Wednesday, February 7, 2018

You may not buy Bitcoin by credit card

Lloyds Bank announced that it would prohibit customers buying cryptocurrencies by credit card.

International Business Times: Lloyds Bank bans customers from buying bitcoin on their credit cards

Similar movements emerged in other credit card companies and banks. In recent days, the price of Bitcoin is extremely frustrating. Just a few month ago, every person who bought Bitcoin gained lots of money because its price is rapidly rising. Therefore, not a few people attempted to invest in Bitcoin. But the situation has been changed. The price of Bitcoin fell down by a third in a few weeks. I guess some people bore a huge debt.

Card companies seem to worry about the risk of loan unreturned. Thus, a person buys Bitcoin by credit card. He expects he will sell the Bitcoin at a higher price. But the price of Bitcoin dramatically falls. He sells the Bitcoin, but he cannot return the money he loaned. It is tragic both for him and the credit card company.

This problem will not occur when you buy Bitcoin by fiat. Therefore, Debit cards will be continuously available to use for purchasing cryptocurrency.

I think this new policy is acceptable. Protecting customers should be prioritized.

When the value of cryptocurrency becomes stable, is it rational that this regulation is amended? I am not sure. Also, cryptocurrency is one form of currency, though it is not accepted by any governments. Buying Bitcoin by credit card is no other than money laundering. It is a potentially risky act.

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