Monday, 25 May 2020

Crypto Credit Cards are Inevitable

Crypto Debit cards too.
While in 2018 traditional credit card providers have made it more difficult to buy crypto with them, with the likes of Bakkt getting into the picture crypto futures, ETFs and now crypto credit cards seem like inevitable things to come in a mainstream way.

Wall Street’s entry into the crypto sector changes everything in very significant ways. The CEOs of the likes of Coinbase and Cardano aren’t the first or the last people to say this on repeated occasions. With the significant rise of crypto funds and with Coinbase on the path to list SEC-regulated crypto securities, it’s a new world. Ironically, this is bigger news than the bear market of Bitcoin’s price, that isn’t getting fair press.

Mike Novogratz, former Wall Street executive and CEO of Galaxy Digital Capital Management, used to work at Goldman Sachs. He might have been early to pivot from finance and traditional investing into crypto, but he isn’t alone. In fact, in 2018, we are starting to see the trickle from the likes of J.P. Morgan and Goldman Sachs turn into the actual beginning of an exodus of top talent pivoting into blockchain and crypto. We are seeing the same thing already with former Coinbase and Binance employees, where they are starting their own projects.

Clearly our 401k needs a rethink with the advent of crypto. The SEC has drawn out the process of the advent of Bitcoin ETFs with multiple delays. Meanwhile smaller countries like Malta and more progressive countries like South Korea are creating more crypto-friendly regulations that are attracting blockchain startups and innovative projects.

Credit card companies need either to pivot or be disrupted in the case of crypto credit cards. In spite of the quotes of Wall St. executives on the merits or inadequacies of Bitcoin and crypto, the reality is that their people are earnestly working on crypto since bigger investors are showing more of an interest. Crypto custodian services are definitely on an upward trend. Blockchain innovation in Asia’s lead over the U.S. and Europe is widening with bigger winners emerging such as the likes of Bitmain and Binance, that makes apps like Coinbase appear relatively small in comparison.

The wild market for cryptocurrencies is attracting more whales and, while Coinbase has adapted well to the demand, Wall Street’s inertia and delay in getting into the space has them lagging behind Asian investors. For the future of payments then it’s somewhat inevitable that crypto credit cards will become more common and facilitate the future of transactions in the emerging token economy. I think this will still surprise a lot of people.

In late 2018, we’ll have reached a “tipping point” where mainstream financial services will more rapidly integrate with crypto custodian services and where major blockchain third-party platforms can accelerate with more mainstream integrated partnerships. As Millennials show more of an interest in investing in crypto than traditional stocks (a game rigged in favor of richer GenX and Boomers), the entire financial investment system needs to pivot to adapt to consumer demand.

A crypto credit card will help consumers feel that their crypto assets are more tangible, just as the likes of cross-border payment apps such as Revolut and Transfwise have come out with their own credit cards. The convergence of FinTech and crypto means how we see the traditional “credit card” also will change. Millennials crave more flexibility in how they use and store their crypto assets and this won’t just be more mobile wallets, it will mean more credit cards and physically secure devices (hardware wallets), such as that of Ledger.

Crypto will change the way we perceive of credit cards as they evolve with the times. The age of the fiat monopoly on transactions and the American dollar as the global baseline currency may be short lived.

By Michael K. Spencer 
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