- Challenges in Monetizing Crypto Wallets
- Self-Custody and Its Subsystems
- Crypto Cards as a Revenue Driver
From Crypto.com to Coinbase and now MetaMask, some of the most prominent crypto players have issued crypto cards. But what explains this proliferation?
Challenges in Monetizing Crypto Wallets
The answer lies in crypto wallet software and its shortcomings. Crypto wallets are difficult to monetize. Crypto assets are in the end user’s custody, so there can be no hidden fees. Users can easily switch between different wallets, making it challenging to create a sticky product.
Self-Custody and Its Subsystems
There is an inherent image problem with self-custody in crypto. The concept of self-custody was sold with the belief that crypto is akin to cash, allowing users to hold it without spending money. However, this is not accurate. Self-custody is more like holding gold in a vault; users need to purchase a vault and pay for its maintenance. Psychologically, people are more willing to pay for physical goods than software.
Crypto Cards as a Revenue Driver
Crypto cards allow users to spend their crypto assets in local stores, serving two functions: loading and spending crypto. They generate revenue for issuers through fees. Adoption of crypto cards is skyrocketing: Visa customers made $2.5 billion in payments with crypto-linked cards in the first fiscal quarter of 2022. Importantly, crypto cards are compliant, easy to understand, and use.
While crypto cards are not a perfect solution, they are practical and sufficient for all stakeholders at this stage.
