Episode 40 – Different Ways to Spend Your Crypto IRL
If you’re watching this film, chances are you own some crypto. Here’s a big question for you… why? What do you do with it? Do you stake it? Mine it? Yield Farm it?
One thing you probably don’t do is SPEND IT. And why would you, if you think the value’s going up?
I mean, we’re all scarred by the story of the dude – yes, we’ll name and shame him again – Laszlo Hanyecz, who spent TEN THOUSAND BITCOIN on a pair of Papa Johns PIZZAS back in 2010.
Market value of those pizzas now? Oh, only SIX HUNDRED MILLION DOLLARS.
That’s one pricey takeout. And Laszlo didn’t stop there – he went on to spend another NINETY THOUSAND BITCOIN on pizzas that summer. Market value today, only SIX BILLION DOLLARS.
I mean, he could buy Papa John himself for that, get the legend to live in his house and make him pizzas forever.
But that’s not the moral of this story. If all we ever did was sit on our gold and never spend it we’d end up like a miserable dragon in The Hobbit. [clip]
So if you want to know why it might just be a GREAT idea to spend your crypto rather than hoard it, then stay tuned – because if there’s one thing I like it’s BUYING STUFF. [reverse camera to show all filming kit?] I mean, look at this lot.
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It’s not saying anything particularly controversial to point out that crypto has offered almost UNPRECEDENTED RETURNS to most early adopters.
As long as you didn’t get chopped up by the market or your emotions during one of the multi-year BEARS, then every dollar put into crypto in years past will generally be worth more today.
And this is what’s driven the BUY and HODL philosophy that most investors abide by.
And as a consequence there’s no end of NOCOINER TROLLS who accuse crypto of being purely a SPECULATIVE ASSET, with no inherent value or real world use cases.
Now you and I know that’s not true – because for one it’s STORE OF VALUE use case becomes stronger YEAR ON YEAR.
But with most of the promised real world use cases still being in their infancy, how can we rebuke those TROLLS with big, fat, obvious UTILITY?
The answer, well – today’s answer at least – is – the SPENDING POWER of crypto is here, and it’s growing by the day.
It wasn’t always this way though, INFRASTRUCTURE, VOLATILITY, ACCEPTABILITY and REGULATION have all historically put a spanner in the ointment. A fly in the works. Ointment in the fly.
But now, shops ALL OVER THE WORLD accept bitcoin. Websites like TRAVALA enable you to book holidays with crypto. It might not be a LAMBO, but companies like UTRUST mean you can at least buy a LOTUS.
If you want to be a bit less fun, as you probably are anyway if you’re Swiss, then you can PAY YOUR TAXES with crypto if you’re a SWISS CITIZEN.
And if the end really is nigh, you’ll be glad to know that CRESCENT TIDE funeral services in MINNESOTA will gladly sell you a CASKET and CREMATE you for a THREE PERCENT discount if you pay in bitcoin.
But here’s the really big deal – you don’t have to rely on vendors to accept crypto in order to spend it.
Just like a conventional debit or credit card, CRYPTO CARDS allow you to complete day to day transactions using Bitcoin, Ethereum and a bunch of other tokens.
And you don’t need to worry about where you can spend it – as the majority of crypto cards have been released in conjunction with VISA and MASTERCARD, so anywhere that accepts card payments will accept your crypto.
So how do they actually work?
Well, CRYPTO DEBIT CARDS work in a similar fashion to FIAT DEBIT CARDS. You load your linked account with CRYPTO and when you buy something, that crypto is sold into cash at the current exchange rate and sent to the vendor.
CRYPTO DEBIT CARDS foster financial inclusion, as they can be set up without the need for a BANK ACCOUNT. Some products offer a VIRTUAL CARD instead of a PHYSICAL ONE, making them ideal for ONLINE purchasing through PAYPAL and other E-COMMERCE platforms.
And there’s no shortage of cards to choose from, as both VISA and MASTERCARD grant licences to partner companies who provide the crypto back end.
You can also get a CRYPTO CREDIT CARD, where you get a line of credit extended that lets you purchase now and pay later. GEMINI and BLOCKFI have both released crypto credit cards with crypto cashback. Pretty cool.
WHY SPEND YOUR CRYPTO?
This does of course lead us to the big question of WHY you’d actually use a CRYPTO CARD for purchases instead of your existing FIAT ONE. Good question.
The SHORT ANSWER is this – you’ll most likely get some EXCITING PERKS.
For example, CRYPTO FOCUSED products can protect you from nasty exchange rates when you’re travelling outside your home country.
With conventional debit cards you’ll often end up paying sky high conversion fees while away, but not so when your crypto acts as a bridge to other fiat currencies.
CRYPTO CARDS often come without the yearly membership or individual transaction fees that you’ll get from traditional cards.
You can use your crypto card for ATM WITHDRAWALS, and many of the products on the market also support APPLE PAY, GOOGLE PAY and SAMSUNG PAY meaning there’s literally NO EXTRA FAFF involved, and we’ve not even got to the REWARDS yet.
Which can include AIRPORT LOUNGE ACCESS, TRAVEL REWARDS, 3% CASHBACK on purchases and REBATES on STREAMING SERVICES like NETFLIX and PRIME.
Not to mention the fact SECURITY is also top notch, with 2FA and 256bit ENCRYPTION online bandits are not something you need to worry about.
And when you consider VISA and MASTERCARD are well and truly on board, there really aren’t too many barriers left in terms of MASS ADOPTION.
There are however a few WRINKLES to be aware of.
Some providers will need you to STAKE COINS in order to unlock the best rewards.
There is of course the issue of VOLATILITY. Where that holiday you buy with BITCOIN today might end up costing you double or triple in the future. Although equally it could dump, meaning your hols was a massive bargain. Either way, a degree of fiscal uncertainty enters the process.
It’s also worth doing your due diligence on the blockchain brands offering CRYPTO CARDS. In most territories they’ll be subject to regulation – but not all.
And finally depending on which country you’re in – there may be TAX COMPLICATIONS, where any transaction from crypto to fiat becomes a taxable event. Something to be aware of.
When was the last time you used physical, hard cash? A while I’d imagine. The pandemic has accelerated the trend for money to be SPENT DIGITALLY, EVERYWHERE.
And CRYPTO CARDS are the next logical step. Because the way that we EARN and SPEND money will be different in the future – it won’t only be in FIAT.
CRYPTO is well on the way to becoming an essential part in how we STORE and TRANSFER VALUE, and the fact MEGALITHS like VISA and MASTERCARD are well and truly on board tells you which direction this is headed in.
Which is why this discussion wouldn’t be complete without mention of the CL CARD, powered by LEDGER. A free, virtual card offering ATM withdrawals and integration with APPLE PAY, GOOGLE PAY and your existing PHYSICAL CARD.
Connected to your HARDWARE WALLET, and integrated with LEDGER LIVE it really is the most painless and secure way to spend – where you only convert your crypto to fiat at the moment you pay – not the moment you top up. Not only that, but you can open a LINE OF CREDIT, using crypto as collateral. Awesome.
One final point. It’s also worth remembering that as the CRYPTO MARKETS evolve we’re likely to see a reduction in the VOLATILITY of the prices. So let’s say, like our old friend LAZSLO – you buy a PIZZA today with your crypto… It’s unlikely to cost you 600 MILLION DOLLARS ten years down the line.
You’ve been watching School of Block, presented by Ledger and the Defiant, demystifying decentralisation, one block at a time. Don’t forget to subscribe, drop us a like if that’s what you’re into, and as always – here’s to your financial freedom.