Our regular columnist, technology expert and analyst Chris Green, looks at simply trying to spend a bit of cryptocurrency…
Back in February, when the crypto space was taking repeated fire from Bank of England governor Mark Carney, I wrote that “crypto is, for now at least, a currency you invest in and hold rather than a currency you spend.”
The likes of Bitcoin, Litecoin, Ripple and Ethereum continue to be castigated by the established banking community for this. The financial services sector is still holding these and other cryptocurrencies to the same measures of success as fiat currencies. As we explained back then, the cryptocurrencies of the moment are more investible assets rather than spendable units. However, two months is a long time in financial services and things are changing rapidly – crypto is becoming significantly more spendable in its own right.
What has changed is the simplification of a mechanism for making that transaction with a business or service. A raft of new prepaid and account-based debit cards are combining fiat and crypto into a single spendable mechanism, moving us ever closer to being able to buy a daily newspaper, a hamburger or a new microwave oven with our hard-earned Bitcoin.
The Missing Link
Card services such as FuzeX, cex.io and HashCard are providing individuals with a non-threatening mechanism to buy crypto, to convert fiat to crypto (and visa versa) and to conduct everyday transactions that can be ultimately deducted from a crypto balance. Moreover, these cards provide a mechanism to spend crypto that is compatible with the vast majority of retailers today, requiring no investment or workflow changes at the till or point of transaction. If a retailer can accept Visa or MasterCard, it can accept a hybrid card that connects to fiat and crypto accounts on the back end.
A case in point is crypto loyalty scheme Energi Mine. It is partnering with companies looking to promote energy-saving best practice. Its token will serve as the equivalent of Nectar points for those who save energy in the workplace and at home. It is partnering with FuzeX, so that Energi Mine users will have an easy conduit through which to convert and spend the EnergiTokens (ETK) they accrue, using them on everything from an electricity bill to a bucket of tofu.
These cards are the missing link needed to bridge the consumer experience of money with cryptocurrency assets.
People understand credit and debit cards. It has become non-threatening technology like a television and a kettle. People are comfortable with how they work and with using them in public. Young and old – both are comfortable with cards. As a format, cards transcend physical and digital transactions. They make for a perfect link between fiat and crypto.
Challenger banks such as Revolut have also seen potential in the hybrid card model. It has demonstrated today that multiple currencies – fiat and crypto – can be managed and used via a single card. While services such as Curve, which is available and operational now, have proven that the ‘one card, many accounts’ model both works and can be managed by a user easily using a simple mobile app. It means that card operators could leverage Open Banking principles and act as an aggregator for exchanges, other cards, bank accounts and crypto wallets.
The question is, how long will it now take the established banks and credit card companies to jump on this bandwagon as well? Not any time soon alas.
If we take the UK as a case example, most high street banks are still fleeing the crypto scene and even blocking the use of their own credit and debit cards to facilitate crypto purchases. Similar reluctance abounds in the US as well. However, physical and digital retailers are showing growing interest in accepting crypto which will eventually force the hand of the established financial services space into meeting business and consumer demand.
Ultimately, it doesn’t matter whether your local burger van takes native Bitcoin or just Visa and MasterCard. With the advent of hybrid card services, it is ultimately irrelevant as the consumer can decide whether to ultimately fund a purchase with crypto or fiat.