What does a cryptocurrency card mean?
There are more than 22 bn. payment cards (debit, credit and prepaid) that are in use across the globe (Nilson, 2018). Almost 2 bn. people do not prefer to “benefit” from banking services thereby a person has 3.5 credit cards approximately. Credit and debit cards have been in our lives since the 1950s and, certainly, they have changed the way we buy goods and services. Consumer behaviours are on the edge of a revolution once again -since the 1950s. To make it clear, the rise of blockchain technology -exclusively cryptocurrencies- means a strong alternative for the financial system. Cryptocurrency cards are one of the latest alternatives that blockchain technology provides. But, what does a cryptocurrency card exactly mean? And can they change consumer behaviours?
Origin of credit cards
Before we go into the details of cryptocurrency cards let us start by introducing how we met with credit and debit cards. Although their origins go back to 1920s when oil companies and hotel chains in the United States started to use a small paper card, the first modern credit cards were first established in the 1950s. But their area of usage was limited with dining restaurants, hotels and clothing stores. As the number of merchants who accept credit cards increased, the fame of credit cards exceeded regions. Most of the well-known financial services like VISA and MasterCard were established afterwards (Business Insider, 2015). Late 20th century was the time when debit and credit cards became extremely popular across the globe. Now, most of us use them in our daily lives without any doubt.
What is a cryptocurrency card?
At its simplest, a cryptocurrency card is a financial instrument that relies on cryptocurrency assets. It is easy to buy goods and services by spending assets via cryptocurrency cards. Although they seem quite similar to traditional cards there are important differences between them. First, traditional credit cards are backed by your credit rating while a cryptocurrency card relies on crypto assets. Second, traditional credit card holders often pay annual fees to their banks. Especially, if you are a seller there is a possibility of a transaction fee, which is between 1% and 4%. Another major difference is that when one has a cryptocurrency card, there is a high cashback reward. A detailed analysis of the cryptocurrency card, with examples, is going to be mentioned below. Keep reading 😊.
Crypto.com offers a variety of cryptocurrency cards which has different features. Their cards are called MCO Visa card. It is paired with a wallet app that supports more than 50 coins. Their cards are available only in the US, Europe and Singapore for now. Crypto.com has a token called `CRO` and the CRO token can be staked to MCO Visa card. As the amount of staked CRO increase, the status of crypto card level-ups. It is possible to see 100% cashback reward in Spotify and Netflix payments or 10% cashback reward in Airbnb payments. Crypto.com seeks for opportunities to expand its business by launching its card in the other regions of the world.
Paribu is a cryptocurrency exchange market which is based in Turkey. The CEO of Paribu, Yasin Oral, announced that they are planning to launch a cryptocurrency card. Paribu card owners will be able to buy goods and services through crypto assets. He also stated that the card will be backed by VISA, which means it can be used over 200 countries, including millions of sellers that rely on VISA.
Risks
To take into consideration, one of the most important features of blockchain technology (especially Bitcoin) is to remove third parties and intermediaries. Crypto exchanges must sign deals with financial payment systems to be able to design their cards. Cryptocurrency cards might be a step between traditional and digital. In addition to this, the world is shifting from petrochemical trends to eco-friendly trends. Therefore, a need for a cryptocurrency card -whether it is plastic or metal- seems less likely in the future when you consider the rise of QR codes.
Conclusion
In conclusion, consumer behaviours have drastically changed after the invention of payment cards. Traditional cards were so much promoted that they had been mailing to the households in the US when they started to become popular. This is how the most consumerist society in the world was created. Taking into consideration, 2008 mortgage crisis that started also in the US was heavily related to credits and consumer behaviours. Although we live under COVID circumstances and make fewer purchases, fiat money related credits are still on. In my opinion, cryptocurrency cards might reduce the greed for credits that human beings have by providing an adaptation process for the cryptocurrencies.
