There’s no shortage of digital currencies, tokens, coins, etc but if there would ever be one that could be described as the pinnacle of cryptocurrencies, it would be Bitcoin. This digital currency got its start in 2009 and it was the brainchild of Satoshi Nakamoto whose identity remains unknown.
The value of Bitcoin has continued to surge as its acceptance has grown. As of February 2021, it’s currently trading at all-time highs of over $55,000. A lot of people are now sitting up and taking notice with most of them wondering if it’s at all possible to buy Bitcoin with a bank account?
Bitcoin isn’t a government-issued currency; it’s run instead by a completely decentralized authority. There are no physical tokens. Bitcoin balances are kept on a public ledger that’s accessible to everyone.
All transactions are verified on the blockchain with significantly lower transaction fees compared to what banks and financial institutions charge for conventional currencies.
Bitcoin has gained widespread popularity over the years. It’s also one of the most widely accepted digital currencies. Even Tesla announced recently that it will soon allow customers to purchase its cars using Bitcoin. All the more reason for people to start buying some Bitcoin.
What banks allow you to buy Bitcoin?
People generally try to buy Bitcoin using debit or credit cards but they often run into issues. Some card issuers don’t allow cryptocurrency purchases at all. There are high fees to take into account as well when purchasing Bitcoin using a card.
That’s why a lot of people now prefer buying Bitcoin from their bank account. There are several benefits to doing this. The fees tend to be much lower compared to credit and debit cards.
Cryptocurrency exchanges also prefer transactions through bank accounts as there’s a lower risk of a chargeback. Bank transfers are deemed to be irreversible so they’re not taking on a lot of risks that could sour their relationship with their payment processors.
Despite the gaining popularity of Bitcoin, most major conventional banks still don’t allow customers to purchase the digital currency. Since there still exists a degree of risk as far as the wider cryptocurrency market is concerned, Bitcoin ends being treated the same as other cryptocurrencies that aren’t as widely accepted.
Major banks like Wells Fargo, Citigroup, Chase, Bank of America, Capital One, and others don’t allow their customers to buy Bitcoin with a bank account. They’ve effectively left the playing field open and that’s where neobanks like Aspiration have capitalized heavily.
How do I buy Bitcoin with a bank transfer?
Before you can buy Bitcoin with a bank transfer, you need to find an exchange that works best for you. Bitcoin is actively traded online and there are dozens of exchanges that you can sign up for if you’d like to purchase the digital currency.
Almost all cryptocurrency exchanges allow their customers to buy Bitcoin with their bank accounts. You first start by adding money to the account that you create on the exchange.
Most exchanges have lower processing fees for customers that pay by bank transfer and they often allow higher spending limits as well compared to customers who utilize debit or credit cards.
For example, customers in the United States can use Coinbase, one of the leading cryptocurrency exchanges today. It accepts bank transfers via ACH in the US and SEPA in Europe.
Once funds have been deposited in the account, you can then use the trading platform that the exchange provides to buy Bitcoin. There’s no limitation on the exchange’s part as to which banks can be used to initiate a transfer. It depends on the customer’s bank whether they allow transfers for cryptocurrency purchases.
Neobanks don’t tend to place the kind of restrictions that conventional banks do. That’s why many people now use them to buy Bitcoin with a bank account.
Can you buy Bitcoin without a wallet?
The exchanges that people use for trading digital currencies provide their customers with a wallet. However, the customers don’t necessarily have full control of that wallet. In this scenario, the exchange merely holds on to the customer’s Bitcoins for them.
Since the exchange has control over the private keys for the wallet, it’s a less secure solution, particularly for those who invest heavy sums in digital currencies. It’s quite possible to end up losing all of your Bitcoin if the exchange gets hacked. There are plenty of examples of this happening.
That’s why a lot of people who are serious about adopting cryptocurrencies opt for their wallets. Think of these wallets as software programs that can store digital currencies. In this case, you have full control over the wallet’s private keys.
These keys are mathematical proof that you own a certain number of Bitcoin. The only risk here is that if the wallet and its private keys are lost then you would lose all access to the Bitcoin. A recent NYT report mentioned that about $140 billion worth of Bitcoin is currently held in lost wallets.
Potential disadvantages of Bitcoin
Volatility remains one of the biggest potential disadvantages of Bitcoin. It’s still not immune to rapid movements in price. There have been boom and bust cycles over the years where the price of Bitcoin has increased rapidly in a manner of days. Once the bubble bursts, it falls significantly and may not recover for a long period.
That’s largely because a lot of people still treat Bitcoin as a speculative investment, as a way to make a quick buck. Even if the initial price rally is driven by positive sentiment or a major corporation changing their attitude to Bitcoin, many speculative investors jump in to take advantage of the situation and that pushes the price up.
It snowballs from there as more and more people enter the market trying to ride the wave. It ultimately reaches a peak from where the price starts falling. Many who got in at the peak are left holding the bag as price drops in the tens of thousands of dollars can happen in mere days.
While it’s true that many companies are now accepting Bitcoin as a payment method, it still has a long way to go before it can be as ubiquitous as fiat currency. The volatility remains one of the main reasons why a lot of people still don’t believe in using Bitcoin for their purchases. The value of their holdings could significantly decrease the next day.
The risk attached to the loss of wallets is another disadvantage. There’s not much one can do if a wallet is lost, no matter the amount of Bitcoin that was stored in it. That level of insecurity is not faced with fiat currency in bank accounts.
Other methods of alternate neobanking
Neobanks, also called challenger banks, are on a mission to revolutionize the banking industry. They have particularly been of great help to the remittance industry that was previously at the mercy of the big banks. These banks subjected customers to ridiculous transfer fees and exchange rates with slow intermediaries. This meant that funds transferred from one country to another would often take several days to clear.
Neobanks have been a tremendous alternative for currency conversions as well. Where banks charge fees on top of providing bad exchange rates, neobanks allow their customers to convert currency at interbank rates. They get almost the same rates that the big banks get when they transact amongst themselves. This helps customers save a lot of money.
They enable customers to open digital wallets so that they can hold multiple currencies at the same time. So when the customer uses their debit card in New York, they pay with the funds in their USD balance but they can also use the same card to pay funds from their GBP balance in London.
Some neobanks can help you fight climate change
These banks of the future realize that the modern customer is more knowledgeable than ever before about the impact of their choices on the planet. So they take that into account and provide customers with services that are in line with their outlook on the world.
Climate change is a cause that a lot of people care very deeply about. They may be shocked to know that the four biggest banks in the United States lend over $240 billion of their customers’ money to fund fossil fuel projects every year.
Like its customers, Aspiration is deeply concerned about the future of this planet. That’s why it’s 100% committed to clean money. Whenever customers swipe their cards, Aspiration plants a tree. Every $1,000 transferred to Aspiration has the planet-saving climate impact of 6,000 fewer miles being driven by the average car.
Customers can have the peace of mind that the company they choose to bank with shares their values, doesn’t lend their money out to fossil fuel projects, and does something to fight climate change.