The cryptocurrency industry has grown rapidly over the past several years, and the idea of digital currencies is becoming an accepted part of the financial mainstream. More people than ever have heard of digital currencies. Many who might not have considered such a thing in the past are beginning to feel more confident about actually incorporating them into their financial portfolios.
As people become comfortable with cryptocurrencies, banks and other large financial institutions have begun to take notice, with some trying to develop their own cryptocurrencies as well. One of the newer ways that cryptocurrency is trying to enter the mainstream is through the use of cryptocurrency debit cards, though so far, the plans have been somewhat less than successful.
Here is what you need to know about what might be on the horizon if cryptocurrency debit cards do enter the mainstream market.
The Cryptocurrency Evolution
Over the last several years, cryptocurrency has experienced some significant changes. It has gone from humble beginnings as a medium used in transactions (two pizzas were traded for 10,000 BTC in the first cryptocurrency exchange) to a digital asset seen more as an investment than a true system of payment in transactions.
However, the role of cryptocurrency may be starting to shift again to be more in line with its original mission to function as an electronic cash system for transactions. So, will the next step be a cryptocurrency debit card? And does cryptocurrency really need to be used as a payment method to be adopted more thoroughly into the mainstream?
Cryptocurrency Cards: The Problems
The move into debit cards for use with cryptocurrency has long been a goal of many in the industry. Some of the traditional market’s most important players have been showing interest in the possibility for some time now. But the road to cryptocurrency debit cards has not always been smooth. In fact, just a few months ago a scandal in this marketplace rocked the financial industry.
Wirecard, long viewed as a potentially dominant player in this subset of the market, suddenly became the subject of controversy when news of the initiation of insolvency proceedings broke in June. The German fintech group filed for insolvency, admitting that the 1.9 billion euros (or $2.1 billion US dollars) it had claimed was missing from its accounts did not exist.
This was more than just a financial failure, however. Long-time company auditor EY even noted it seemed to be an ‘elaborate and sophisticated fraud.’ Markus Braun, the former CEO of Wisecard, was arrested and is now suspected of market manipulation.
Less recently, in 2018, the digital payment solutions provider WaveCrest was forced by Visa to immediately close all of the prepaid Visa cards it had issued, citing non-compliance with membership regulations. These incidents show some of the problems with regulation in the cryptocurrency space. Additional companies are likely to come under fire in the years to come for their business practices. Such problems are also a hindrance to the growth of the industry and its adoption into the mainstream.
Can Cryptocurrency Cards Work?
Credit cards and debit cards are some of the oldest ‘new’ financial technologies in the industry. Today, they are a common part of our daily lives, but when they were first introduced, they represented a revolutionary concept. It should come as no surprise then that the two main players in the traditional credit card market have begun looking for ways to get involved in the cryptocurrency space.
Both Mastercard and Visa, giants in the credit and debit card space, have expressed interest in improving technology and expanding into this new market space. Mastercard recently announced a partnership with Wirex, allowing it to issue a new digital payment card on the Mastercard network. Visa recently published a blog post detailing its interest in partnering with top blockchain players and expanding its technologies.
Even those uninterested in cryptocurrency in the past, like PayPal, have begun to enter the cryptocurrency space. In a partnership with another top player in the fintech industry, Venmo, Paypal is making moves to allow customers to purchase Bitcoin through its site and through the companies’ mobile apps.
There are financial experts, though, who don’t believe cryptocurrency cards have a place in the industry. After all, the banks already pay these payment processing companies for the opportunity to issue cards, along with many other intermediaries that collect some form of payment along the way.
These extra expenses are part of the reason that non-traditional payment companies are entering the race to create a cryptocurrency card. But that doesn’t mean Visa or Mastercard couldn’t take the current options and make them work for cryptocurrency. Perhaps we will indeed see a cryptocurrency debit card soon.