Crypto credit cards have been rumored and discussed for as long as the market exists. Bringing a card to consumer markets would be a big sign of crypto’s adoption path. So where are we on crypto credit cards and which are the most promising projects?
What is a crypto credit card?
A crypto credit or debit card is just like any other card that you can use at a PoS or an ATM. The main difference in this situation is that you draw funds from your cryptocurrency wallet and not from a credit line extended to you.
The main benefit of crypto credit cards is the convenience, as they allow anyone to spend their cryptocurrency as they would in the case of typical fiat currency. Another advantage of crypto credit cards is the fact that you don’t need to worry about exchange rates.
Cryptocurrency credit cards could change the way people think about spending virtual and digital currencies.
On April 30th, 2018, Nexo launched the world’s first instant crypto-backed loans platform, announced via a blog post. Nexo aims to revolutionize the loan industry by boasting that investors and businesses won’t need to ever choose between accessing cash and holding their cryptocurrencies.
In short, Nexo allows its users to enjoy their own crypto wealth without having to actually sell it.
The platform is designed to be both security-focused and user-friendly. It provides you with the option of depositing your crypto assets to your secure Nexo wallet and benefit from instant loans via flexible credit lines. The loans are backed up by your own holdings. Thus, no credit card checks and other procedures are required.
The fiat can be instantly spent directly from the company’s crypto credit card (called Nexo Credit Card). One other benefit of this method is that you have to pay interest only for what you use. There are reportedly no minimum repayments and no hidden fees.
Nexo also has an ace up its sleeve when it comes to repayment options, namely, it allows you to pay loan repayments in fiat or even other cryptocurrencies stored outside Nexo.
The platform is highly accessible (worldwide) and, as long as you have cryptocurrencies, getting a loan is quite easy. Since all loans are collateral-based, having a credit history does not matter.
The company also boasts that it is the first USA-compliant security token under Regulation D Rule 506(c).
Nexo is powered by a so-called “Nexo Oracle system.” According to the official roadmap, Nexo has big plans for the future—with payment cards, mobile, and desktop apps. Going forward, Nexo hopes to increase the maximum loan limits and perform a second airdrop (Q4 2018), to finalize the acquisition of the FDIC-insured Banking Institution, as well as introducing deposit accounts (in Q1 2019).
TenX is a digital wallet and physical card that, just like Nexo, can be used to spend cryptocurrency anywhere, even in places that don’t accept crypto. The service is quite affordable, as you can order a physical card for about $15. There are annual fees of $10 per card if the spendings don’t go over $1000 in 12 months. The downside is that the service charges a $2.50 fee for every ATM transaction you make.
The service also incentives its users with a 1% reward for every purchase. TenX can be used in any place where Visa is accepted.
Monaco is a similar service built atop of the Ethereum blockchain. The service offers four types of cards, very different amongst each other. There are differnt card ties, depending on your holding of MCO tokens over 6 months: Ruby Steel (50 MCO), Precious Metal (500 MCO), or Obsidian Black (50,000 MCO). The entry-level card is called Midnight Blue, and it doesn’t require you to hold any MCO tokens.
The fees differ depending on the type of card you hold. The monthly limit varies from $200 for the Midnight Blue card to $1,000 for the Obsidian Black card. If monthly limits are exceeded, then you are charged a 2% ATM fee. The 1% fee applies to all types of cards each time you buy cryptocurrency. It’s a similar situation when it comes to rewards that vary from 1 to 2%. The cards currently support Monaco Tokens, Ethereum, and Bitcoin, and they are available in Asia, Europe, and North America.
The global financial ecosystem has long been transitioning towards a completely digital model. While various challenges have been met (and addressed) along the way, there is still a lot of room for evolution, especially with cryptocurrencies. As cryptocurrencies become more popular, so may these credit cards, which are bound to change the way we use crypto to pay for daily services and products.