The launch of a credit card that offers crypto rewards by Mastercard is just one of many recent collaborations between traditional finance and cryptocurrency. These collaborations help push crypto payments into the mainstream.
The fight for crypto acceptance has long hinged on the idea that these currencies need to become useful in day-to-day transactions. As people are able to pay easily with crypto the same way they can with fiat, the more likely they are to interact and come to understand what these coins are all about.
However, some in the crypto community feel that these relationships with traditional finance do not speak to the inherent mission of cryptocurrencies and transparent, decentralized blockchain technology.
While this is possibly a concern, the collaborations so far have provided more use cases for cryptocurrencies than have ever been available.
Partnerships lead the way for crypto
For years, cryptocurrencies have struggled to gain acceptance from traditional financial institutions. Big players considered this burgeoning financial sector to be too risky and volatile to put their weight behind.
As a result, the crypto and blockchain community stayed small as a niche interest rather than a viable alternative to fiat currencies.
The recent bull run by bitcoin (BTC) has brought with it a shift in thinking from traditional financial institutions. Multiple companies, especially in payments, have come out in support of crypto. They have expanded their crypto payment abilities and spoken about future developments to take this even further.
The most recent announcement came from Mastercard. It launched the first-ever crypto rewards card with the crypto exchange Gemini. Users of the card could earn up to 3% in bitcoin or other cryptocurrencies on their purchases.
This collaboration between two such big players in their respective fields is a breakthrough for both sectors. Sheraz Ahmed, Managing Partner of STORM Partners explains:
“Partnerships with traditional payment processors are further driving cryptocurrency adoption and reshaping the future of payments.”
“The launch of a crypto rewards credit card by Gemini and MasterCard will further bridge the gap between crypto and conventional payment networks,” he says.
Increased exposure means more use cases
Mastercard is just one of many traditional financial players getting involved in cryptocurrencies. In March, its opposition, Visa, announced that it would start settling transactions with USD Coin (USDC) on Ethereum (ETH).
Alongside benefiting those who already hold cryptocurrencies, these actions provide more reasons for others to join and start using various coins.
“In one of the industry’s biggest news last year, PayPal announced the integration of cryptocurrencies. This helped increase exposure, as millions of active users and merchants could buy, sell, hold and make purchases using crypto,” says Ahmed.
While many may not understand how cryptocurrencies work, millions of people use PayPal to do transactions daily. This kind of integration can help limit the ambivalence felt by some who see cryptocurrencies as some confusing entity.
“The decision and its corresponding impact show the influence of traditional payment processors on cryptocurrency mainstream adoption,” Ahmed commented.
More companies accept crypto payments
While payment networks making paying with crypto easier across the board, increased acceptance of cryptocurrencies by businesses helps as well. In 2021 so far, big names have announced the acceptance of cryptocurrency as payment for their products.
Elon Musk made waves when he announced Tesla would start accepting bitcoin as payment. Users would simply be able to click “pay in bitcoin.”
Most recently, co-working company WeWork said it would begin accepting payment in cryptocurrencies through BitPay.
What is interesting about these two companies, and a few others, who have made these statements is that they say they will keep these payments in cryptocurrency on their books.
This provides further support, as they are not simply allowing cryptocurrencies as a transaction mechanism before converting to fiat. This kind of vouch for crypto has been seen more during this recent uptick in support.
The long road to mainstream adoption
Exactly how long it will take for cryptocurrencies to break into the mainstream officially is hard to determine. While institutional involvement is a big push, multiple factors need to be addressed before people can pay their rent, or even taxes, with cryptocurrencies.
However, it is no longer a question of whether this will happen but rather when it will happen. As PayPal’s CEO, Dan Schulman, said, “Digital currencies are going to come into the mainstream. The time is now.”