Many legacy finance firms are beginning to embrace the use of cryptocurrencies for investments and payment purposes. As you probably already know, cryptocurrencies are digital currencies that can be used to buy goods and services, but use an online ledger with strong cryptography to secure online transactions. Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology that manages and records transactions. The main appeal of blockchain and cryptocurrencies are their high level of security.
Visa is the latest legacy finance player to embrace cryptocurrencies. A couple of weeks ago, Visa announced that it’s rolling out a new program in conjunction with its Crypto.com Visa cards. Back in 2018, Visa’s CEO Aflred Kelly told CNBC’s Jim Cramer that cryptocurrencies are not a big threat but “if we have to go there, we will go there.”
Fast forward a couple years and Visa is finally going there.
In 2018, Visa was a $300B+ company and the combined market cap of all cryptocurrencies was $200B+. Now in 2021, things look a bit different. Visa is now a $450B+ company and crypto, primarily Bitcoin and Ethereum, is now at $1.8T.
You’re probably wondering how Visa’s new crypto program works.
Crypto.com already offers its users a Visa card. However, any payments used by the cryptocurrency card have to be converted to fiat ($), which adds costs and complexities for merchants. Now, when a Crypto.com Visa card purchase is made, instead of converting to fiat, Visa will settle the transaction using Crypto.com’s USDC stablecoin, all done on the Ethereum blockchain. This new process helps in reducing the friction in using cryptocurrencies for payments. Previously, a single transaction could incur a fee of $10 to $20. Visa’s solution — bundling payments as it does on its existing network to reduce costs and increase speed.
This new and improved process will likely go a long way in helping mainstreaming crypto for everyday transactions. As cryptocurrencies continue to rise, other big finance firms are jumping aboard the crypto bandwagon:
While there were (and still are) many doubters, it’s safe to say that the everyday use of cryptocurrencies is continuing to grow.