Payment cards could be the missing link in mass cryptocurrency adoption

Hodling is cool, but ultimately everyone wants to buy something. This is why debit and credit cards connected to a cryptocurrency wallet are key to mass adoption.

Of the many avenues available for mass cryptocurrency adoption, which include decentralised finance (DeFi), non-convertible tokens (NFT) and stablecoins such as USDT, USDC (and many others), perhaps the simplest and most appropriate path for crypto adoption is the ability to use cryptocurrencies for everyday purchases using an integrated debit or credit card.

In 2021, more and more companies are offering cryptocurrency-based credit cards that give holders the chance to use the value of their cryptocurrency for everyday purchases, but is this just the latest gimmick used by companies to make money or a true sign of mass adoption?

Debit cards, such as the one offered by Crypto.com, allow users to convert their cryptocurrency holdings into stablecoin (e.g. USDT), which can then be paid in-store via the global VISA payment network.

The Coinbase card and the cryptocurrency debit card offered by Uphold provide a similar service. All of the aforementioned cards offer rewards to be used in the form of a percentage of each purchase (so-called Cash Back), which you will receive in Bitcoin (BTC) or another cryptocurrency, depending on the platform. 

The ability to make payments using cryptocurrencies can help make good use of the cryptocurrency ecosystem, but it also goes against the 'hodge-podge' nature of many investors who subscribe to Gresham's Law, which states that 'bad money drives good money out of circulation'.

In terms of which money is spent and which is saved, good money or cryptocurrencies in this case will be saved, while fiat currencies will be spent in daily transactions.

Crypto credit allows breeders to continue to accumulate

Credit cards, such as the recently launched Visa Signature BlockFi Rewards credit card, do not require prior conversion of the user's cryptocurrency assets to pay for transactions. Instead, it offers an interest-bearing credit limit.

Gemini Exchange plans to offer a BTC cashback card on the Mastercard network. This is another example that has taken the approach of the old credit system, offering rewards and charging interest on transferred balances.

Users can spend fiat currencies and earn cashback rewards, which are repaid in Bitcoin.

Paying in dollars when stacking stats is more in line with the idea of spending bad money in daily transactions while earning more crypto, but this requires users to hold fiat currencies.

In the event that someone only holds cryptocurrencies, they are forced to convert a portion of their holdings to an accepted form of repayment.

Today, the majority of the world's population either still uses the traditional financial system or belongs to a large population of unbanked people who are outside all systems. The injection of blockchain technology and cryptocurrencies is either the next step in this process or offers a new way to enter the financial network.

For die-hard cryptocurrency fans who hold as much of their wealth in cryptocurrencies as possible, debit card options that allow users to spend their assets may be the best option.

As many crypto investors work in jobs that still pay in fiat currencies, credit card options offer a way to use their income to make purchases while continuing to accumulate without having to convert to crypto themselves.

Legacy networks will finally integrate blockchain technology

Visa and Mastercard have fully implemented the integration of cryptocurrencies and blockchain technology into their networks. Visa recently reported that its cryptocurrency-enabled cardholders spent more than $1 billion in the first half of 2021.

It is possible that in the not-too-distant future the entire web will be blockchain-based, with users regularly interacting with digital currencies without even knowing it.

We don't know how this all plays out in the long term, but the current trend of companies releasing cryptocurrency-related debit and credit cards shows no signs of slowing down. 

04-08-2021, Mr Advice TEAM


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