Crypto-Linked Cards Spent Over $1 billion in first 6 months of 2021, According to Visa
On Wednesday, Visa announced that over $1billion worth of cryptocurrency had been used to buy goods and services in the half of 2021. This spending was done on the cards Visa provides that are linked to a cryptocurrency.
Without releasing precise numbers, Visa also made a comparison to spending on their crypto based cards over the same period in 2020 and 2019, saying that the amounts were a fraction of the spending in 2021.
In an interview with CNBC, Visa CFO Vasant Prabhu said, ‘We are doing a lot to create an ecosystem that makes cryptocurrency more usable and more like any other currency. People are exploring ways in which they can use cryptocurrencies for things they would use normal currencies for. There are lots of issues in terms of volatility, etc. But that’s up to the owners of cryptocurrencies to manage and track.’
Mastercard recently completed a research project which found out that 93% of people who live in North America are planning to use a cryptocurrency or another new technology in the next year. Examples of other emerging technologies include QR code systems, contactless, and biometrics. Alongside this, the study also highlighted that 75% of millennials would use a cryptocurrency, if they had a better knowledge of how they work.
On a similar train of thought, Visa has predicted that cards linked to crypto as well as other new payment methods are capable of disrupting the $18 trillion worth of cash and checks that is spent every year around the world.
Currently, Visa have partners that give consumers the ability to spend from their cryptocurrency wallets with over 70 million merchants around the world. These partners are Circle, BlockFi and Coinbase.
But despite the predictions and performance of cryptocurrencies that Visa has witnessed, the company does not plan to add cryptocurrency to its own ecosystem, like Tesla and Microstrategy have done. Prabhu continued, ‘We don’t hold crypto currencies on our balance sheet today. We hold currencies on our balance sheet that we need to run our business. We hold currencies that we get paid in or we pay people in. That tends to be the dollar, euro, pound. So we don’t have plans to hold crypto currency because it’s not typically the way we get paid or the way we pay people’.
What are crypto-linked cards?
Cryptocurrencies have become a huge industry. There are hundreds of billions worth of assets being held in regulated digital wallets, used by tens of millions people. However, one of the stumbling blocks towards mass adoption of cryptocurrencies is how to spend them. This is where crypto-linked cards come into play.
A crypto linked card, or crypto card is a type of credit or debit card that lets you spend cryptocurrency, and in some cases earn rewards too. These cards, particularly the ones that reward consumers, work similarly to a more normal credit rewards card. Everytime you make a payment on your card, you earn points or rewards. Another form of cryptocard works more similarly to a debit card. In these situations, the funds are withdrawn from a wallet that contains a set amount of cryptocurrency within it. You have to have cryptocurrency available to make a purchase on it.
Using Visa’s ecosystem as an example, they have 50 partners that are the leading crypto platforms, each of these is linked with a card program. This means that it is easier to use and convert digital currency. What is especially useful about this system is that a shop doesn’t need to specifically accept cryptocurrencies.
It is a very exciting time in the financial world. Digital markets show a huge amount of promise, especially as they make their way into our day to day lives more and more. This integration could see using digital currencies almost seamlessly alongside other more traditional payment methods.
As we have seen, the data Visa provided highlights the scale of money people have spent in 2021. The growth of this is huge when comparing the numbers to 2020 and 2019. It will be interesting to see if this continues into the next year, particularly as the cryptocurrency markets can be so volatile. For instance, in April Bitcoin hit an all time high of $65,000 per unit, but has fallen approximately 45% since then. This volatility is potentially one of the biggest reasons more people haven’t uptook the digital currency. Time will tell if that will change alongside easier access to spend a cryptocurrency.
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