Cryptocurrency Acceptance

Can Your Credit Card Machine Take Bitcoins?

Bitcoin ProcessingNote: as of February 2014 there are not many terminals widely available that will take Bitcoin and other Cryptocurrency. In some countries the virtual currency is considered a commodity and not actual money, and the fluctuation in the price of bitcoins means that for merchants there would need to be some kind of exchange rate conversion in the machinery.

Bitcoin Credit Cards

Debit and credit cards that access a bitcoin account are cautiously being floated by some of the bigger exchanges. However, due to the cryptographic nature of the coin (which takes up a lot of bits, hence the name) and the fractional nature of the way things are purchased it is generally accepted that the card essentially accesses an existing account. Even the smartcards and chip-and-pin credit cards available today might not properly handle the entire digital wallet efficiently. Compounding this is the fact that many current credit card terminal protocols still are based around the 14/4 modem you can occasionally see on the Antiques Roadshow.

Bitcoin Exchange Rates Confound Traditional Processors

To be sure, there are many more merchants that take payments in Bitcoins, and they are an attractive alternative to traditional credit card processing because (1) the transaction fees are lower than those charged by credit card processors and (2) there are no chargebacks, which are an important consumer protection but also widely abused. The downside to buyers is that you have a harder time getting your money back if you feel that you have been scammed or did not get what you paid for.

Currently, there are some ATMs in the world that allow cash to be exchanged for Bitcoins. Whether the actual coin number is stored as a QR code, in the cloud, or on a USB device, or even encoded onto a physical coin is up to the user and the device.

Some of the issues with Bicoin credit cards and their potential goes to the fact that in many nations you can buy services with the cryptocurrency, but not physical goods. In December 2013 China's central bank prohibited other financiers in that country from using them. In the United States, exchanges are regulated in the same way as other services dealing with dollars, so KYC laws and laundering regulations are in place. If you were able to use a bitcoin credit card to make a big purchase, you might not have much hope of resting on anonymity. In fact, the very use of a Bitcoin card might put you into a category with unsavory types. If anyone remembers the late 1990s when pagers became popular because drug dealers used them, then you know that the association with illicit activity died when text messaging on cellphones made them obsolete.

The upside of Bitcoin cards would be that they are a great workaround when you consider how much governments manipulate their money supply and exchange rates. Because bitcoins are created on a fixed schedule, and aren't printed foolishly by Federal Reserve types in order to push up a stock market into a bubble far beyond the Real Estate fiasco, then they could be useful in places like Zimbabwe where the price of a single egg exceeded one hundred trillion dollars. In places like Cyprus, where money was seized from bank accounts to balance the nation's books, the Bitcoin may represent an attractive alternative to traditional banking, with the major caveat that if you buy high (like when exchange rates exceeded $1000 USD) you might get kind of frightened when the rate hits lows like $50. On the Vice-Versa side, if you invested when the things were just $2 you can probably move into a mansion next to the Clampetts, even if you aren't as cultured.