Bitcoin has hit all-time highs this week, reaching prices of $17.7K USD or $22.8K CDN, and people are chomping at the bit to get a piece, however small that may be and no matter the speculative risk.
After all, what could be more exciting than witnessing the sudden wealth of Bitcoin’s first billionaires, the Winklevoss twins?
Their claim to fame came from a lawsuit against Facebook’s Mark Zuckerberg over the ownership and invention of the social network. Using their settlement money, the twins invested $11 million into their Bitcoin portfolio when, at the time, Bitcoin cost a mere $120 each. Seeing their investment rise within only a four-year timeline certainly has others looking to cryptocurrencies as a viable investment.
Whether it’s Bitcoin, Ethereum, Ripple, or any other cryptocurrency currently on the market, we know there is a demand and people are investing. But now the question remains, are people spending it? Or are they saving it for a rainy day?
With the emergence of blockchain technology from the ever-elusive creator of Bitcoin, Satoshi Nakamoto, has come the ability to invent and create a multitude of cryptocurrencies across the globe.
Take for example, Venezuela, who just last week announced that the introduction of a digital currency could potentially save the country from economic collapse. With sanctions placed on the bolivar by the U.S. and the increasing difficulty to purchase foreign goods at a reasonable rate, many have already turned to cryptocurrencies like Bitcoin. Venezuela hopes that implementing the “petro,” a government sanctioned cryptocurrency, will improve economic health long term. And so, in scenarios like Venezuela we already see a definitive application for the cryptocurrency.
But again – are people spending their cryptocurrency? Are there means of converting the digital dollar back into fiat currency as we wait for merchants to catch up to the blockchain future? In other words, can it become a good medium of exchange?
Enter prepaid cards. For years prepaid Visa or Mastercard prepaid cards have had the ability to contain multiple currency “wallets,” effectively letting you load and spend different currencies of your choice (like pesos, USD, and Euros) on a single prepaid card as part of a forex payments solution.
This same platform can facilitate real time conversions of cryptocurrencies to fiat currencies for point of sale transactions, using physical payment cards, virtual cards, or tokenized payment cards. This effectively lets consumer bypass online cryptocurrency exchanges, which are notoriously slow, difficult to navigate, and fee intensive, and lets them spend the way they’re used to – using card payments at merchant terminals.
Bridging the gap between a digital and fiat currency can, in the interim, create a much-needed space for users of cryptocurrencies to make purchases at POS level terminals and for merchants that do not yet accept crypto payments.
It’s no surprise there are use cases among the darknet and criminal circles for blockchain and cryptocurrencies, and perhaps that’s why it has been difficult to convince the general public of cryptocurrency’s potential. But as we establish fiat and card payments bridges between the two, we increase the value of cryptocurrencies in the Average Joe’s life.
Can Average Joe use his cryptocard to buy groceries, or that new TV he’s been drooling over? Yes. And with each step towards making cryptocurrency more accessible and applicable on a wider scale, the more value it has among the general public, and the more people will be willing to spend their currency.
So, to answer the question, are people spending their cryptocurrencies? The answer is yes, but not at a rate that reflects a strong medium of exchange or store of value (it’s volatility is still very high). But as we increase the ways in which cryptocurrencies can be managed, converted and spent, we simultaneously increase the rate at which they become of value to people and businesses on a wider scale.