Of the many avenues available for mass cryptocurrency adoption, which include decentralized finance (DeFi), layer-one protocols, non-fungible tokens, and stablecoins, perhaps the easiest and most appropriate route for the general public is to use Ability to use cryptocurrencies for everyday purchases with an integrated debit or credit card.
In 2021, a growing number of companies are offering cryptocurrency-based credit cards, giving holders the ability to use the value of their cryptocurrencies for daily purchases, but is this just the latest gimmick used by companies to make money or a real one Character? the mass adoption?
While the traditional financial sector is not discussed much in this newsletter, as its focus is on exploring the various sub-sectors of the cryptocurrency ecosystem, crypto assets are fast becoming a new asset class recognized by the global financial system.
Debit cards open up crypto holdings
It’s important to clarify the differences between the card services offered by some of the biggest players in the game, including Crypto.com, BlockFi, and Coinbase.
Debit cards such as those offered by Crypto.com allow users to convert their cryptocurrency holdings into a stablecoin, which can then be transacted on Visa’s global network.
You can now top up your card with $ ADA, $ DOGE, $ LINK, $ MATIC, $ UNI and 12 other new supported stablecoins and tokens!
Available in the US, Europe, UK, Canada, Singapore, and APAC.
Details https://t.co/ChXzOjfxlB pic.twitter.com/qTVsXfy4KZ
– Crypto.com (@cryptocom) July 20, 2021
The Coinbase card and crypto debit card offered by Uphold offer a similar service, with both offering rewards in the form of a percentage of each purchase that is returned in Bitcoin (BTC) or another cryptocurrency depending on the platform.
The ability to make purchases with your holdings can help make the cryptocurrency ecosystem a good use case, but it also goes against the “Hodl” nature of many investors who abide by Gresham’s law that “bad money is good.” Distributes money in circulation ”.
In this case, when it comes to what money is spent and what money is saved, good money or cryptocurrencies are saved while fiat currencies are spent in daily transactions.
Crypto credit allows hodlers to keep piling up
Credit cards such as the recently launched BlockFi Rewards Visa Signature Credit Card do not require any prior conversion of a user’s crypto holdings in order to pay for transactions. Instead, it offers a credit limit with an interest rate attached.
The Gemini exchange plans to offer a BTC cashback reward card on the Mastercard network. This is another example that has taken the legacy credit system approach by offering rewards and charging interest on balances borne.
Users can spend fiat currencies and earn cashback rewards that are paid back in the form of bitcoin.
Paying in dollars when stacking stats is more like the idea of spending bad money in daily transactions while making more crypto, but it requires users to have fiat currencies to spend.
In the event that someone only owns cryptocurrencies, they would be forced to convert part of their holdings to the accepted form of repayment and potentially suffer a taxable event depending on the laws of their place of residence.
Currently, the majority of the world’s population either still uses the traditional financial system or belongs to the large population of non-banks that are outside of all systems. The injection of blockchain technology and cryptocurrency either adds another step to the process or offers a new path into a financial network.
For die-hard crypto fans who keep as much of their assets in cryptocurrency as possible, debit card options that allow users to spend their holdings may be the best option.
Traditional financial system vs. decentralized financial system. #defi #blockchain #crypto
Credits: Financial Times pic.twitter.com/1dc0jJxvm3
– BlockchainAssets (@BAXASSETS) December 30, 2019
Since many crypto investors have jobs that still pay in fiat currencies, credit card options provide a way to use their income for purchases and keep piling up without having to switch to crypto yourself.
Related: Bitcoin payments for real estate are gaining traction as crypto owners seek monetization
Legacy networks will eventually integrate blockchain technology
Visa and Mastercard have fully embraced the integration of cryptocurrencies and blockchain technology into their networks. Visa recently reported that crypto-active card holders spent more than $ 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.
How everything will play out over the long term is unclear, but the current trend of companies issuing cryptocurrency-related debit and credit cards shows no signs of slowing. They are a proven marketing tactic used in industries large and small to attract new users.
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The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every step of investing and trading involves risk, so you should do your own research when making a decision.