Hodling is fun, but at the end of the day, everyone wants to buy something. This is why debit and credit cards connected to a cryptocurrency wallet are the key to mass adoption.
Of the many paths available for mass cryptocurrency adoption, which include decentralized finance (DeFi), non-exchangeable tokens (NFT), and stablecoins such as USDT, USDC (and many others), perhaps the simplest and most suitable path for cryptocurrency adoption is to be able to use cryptocurrencies for purchases on a daily basis with an integrated debit or credit card.
In 2021, more and more companies are offering cryptocurrency-based credit cards that give holders the chance to leverage the value of their cryptocurrencies in their everyday purchases, but is this just the latest money-making trick or a real sign of mass adoption?
Debit cards such as the one offered by Crypto.com allow users to convert their cryptocurrency holdings into a stablecoin (e.g. USDT) which can then be paid in-store via the VISA global payment network.
The Coinbase card and the cryptocurrency debit card offered by Uphold provide a similar service. All listed cards offer rewards to use as a percentage of each purchase (so-called Cash Back) you 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 “hodling” nature of many investors who follow the Gresham’s law of “bad money crowds out good money in circulation.”
As for what 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 loan allows the hodlers to keep accumulating
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 the transaction. Instead, it offers an interest-bearing credit limit.
The Gemini exchange plans to offer a BTC cashback card in the Mastercard network. This is another example that has taken the approach of the old loaning system, offering rewards and charging interest on balances carried over.
Users can spend fiat currencies and earn cashback rewards that are paid back in the form of Bitcoin.
Paying in dollars when stacking statistics is more in line with the idea of spending bad money in daily transactions while earning more crypto, but it does require users to have fiat currencies.
In the event that someone has only cryptocurrencies, he is forced to convert some of his resources into the accepted form of repayment.
Today, the majority of the world’s population either still benefits from the traditional financial system or belongs to a large population of unbanked people who are outside of all systems. The injection of blockchain technology and cryptocurrencies is either the next step in the process or offers a new way to enter the financial network.
For die-hard cryptocurrency fans who keep as much of their wealth as possible in cryptocurrencies, debit card options that allow users to spend their resources may be the best bet.
As many crypto investors work in positions 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 themself.
Older networks will eventually integrate blockchain technology
Visa and Mastercard have fully implemented the integration of cryptocurrencies and blockchain technology in their networks. Visa recently reported that its cryptocurrency cardholders spent over $ 1 billion in the first half of 2021.
It is possible that in the near future, the entire network will be based on blockchain, and users will regularly interact with digital currencies without even knowing it.
We don’t know how it all plays out in the long run, but the current trend of companies issuing cryptocurrency-related debit and credit cards shows no sign of slowing down.
04-08-2021, Mr Advice TEAM