This article is basically a warning for anyone who might face if they buy Bitcoin with credit cards as the repercussions can become a financial nightmare. If you are here to know how to buy Bitcoin with credit cards then this article is not for you.
Bitcoin has been here for about 15 years now. Its volatility is what makes it unique from other commodities in the world. Created initially as an alternative to the bank’s payment system, it slowly lost that war and now has become more of a commodity, similar to gold.
Bitcoin made its name worldwide when it reached an ATH of 21k in December 2017. One of the main reasons was a lot of mainstream media coverage. The apparent reason mainstream media never thought such a thing would happen as Bitcoin is not a government project but a project run and maintained by a community that believed it would be a currency of the internet.
As of now, it has not the only currency of the internet, but now, it is undoubtedly the most sought-after commodity of the internet.
Why shouldn’t you buy Bitcoin with credit cards?
There are many reasons to avoid credit cards for purchasing Bitcoin, and below are the top 5 reasons that we think can destabilize your finance and also reveal your identity to hackers and spammers.
A credit card is borrowed money.
One of the main reasons to avoid credit cards is that it is money provided by those financial institutions who charge a heck of interest on it. It is always recommended to use money owned by you. A small investment can become considerable every month if you have the patience and discipline to invest regularly. By small amount, we mean what you can afford to spend and forget.
Check out the fees.
For buying Bitcoin, you would use an exchange. Almost all exchanges charge a fee whenever you make a purchase. This fee differs from exchange to exchange depending on its popularity of it.
The bigger that exchange, the more significant the fee. Apart from the exchange fee, you will incur a processing fee and currency exchange fee on the purchased amount on your credit card from the bank.
Therefore always check the fee first and decide how much you want to invest. When you purchase with a credit card, these fees will get added to the bill and might become a significant amount on your borrowing.
Bitcoin with credit cards, reveal your Identity.
Whenever anyone uses their credit card, it is evident that the bank and the government will know who used it. The bank constantly monitors credit card transactions, which means the government knows you have made that purchase.
If you still want to use your credit card, avoid using it on centralized exchanges (CEX). We recommend using decentralized exchange (DEX) for buying Bitcoin with a credit card.
Regular investment is profitable
As stated earlier, Bitcoin is volatile. If the price of Bitcoin has gone up, it will go down. When the price of Bitcoin went up by 21k in 2017, it did go down to 3k in 2018, such volatility can be risky if you use a credit card.
This volatility is another reason why Bitcoin has become so popular and its USD value has gone so high in the past 15 years. Still it is very risky to use a credit card to buy Bitcoin as the price can fall at any time.
Therefore periodic investment either monthly or weekly by using your own money can always be a profitable investment as you take different positions on Bitcoin price and by that, you capitalize on the volatility of Bitcoin.
Invest the money that you think you can afford to lose if the market crashes. Your investment will come back and might give your a good profit. When will it happen no one can predict as Bitcoin has defied all odds to date.
Therefore Bitcoin investment is secure, but you cannot say it is stable. Using your own money will always be fruitful. Investing small and long is the mantra to becoming a Bitcoin millionaire.
Still want to buy Bitcoin with credit cards then use a DEX
Privacy is a major concern at this time and also a need for everyone using the internet. It is evident that those users who avoids it are those who are facing the problem of losing money.
One of the biggest reasons to avoid centralized exchanges (CEX) is that every user has to undergo identity verification, which can be critical if a particular country’s government decides to ban or put harsh regulations in place for cryptocurrency trading.
Harsh regulations can be anything from controlling the amount of BTC a user can buy to using the tax system to control a user’s buying/selling capacity.
If you want to buy Bitcoin anonymously using a credit card then it is better to use a DEX. That will still give your privacy but will not provide you complete privacy on your transactions.
DEX, or decentralized exchange, has recently gained a lot of new users as per the registered data since governments in many countries have already implemented or are implementing strict regulations on cryptocurrency trading.
The whole reason you should avoid buying Bitcoin with borrowed money is simple: you will not be able to repay the interest and niether the capital within the stipulated timeline as the bear market can hit anytime.
Your privacy will get compromised when you buy Bitcoin using your credit card. With an increase in identity theft, it is always recommended not to use credit cards for such transactions as criminals, hackers, and spammers use such accounts for their benefit.
Scammers always target those who use a credit card for making a purchase on the internet. The same can happen to you if one of the exchanges loses user data due to a hack as in the past cryptocurrency exchange have been hacked.
The same is applicable if you use a wallet to buy Bitcoin with credit cards. Wallets are also prone to such hacks due to the negligence of a user or due to malware installed on the device storing the wallet.
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