Cryptocurrencies are becoming increasingly popular as the world transitions to a more digital society. With this trend, many people are looking for ways to securely store their coins and tokens without worrying about fraud or theft.
Crypto credit cards are a promising solution that allows users to spend cryptocurrencies similarly to fiat currency. An initiative that may help bridge the gap between crypto skeptics and adopters. The rise of these credit cards, therefore, could have profound implications on not just blockchain, but the financial sector as a whole.
Over the last decade, a financial revolution has taken place. The internet has created an entirely new way for people to bank themselves with cryptocurrency, creating an innovative and exciting way of making money in today’s world. This blog post will explore how individuals can unbank themselves from their current financial service providers using digital currencies.
How the Blockchain is Designed to Help Everyone
Cryptocurrency and blockchain have the potential to change lives by aiding those who struggle with access to financial services.
There are billions of people in emerging countries who lack access to a bank account, which is a major contributor to economic mobility. Among those who are able to set up an account, many won’t find one conducive to their income bracket.
Blockchains can help these unbanked populations overcome these institutional obstacles through mobile-based digital wallets, which may be one key solution for decreasing poverty worldwide.
Many banks choose to outsource their technology and pay for outside expertise, to cut costs in the long term. But rather than taking on the financial burden themselves, many will offset it by shifting more costs onto consumers through basic account fees. These fees include penalty charges for balances below a certain threshold; common in checking accounts but especially common for saving accounts.
Individuals with limited income and savings, as a result, are being forced to pay more because their income and savings do not justify or match the costs of third-party technologies employed by these banks.
This is where cryptocurrency can be the solution. Crypto bank accounts and DeFi services are helping individuals escape these archaic institutions by allowing them to become their own banks, which will offer a more seamless financial process. And eliminate the high fees associated with the traditional banking system.
With a low-cost blockchain provider, users can enjoy the benefits of a borderless currency. Individual investors can have more control and transparency over their financial assets with this type of service.
By unbanking from traditional financial institutions, users will be fueling a community-driven system that exists outside of the mainstream. The future is now, and this decentralized infrastructure could challenge or replace what we consider to be a normal banking system.
The Advantages of Crypto Credit Cards
First, let’s answer the question: what is a crypto credit card? The answer is fairly straightforward. Crypto credit and debit cards are identical to your normal ones. The only distinction is that you’re using cryptocurrencies to pay for products and services.
Note, however, that one doesn’t straightforwardly spend with Bitcoin or Ethereum. When using these cards, your cryptocurrency is converted into what you would be spending in your local currency then sent over to the recipient.
With the boom of cryptocurrency, having a crypto credit card can be beneficial. One of the biggest advantages is paying for products and services without bearing exorbitant fees to convert them. With a normal bank card, you may have to pay hefty conversion fees if purchasing anything from outside your country’s borders.
But with a crypto credit card, there are no foreign exchange charges. Other benefits include not being limited by geographical boundaries, like when traveling overseas.
Furthermore, banks usually charge a fee when issuing credit cards, but this fee is waived with crypto credit cards. You just have to make sure you spend within the threshold amount in the year (something one agrees upon ahead of time with their financial expert or card provider).
Cryptocurrency credit cards are also rewarding. You can earn extra coins, just like how you would receive cashback when purchasing a specific amount. Some crypto rewards might provide you with 3% or more on your total transaction.
One thing to keep in mind with this reward system is that cryptocurrencies could rise in value after redeemed. The same cannot be said for credit card rewards, which most likely will stay at their original price and cannot be sold. Flight tickets or hotel rooms purchased with points, for example, cannot be sold later for a profit. In this sense, cryptocurrency offers the only form of credit card that earns you money as you spend it.
The Advantages of DeFi
First, let’s define DeFi. In short, it stands for decentralized finance. More often than not, it’s an umbrella term used to describe a financial system operating without third-party intermediaries – the dreaded banks we’ve been reading so much about.
To end poverty in low-income countries, financial inclusion needs to be top of mind, according to Ceyla Pazarbasioglu, vice-president of finance, equitable growth, and institutions at the World Bank. She says financial services need to make sure they serve the citizens and SMEs, not just the bankers, rich, or select few.
As a side note, the world bank had a stated goal of Universal Financial Access by 2020. It’s now 2021 and that goal has not been achieved. Most likely because banks are still catering to the needs of bankers and the wealthy.
And where the world bank failed, DeFi platforms are in a position to succeed. For example, Bitcoin – with its hard cap on mining at 21 million – offers those in hyperinflation-prone countries like Venezuela and Argentina an alternate form of currency that is not vulnerable to the central bank’s inflationary policies.
In contrast, US dollar pegged stablecoins may provide more financial stability for individuals living in nations where their respective state currencies are unstable due to government interventionist economic policy.
In addition, with the introduction of smart contracts in processing, middlemen are significantly reduced and along with their processing time. Smart contracts also may improve security because they can be easily verified by code, and no human error or arbitrary intervention could ever change without consent from all parties involved with a transaction.
Finally, on a “trustless” platform, you are not required to trust a centralised exchange. Individuals have the power to hold and manage their own private keys that allow for increased security without being affected by third parties.
Smart contracts can automate operations which lower or even eliminate transaction fees because they are no longer needed in order to interact with centralized exchanges on behalf of others. Decentralized Exchanges also provide greater variety when looking at trading pairs, allowing people more options and increasing profitability for trades made due to lowered risk factors (i.e transaction fees).
Blockchain is designed to be fair and secure, providing an immutable ledger that benefits everyone. With the many advantages of crypto credit cards and DeFi, we’re entering a new era where individuals can unbank themselves from their current financial services providers, or lack thereof, with relative ease.
If your financial goals are not being met, or you’re fed up with your financial institution, it would be well worth your time to consider cryptocurrency and crypto credit cards.
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