Bitcoin and other cryptocurrencies have been trending lately, but they have been around for nearly a decade. After bitcoin’s meteoric rise in 2017, the cryptocurrency has lost value since the start of the year, with the market dropping as much as 50% since December. Still, don’t expect bitcoin to go away any time soon.
Thus far, bitcoin has been seen primarily as an investment, but more recently, some have begun exploring its potential as a true currency to buy and sell goods. Several online retailers accept bitcoin as a form of payment. However, using cryptocurrency to buy items in brick-and-mortar stores or on most Internet retail sites has proved challenging. Even though acceptance of cryptocurrency has grown, it is still not a common form of payment for everyday transactions.
A cryptocurrency prepaid card could change this paradigm. A prepaid cryptocurrency card would allow consumers to either make payments directly in bitcoin, or convert their bitcoin to traditional currency. So far, one of the few examples of this concept in action is the BitPay VISA Card, which allows users to load their card from their bitcoin wallet. The card converts bitcoin into U.S. dollars, so cardholders can use it like a conventional VISA card at retailers and ATM machines.
You may be wondering what would be so different about a prepaid cryptocurrency card compared to conventional bank-issued debit cards or prepaid cards. The short answer is that, using a prepaid card specifically for blockchain technology (cryptocurrency) would offer a decentralized payment process that would make it easier for consumers and merchants to complete transactions.
Ideally, cryptocurrency prepaid cards would be accepted on the same terminals used for traditional and prepaid debit card transactions. Cryptocurrency prepaid cards could also be used as a funding source to purchase bitcoin and other types of cryptocurrency without having to link to a bank account.
Prepaid Cards Could Change the Retail Market
Bitcoin has been used primarily as an investment vehicle since its debut. Nevertheless, interest in using cryptocurrency in the retail market has grown substantially. In Japan, two major retailers announced they would accept bitcoin as a payment method at over 260,000 retail stores.
If other retailers follow suit, this could be a major shift in the way transactions are handled. However, this progress has been slow-going and using cryptocurrency to purchase goods and services is still in its infancy. It may take a while before cryptocurrency is widely accepted for seamless transactions.
Cryptocurrency Prepaid Card Features
So ideally, what would a prepaid cryptocurrency card look like and what features would it have? Under one model, a cryptocurrency prepaid card would be an all-in-one debit card that would allow various types of cryptocurrencies to be loaded onto the card. The prepaid card would have both virtual and physical card options, and various fiat currencies such as the U.S. dollar, Japanese yen, and the euro could be loaded simultaneously.
What Do the Critics Say?
The chief executive of one of the world's largest credit card issuers has indicated he believes cryptocurrency is no threat to traditional currencies. In a CNBC interview in January 2018, he explained that since Bitcoin and other cryptocurrencies were not created to function as payment systems, this type of currency isn’t in direct competition with traditional payment systems, in his opinion. Other critics think that even if cryptocurrency prepaid cards are able to make an impact on the market, it will be a long time before most major retailers would be on board with accepting bitcoin and other cryptocurrencies directly as a form of payment. However, as the public becomes more aware of how cryptocurrencies work and feels more confident using them, this may change.
What the Future Holds
Even though bitcoin enjoys a lot of hype, actual surveys indicate consumers are less enthusiastic about cryptocurrencies. A study conducted by payment company Intrapay indicated that fewer than 2 percent of consumers have actually used a cryptocurrency to purchase items, and less than 10 percent are interested in purchasing items with a cryptocurrency in the future.
As time goes on, it will be interesting to see what will happen in terms of using cryptocurrency for normal, everyday transactions. If consumers gain more confidence in cryptocurrency and generate strong demand for a cryptocurrency prepaid cards, more financial services companies, banks, and fintech companies may step up to fill this need.
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