From Options to Debit Cards: Crypto Is Making Inroads Into FinanceAdam Gardiner
Every day seems to bring fresh news of the new inroads made by cryptocurrencies into the traditional finance world. And each step cryptocurrencies take upends conventional finance even more. In just 10 years, cryptocurrencies went from mere curiosities to internationally traded financial assets. And 10 years from now we may look back and wonder how we ever survived without crypto.
One of the advances that first brought major focus to cryptocurrencies was the introduction of Bitcoin futures in late 2017. That spurred interest in Bitcoin that drove the cryptocurrency to record high prices, and drove up consumer and investor interest in cryptocurrencies across the board, from Litecoin to Ethereum to XRP, etc.
Following the introduction of futures, options were the next derivative to be introduced. First trading on cryptocurrency-specific exchanges, Bitcoin options have now been embraced by CME, the world’s largest options and futures exchange. And since CME started offering Bitcoin options at the beginning of 2020, its operations have exploded in size. It now controls over 20% of the Bitcoin options market, with its market share really accelerating over the past month.
As the majority of Bitcoin holdings are held and not moved, it seems that most Bitcoin owners prefer to invest in Bitcoin for its potential for long-term price growth, investing through vehicles such as cryptocurrency IRAs. That wasn’t the intent of Bitcoin’s creator, Satoshi Nakamoto, who intended for Bitcoin to be an actively used currency in daily life. But there are continued moves afoot to increase consumer exposure to cryptocurrencies too.
Cryptocurrency payment processor BitPay has recently announced that it will offer US customers a cryptocurrency-backed debit card with which they can make payments at point of sale using cryptocurrency. The card, provided through MasterCard, is the first cryptocurrency MasterCard available in the country, and its adoption should help spur the use of cryptocurrencies as a method of payment. BitPay’s move follows in the footsteps of other companies that have offered cryptocurrency Visa debit cards. The appeal of paying for goods in a currency that appreciates in value and purchasing power, versus one like the US dollar that declines in value and purchasing power each year, is too strong for many consumers to ignore.
These are exciting times for cryptocurrencies, and the next few years could end up being crucial to the large-scale adoption and long-term survival of cryptocurrencies. But with such great strides being made already, it’s hard to believe that cryptocurrencies won’t remain strong in the coming years.