Crypto might be slowly exiting the #crypto winter but cryptocurrencies are certainly far from becoming mainstream. Nonetheless their popularity has forced #payments players globally to take a stance with a noticeable number of crypto card offerings. Let’s take a look.
A cryptocurrency is a form of payment with which people can buy goods and services, but it’s fair to say that much of the interest so far has been speculative. Crypto card offerings are signaling a shift from speculation to the transactional, payments aspect, and as such they are worth paying attention to as a potential move in a more mainstream direction.
There are two main features that today’s evolving crypto card landscape is offering:
👉 The ability to pay for goods and services (at stores where Visa and Mastercard are accepted)
👉 The ability to convert crypto to fiat currency and withdraw these funds in fiat currency as well
A further differentiation needs to be done between (crypto) credit and debit cards. Crypto credit cards are typically fiat credit cards that are offering their most common incentive – rewards – not in the form of miles, cash or points as typical credit cards do, but in cryptocurrencies, i.e. a percentage translated in #bitcoin or some other connected cryptocurrency on the back of every purchase (every card offers selected cryptocurrencies to choose from). The drawback is that these rewards naturally carry the inherent volatility of the originating cryptocurrency (for the reward amount), but there is also the advantage of not having to incur the trading costs associated with buying crypto, which can be also a good starting point or incentive to experiment with owning crypto.
On the other hand, crypto debit cards function in a different way and connect to a user’s cryptowallet, which is the equivalent of a bank account in crypto world (a cryptowallet is essentially a #software application that allows its users to store and access their digital assets, i.e. cryptocurrencies). In this way, owners of crypto debit cards can make payments using the funds in their crypto wallets. It needs to be noted that for the transaction to be able to be executed, the conversion of crypto to fiat currency is a pre-condition that automatically takes place as part of the offered functionality.
In an increasingly versatile digital payments arena, the offering of cryptocurrencies has become a tool of choice and diversification rather than one of endorsement. As such the proliferation of crypto cards should be seen as an intermediary evolutionary step, however one big oxymoron cannot go unnoticed: what started as a (to be) disruptor to the traditional #finance system, is making its way through one of its most established rails – credit cards – but mostly due to its weak penetration rather from a strength position.