What are Crypto Card Rewards?
By Beluga Research August 20, 2023
Summary
- Crypto credit and debit cards work by linking a user's cryptocurrency wallet to a physical card that can be used at point-of-sale terminals
- They link cryptocurrency wallets to physical cards for point-of-sale purchases, converting crypto to fiat in real-time to avoid volatility
- Crypto card rewards include cashback in cryptocurrency, loyalty points and crypto bonuses, enhancing traditional credit card benefits.
- To use crypto cards, users need a crypto wallet and can apply with providers
Overview
Crypto credit card rewards, credit cards, and debit cards work by linking a user's cryptocurrency wallet to a physical card that can be used at point-of-sale terminals. When a user makes a purchase with the card, the cryptocurrency is automatically converted into fiat currency, which is then used to complete the transaction. This process happens in real-time, so users don't have to worry about the volatility of cryptocurrency prices.
A Brief History
Crypto credit and debit cards are a relatively new development in the world of cryptocurrency. The first crypto debit card was launched in 2015 by a company called Xapo. This card allowed users to spend their Bitcoin at any merchant that accepted debit cards. Since then, several other companies have entered the market, offering a range of different crypto credit and debit card options.
What are Crypto Card Rewards?
Just like traditional credit and debit cards, crypto cards offer rewards programs that incentivize users to use their card for purchases. One of the most common types of rewards offered with crypto cards is cashback rewards. This works just like traditional cashback rewards programs, where users earn a percentage of their purchase back in the form of cashback. However, with crypto cards, the cashback is paid out in cryptocurrency instead of fiat currency.
Another type of reward offered with crypto cards is loyalty points. These points can be earned for every purchase made with the card, and can be redeemed for a variety of different rewards, such as discounts on future purchases or free merchandise.
Finally, some crypto cards offer rewards in the form of cryptocurrency. This can be in the form of a sign-up bonus, where users receive a certain amount of cryptocurrency when they sign up for the card, or it can be ongoing rewards that are paid out in cryptocurrency.
Getting Started
To get started with a crypto credit or debit card, a cryptocurrency wallet is needed. This is where digital assets are stored. Once a wallet is set up, apply for a crypto card with a provider that offers this service. Some popular providers include Crypto.com and Venmo. These providers offer a range of cards with different benefits and rewards.
Unique Aspects
One of the unique aspects of crypto credit and debit cards is the rewards that they offer. These rewards are often much more generous than what you would receive with a traditional card. For example, some providers offer cashback rewards of up to 8% on every purchase. Others offer rewards in the form of cryptocurrency, allowing you to earn more of the digital assets you already hold.
Another unique aspect of crypto cards is that they often come with no foreign transaction fees. This is because the transaction is processed in real-time, converting your cryptocurrency into the local currency of the merchant. This means using a crypto card to make purchases when traveling abroad without having to worry about additional fees.
Advantages
- Rewards - Many crypto credit and debit cards offer rewards programs that give users cashback, loyalty points, or other incentives for using the card. These rewards are often higher than those offered by traditional credit cards, and they can be paid out in cryptocurrency or fiat currency.
- Security - Crypto debit and credit cards offer a high level of security compared to traditional cards. Because they are linked to a digital wallet, users can easily monitor their transactions and set limits on their spending. Additionally, many crypto cards use two-factor authentication or biometric authentication to prevent fraud.
- Easy conversion - With a crypto credit or debit card, users can easily convert their digital assets into fiat currency and spend them at any merchant that accepts traditional credit cards. This makes it easier for people who hold cryptocurrencies to use them in their day-to-day lives.
- Anonymity - Some crypto credit and debit cards offer a high level of anonymity, which can be appealing to people who value their privacy. Because they are not linked to a traditional bank account, users can make transactions without disclosing their personal information.
Disadvantages
- Limited acceptance - While the number of merchants that accept crypto credit and debit cards is growing, they are still not as widely accepted as traditional credit cards. This means that users may not be able to use them at all the merchants they frequent.
- Fees - Crypto credit and debit cards often come with higher fees than traditional credit cards. These fees can include annual fees, transaction fees, and foreign exchange fees. Additionally, some cards may charge fees for loading or unloading funds onto the card.
- Volatility - Cryptocurrencies are known for their volatility, which means that the value of a user's digital assets can fluctuate rapidly. If the value of a user's digital assets drops significantly, they may not be able to pay off their credit card balance or may have less buying power with their debit card.
- Security risks - While crypto credit and debit cards offer a high level of security, they are not immune to hacking or fraud. If a user's digital wallet or card information is compromised, they could lose their digital assets or have unauthorized transactions on their account.