The Investor’s Guide to Crypto Credit Cards


  • Crypto credit cards are a familiar way for people to start investing in crypto without having to spend weeks learning about the ecosystem.
  • With lower fees and the potential for collateral to appreciate over time, cryptocurrency-backed loans maximize purchasing power

A quick introduction to crypto credit cards

Crypto credit cards are very similar to any other credit card. Make purchases using a line of credit, earn rewards, and pay what you owe at a certain interest rate. What makes crypto cards different is that they provide you with a direct line of credit by using your digital assets as collateral, eliminating the need for a credit check.

The inability to use cryptocurrencies to buy everyday goods is a common criticism. But with crypto credit cards, the user does not notice the difference in Trader Joe’s payline. That direct line of credit can offer instant liquidity from your crypto portfolio.

The difference between crypto credit cards and crypto debit cards

Crypto debit cards work much like a traditional debit card. Users fund their account with stablecoins, bitcoin or altcoins. And when used at your local Gamestop, the card sells the equivalent value of your assets in exchange for the USD needed to make the purchase.

The main difference between the two is that crypto credit cards allow you to borrow funds for purchases and crypto debit cards sell your assets immediately every time you make a purchase.

The case of crypto cards

In a recent empire episodeJeff Dorman reminded us that 20 years ago, people were afraid to put their credit card in a machine. Today we cannot imagine our lives without these magic rectangles. With some countries adopting bitcoin as legal tender and innovations like crypto cards, the question of widespread adoption is not if, but when. But this inevitability is not the only reason to use a crypto credit card.

Earn crypto rewards

There are many rewards cards that provide cash back, travel points, or other types of loyalty points for goods and services. Crypto credit cards offer rewards in crypto. This is a great way to stack sats or other cryptocurrencies without having to buy them on an exchange. While rewards differ from card to card, it’s easy to see the upside potential when cryptocurrencies have a history of appreciating over time and fiat has a history of declining value.

TradFi and DeFi Bridge

In recent years, the adoption of cryptocurrencies has skyrocketed, reflecting the Internet adoption curve way back in the 90s. But even today, it can be difficult for new users to understand how to get started with digital currency. Crypto credit cards are a familiar way for people to start investing in crypto without having to spend weeks learning about the ecosystem. what robinhood did to invest in stockscrypto credit cards can do for crypto adoption.

Crypto Card Adoption Barriers

The taxable event

Most crypto cards create a taxable event every time you make a purchase. Because most governments classify cryptocurrencies as property rather than foreign currency, they are subject to capital gains. So if you were to use a crypto debit card to buy a $5 Mother’s Day card and her wallet is up 100%, that gesture will come with an expensive tax bill.

price volatility

Many investors are hesitant to use crypto cards due to huge price fluctuations and volatility. Not only do they want to avoid paying capital gains, they want to avoid missing out on potential profits. This mindset is why many view cryptocurrencies largely as a store of value rather than a currency. That’s why platforms like nexus they are innovative ways investors can use their crypto without losing and pay capital gains every time they make a purchase.

How does the Nexo card work?

What makes the nexus card unique is how it encourages HODLing. By using Nexo’s proven crypto-backed lending service, Nexo cardholders can use a line of credit to make fiat purchases without having to sell their crypto. Not only does it allow them to hold valuable assets, but it will not trigger a taxable event when selling crypto for fiat purchases, as is the case with other crypto cards. And as an added bonus, each card transaction pays up to 2% in crypto rewards.

What are cryptocurrency-backed loans?

The way you use Nexo cryptocurrency backed loans as a line of credit is a novelty for crypto cards. To understand a little more, this is how loans work.

P2P and no trust

Unlike the traditional financial system, cryptocurrency-backed loans are peer-to-peer and trustless. You don’t need to apply to a lending institution, have your credit score checked, get approved, or trust a centralized company. If you have collateral, you can borrow. Cryptocurrency-backed loans tend to be over-secured for this reason, opening up lending opportunities to more people.

Automated smart contracts

Because crypto loans use self-executing smart contracts, they are as robust as the code itself. They also have lower rates than traditional loans because there is no middleman taking a cut.

Maximize purchasing power

With lower fees and the potential for collateral to appreciate over time, cryptocurrency-backed loans maximize purchasing power. If you are borrowing against your cryptocurrency portfolio without selling the underlying asset and its value increases, your maximum loan will also increase.

Final considerations

Fiat is not going away just yet, and cryptocurrencies need to become practical for everyday users. Crypto credit cards are doing just that.

As with all investments, there are risks that must be carefully considered. Insufficient collateral could trigger loan liquidation and cryptocurrency volatility can drive investors to seek higher interest returns, but keeping the risks in mind, companies like Nexo are offering new and innovative ways to change the credit card landscape. crypto credit.

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This Investor Guide is sponsored by nexus.

The content of this website is not investment advice and does not constitute any offer or solicitation of an offer or recommendation of any company, product or idea. It is for general educational purposes only and does not take into account your individual needs, investment objectives, or specific financial circumstances.

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    emilio weber

    Emily Weber is a content writer and decentralization enthusiast. The point of it is to read all the way to the end of the internet so you don’t have to. In her spare time, you can find her making cool memes and tracking her Twitter handles.