Note: Tinkercoin has since “pivoted” and no longer provides this service. If you want to buy Bitcoin with Credit Card, the best service currently is Circle, which charges you around 3% extra from the spot price for using a credit card, but no other transaction fees. In addition, Coinbase still seems like one the best ways to buy your first Bitcoins. Other companies might fill in this niche.
If you’re new to Bitcoin and want to buy Bitcoin with a credit card, there’s a new service that just opened for you: Tinkercoin. There’s one catch though – you can only buy $20 worth of Bitcoin, once, and nothing else. This is, therefore, a great way to get introduced or introduce people to Bitcoin. Even though $20 worth of Bitcoin doesn’t sound like much, it seems like there is no quick and easy way for someone to get their hands on some Bitcoin and play around with it, just to get a feel for cryptocurrencies and how they work. Tinkercoin solves this problem in a very neat and efficient manner. So next time you have a friend who has no clue how to buy Bitcoin (with a credit card or otherwise) but is curious enough to spend a little to actually have some Bitcoins, Tinkercoin is a good site to refer her to.
Remember why it is so hard to buy Bitcoin with credit card: Bitcoin transactions are irreversible whereas credit card transactions/PayPal transactions are not. This means the seller of Bitcoin is taking and enormous risk by selling his Bitcoins for credit card because the charge can be reversed. Tinkercoin charges you $5 for this, so it covers their credit card fees and some buffer to cover potential chargebacks. Also, they reduce risk by asking you to connect your Facebook page, and some other details.
Tinkercoin is a great service to get someone introduced to Bitcoin. However, don’t try to think of it as a place where you can buy thousands of dollars worth of Bitcoin on your credit card. Also, beware of places that promise you the same.
If you’re in the US, Coinbase is perhaps the best way to buy Bitcoins by connecting it with your bank account. Once you’re verified to the highest level on Coinbase, they give you the option to connect your credit card. They hold the credit card on file – in case a normal ACH deposit comes back with insufficient funds, they will charge your credit card. I’ve contacted Coinbase and they said this is just a backup option and there is no way to really buy Bitcoin with credit cards on Coinbase without a rejected ACH withdrawal (I wouldn’t recommend this route due to charges involved).
If you’ve used Tinkercoin to buy Bitcoin with your credit card, please share your experience.
Photo Credit: Philip Taylor