Credello: Should You Consider Getting a Crypto Credit Card? Here Are the Pros and Cons
Jan 6, 2022
Cryptocurrency can't really be considered a "new" technology anymore. Bitcoin has been around since 2009. The Ethereum platform was established in 2015. We've entered 2022 and crypto has been mass adopted. Billion-dollar companies, nation-states, and professional athletes have gotten behind it. Crypto credit cards are increasing in popularity.
A search for the best crypto credit card should begin with understanding how they work. Interest rates are important, but with crypto cards, it's more about the rewards. That's where the real value is. Instead of getting cash rewards, crypto cards pay out rewards with Bitcoin, Ether, and other cryptocurrencies. The long-term value of those could be significant.
Credit Card Purchase Power with Access to Crypto Exchanges
There are several companies that issue crypto credit cards. Some of them, like Gemini and BlockFi, are crypto exchanges or trading platforms. That means your credit card gives you the ability to own crypto the easy way. Make your purchases normally, get a percentage back as a reward, and choose which cryptocurrency you'd like.
Offering credit cards with crypto rewards will increase the popularity and use of already established cryptocurrencies like Bitcoin and Ether. It can introduce average consumers to other DeFi currencies like Litecoin, Chainlink, USD Coin, and the Gemini dollar. This added exposure should help the crypto sector grow faster in the coming years.
Advantages of Crypto Credit Cards (Pros)
- Easy Entrance into the Crypto Space: Many consumers have not been exposed to crypto exchanges and are uncertain how to get started. Applying for and using a crypto credit card is an easy way to enter the space. As rewards accumulate, it's expected that consumers will want to learn more about crypto investing.
- Rewards with Potential for Growth: Cash-back rewards don't increase in value. Crypto rewards could produce a "lottery-like" return that normal credit card users never experience. Some crypto credit cards offer as much as 8% back in crypto for everyday purchases. With potential returns, that could add up to a nice nest egg.
- Automated Passive Investing: Cash-back rewards are often used by credit cardholders to pay off outstanding balances. They never really see the benefit. With crypto rewards, the user is employing a passive investment strategy that will accumulate assets for them over time. Bitcoin posted a 60% gain last year. Ethereum went up over 400%.
Disadvantages of Crypto Credit Cards (Cons)
- Limited Rewards Choices: The biggest benefit to crypto credit cards is also their greatest drawback. Getting crypto back instead of cash limits the user's choices. They can either hold it or sell it. With cashback, the user can choose to do whatever they like with the money, including buying crypto if they choose.
- Cryptocurrency Volatility: With great risk comes great potential reward. Yes, you could get a huge return on a crypto reward, but you could also lose money. Cryptocurrencies are extremely volatile. If crypto rewards come when the value peaks, there could be at least a short-term loss when the price goes back down again.
- Crypto Selection: This is a situation that's improving, but some crypto credit cards limit rewards to just one or two cryptocurrencies. Users who want more diversity in their crypto portfolio will need to go to the crypto exchanges directly.
The Bottom Line: Crypto is Here to Stay
Cryptocurrency is not a "fad," and it won't disappear over the next few years. The technology is robust and secure. Mass adoption has happened on a global level. Celebrities, CEOs, and world leaders are using it to transact business. Crypto is here to stay. Crypto credit cards are one of the best ways to get exposed to it and a great opportunity to earn investment income.
Sources:
Press Release Service by Newswire.com
Original Source: Credello: Should You Consider Getting a Crypto Credit Card? Here Are the Pros and Cons
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