bitcoin and other cryptocurrencies, there is no guarantee that the digital currency’s value will meet the debt’s payback requirements. Essentially, you could risk exhausting your credit limit on a currency that may become worthless in a short period of time. Therefore, banks only mitigate this risk by charging a high transaction fee on each cash advance. For example, some credit card networks charge up to 23.99 percent in cash advance fees on Bitcoin purchases only.
However, these fees are in addition to the fees imposed by the cryptocurrency exchange for processing the transaction. While there are undoubted challenges to overcome when merging crypto and traditional banking, there are others who are defying the trend. Meanwhile, the financial institutions that recognize the future value of cryptocurrencies are already adding digital currencies into their online banking platforms. Here are the best ways you can earn bitcoin online.
Merging Banking and Crypto?
Even if the near future does not promise the merging of banking and cryptocurrency systems. However, it has become clear that while cryptocurrencies have to adapt to new rules and regulations, banks must learn how to play the new game. Meanwhile, certain more traditional operational methods must be abandoned, and the institution as a whole must embrace a more fluid function. Perhaps, incorporating blockchain technology into their current operations would help banks in staying current and modernizing their operational models. Continue reading to discover more on how you can make cryptocurrency and bank accounts work.
How to Choose a Bitcoin Bank Account
Any Google search for a cryptocurrency bank account will return dozens of results, which can be extremely confusing. Especially, if you are new to digital currencies. Therefore, how do you determine what you’re looking for? However, consider the following features of a digital currency bank account before making your choice.
#1. Consider the Bank Security
This is very necessary in the world of cryptocurrency. Always choose a bank that has a track record of successfully trading digital currencies without experiencing any big hacking or security concerns. Perhaps, you will want the peace of mind that comes with knowing your investment is secure. And also that any issues you have can be resolved by a competent customer service team.
#2. The Bank Convenience
Always choose a bank with an easy-to-use interface. It should be easy to monitor your crypto portfolio and make necessary transfers to your fiat accounts. Meanwhile, a respectable crypto bank will take responsibility for the customer’s crypto assets. This means they will be liable for any payments, including those that are hacked or declared irreversible. However, this is a key part you have to consider if you want to ensure the security of your assets.
#3. Find Out The Bank Fees Structure
Transaction costs associated with trading crypto and fiat currencies are frequently fairly high. Thus, while selecting a cryptocurrency bank account, you’ll naturally want to compare the various fees associated with a shortlist of possibilities. However, it’s worth noting, though, that crypto-friendly banks that charge more fees typically provide a greater quality of service.
Therefore, if you choose a bank simply on the basis of its low costs, be absolutely certain that you are comfortable with the value you will obtain for your money.
#4. Consider The Cryptocurrency Types
While all crypto-friendly banks will merge Bitcoin to some level, if you have more cryptocurrencies in your portfolio or intend to add them in the future, you should keep this in mind. Nevertheless, if you are interested in a certain type of altcoin, your research will be much more extensive than if you’re an Ethereum investor, for example.
If you enjoy the convenience of digital banking apps, you will want the same level of technology for your bitcoin transactions. The ability to view all of your legacy or traditional and crypto funds in one place is really convenient. Therefore, check to see whether your preferred crypto-bank has user-friendly Android or iOS apps.
#6. Consider The Bank International Availability
Cryptocurrency legislation varies by country, as different nations respond to the complexities of digital currency. If you choose a cryptocurrency bank in the United States but also conduct business in another nation. However, ensure that you can access your funds regardless of where you are located.
#7. Loyalty program
As is the case with regular banking services, some crypto-friendly banks have implemented loyalty and incentive programs to entice consumers. You may be able to earn rewards or points just by using a debit card linked to your Bitcoin bank account, or by introducing new clients. Here is the best cryptocurrency you can invest in, in 2021.
How Does Savings For Cryptocurrency Works?
There are some significant differences between the ways in which traditional and digital currency bank accounts allow you to save your money. These differences include the following:
- Gaining interest
Unlike traditional savings accounts for fiat currencies, crypto-based savings accounts do not offer compound interest. While your initial investment will continue to grow in value, the interest on that increase will not compound. That means you will typically need to spend or trade in order to generate significant gains.
>> Related Post: How To Spot And Protect Yourself From Crypto Pump And Dump Scheme
- Key Access
When you deposit your altcoin in a crypto savings account, ownership of the cryptocurrency might become quite unclear. Unlike digital wallets, crypto savings accounts require you to hand over your private keys, which are lent to third parties. Meanwhile, the borrower will pay you interest on this cryptocurrency. But there is a possibility that you may lose your entire crypto bank coin investment if the bank folds.
- Through Insurance
Americans are automatically covered by the FDIC up to a maximum of $250,000 in traditional banks. However, such federal insurance is not available for crypto-savings for now. Perhaps, this type of arrangement may result in a loss of your funds. Hopefully, you are understanding more about how you can make cryptocurrency and bank accounts work.
Lists Of Banks That Accept Cryptocurrency
Banks’ willingness to accept altcoins varies frequently. If you’re asking about which banks accept cryptocurrency, then check out the following:
It does not accept purchases of Bitcoin using a Visa debit card. However, it does allow you to use escrow platforms such as Paxful to send money directly.
It enables you to open a digital currency bank account that stores both your fiat and crypto currency in one place. Customers can fill their accounts using bank transfers, debit or credit cards, and cryptocurrency. As well as through currency exchange. Wirex currently supports the following major cryptocurrencies, Bitcoin, Ethereum, and Litecoin.
This is one of the industry’s most popular and user-friendly Bitcoin banks. As an online bank, Coinbase allows you to link your account and purchase altcoins as needed.
>> Related Post: Best Penny Cryptocurrency to Invest in 2021 With Low Risk
This fintech startup that provides banking services enables users to convert cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Ripple, and Bitcoin Cash to fiat currencies. There are no additional fees, and transactions are quite fast.
This service integrates with the majority of digital currency exchanges, enabling users to conduct Bitcoin buying and selling transactions as needed. However, this site supports several of the most prominent cryptocurrencies, including Bitcoin, Ethereum, Ripple, and Litecoin.
Fidor is a digital bank based in Germany with a strong partnership with Kraken. This essentially means that consumers who have accounts with both companies can use Fidor to purchase cryptocurrency at Kraken. Moreover, you can convert your Kraken crypto balance to fiat currencies and deposit them into your Fidor legacy or traditional bank account.
This European cryptocurrency bank employs its own in-house cryptocurrency teams. The bank’s relationship with Coinbase enables users to easily acquire Bitcoin via the new Cuber Wallet app, which supports both fiat and digital currencies.
Note: You need to always protect yourself against any kind of crypto pump and dump scheme. Here is how to spot and protect yourself from the crypto pump and dump scheme.
Now you’ve got an understanding of how Bitcoin bank accounts can work alongside traditional banking. It’s time to conduct some research into the best cryptocurrency banks for your needs. However, if you’re new to cryptocurrency, you will need to determine which altcoins to invest in. As well as where to store your digital currency. Hopefully, this article has enlightened you better on how to make cryptocurrency and bank accounts work.
For more articles on personal finance , visit the Neptunmag blog posts.