Crypto can be uncomfortably complex. Understanding it requires a new vocabulary and hours of learning. Intimidating terms like “cryptographic hash functions,” “block confirmations,” and “consensus algorithms” appear frequently in articles on the subject. There’s no doubt that it can all be overwhelming to comprehend.
But cryptocurrency doesn’t have to be daunting.
Today, the average consumer has to jump through a few hoops to purchase crypto. First, they download or register for an account to obtain a digital wallet. Next, they have to register their credentials on an exchange, such as Kraken, Binance, or Crypto.com. Then, they need to transfer money to the exchange and use those funds to purchase the cryptocurrency. Finally, they send purchased tokens to their wallet to complete the purchase. This process is not only confusing but costly: There are fees littered throughout the transaction. Afterward, if the user wishes to utilize their crypto to make a purchase, they must repeat the process in reverse.
In addition, registering on an exchange can open a user up to security vulnerabilities because they often have to share personal contact information, their government ID, and connect credit cards or even bank accounts to their exchange account. This can be inherently risky, and users are left to learn about and personally vet each of these systems. Given incidents like the Mt. Gox breach, consumers are understandably concerned about the security of their crypto holdings on exchanges.
Most consumers are uncomfortable with the technical complexity of purchasing crypto. But they are familiar with how to use banking apps and debit and credit cards.
The advent of crypto cards brings together the familiar interfaces and technologies of payment cards with the ability to purchase and use cryptocurrency. As digital assets gain traction and popular adoption, consumers will look for on-ramps to crypto from their payment solutions. A few already exist. For example, Coinbase Card, powered by Marqeta, allows payments using any of the cryptocurrencies on their platform, including Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
Trust is a critical factor in spending and investment decisions for consumers, which is why brand value is such a powerful asset. While many users are attracted by the growth potential and investment value of cryptocurrencies, they are hesitant to dive in. Users don’t want to put their money, private information, or financial details in an unrecognized company’s system. Now that many renowned institutional players such as PayPal, Visa, and Morgan Stanley have entered the space, there exists a strong stamp of approval, bolstering consumer trust. Although crypto is a volatile asset, cards are proving themselves as a convenient gateway to crypto ownership for newly convinced consumers.
Converted consumers flooding into the space through new institutional on-ramps can create a stabilizing influence for the crypto industry. This is mutually beneficial for users and the ecosystem: Everyday usage of crypto cards promotes wider distribution of crypto holdings and can reduce the volatility of digital assets.
Marqeta is excited to work with innovating institutions as this asset class comes into the mainstream. Today at least six percent of Americans have used crypto, and the number is rapidly increasing. As digital assets play a larger role in more and more portfolios, payment professionals will be interested in solutions for transacting with them. Marqeta is positioned to provide solutions for businesses and merchants looking to capture value and remain competitive.
