Most teams simply leverage narrative hype without giving due recognition to the underlying systems and actual developers.

Author: Pavel Paramonov

Compiled by: Shenchao TechFlow

Crypto Cards Have No Future: Why They Are Just a Stopgap?

My overall view is that crypto cards exist as a temporary solution to two well-known problems: first, bringing cryptocurrency into the public eye, and second, ensuring that cryptocurrency can be accepted globally as a payment method.

However, crypto cards are still just cards. If someone truly believes in the core values of cryptocurrency but still envisions a future dominated by cards, it may be time to rethink their vision.

All Crypto Card Companies Will Eventually Disappear

In the long run, crypto card companies are likely to fade away, but traditional bank cards will not. Crypto cards actually add an abstract layer: they are not a true application scenario for cryptocurrency. The issuer of the card is still a bank. While these cards may have different logos, designs, or user experiences (UX), at the end of the day, they are merely an abstract extension. Abstraction does make the user experience more convenient, but the underlying processes remain unchanged.

Currently, different Layer 1 (L1) blockchains and Rollup solutions are eager to compare their transactions per second (TPS) and infrastructure with Visa and Mastercard. For years, their goal has been to "replace" or even more radically, "overthrow" the positions of Visa, Mastercard, American Express (AmEx), and other payment processing institutions.

But this goal cannot be achieved through crypto cards—crypto cards do not replace existing payment networks; instead, they add more value to Visa and Mastercard.

Traditional payment networks like Visa and Mastercard remain key "gatekeepers," holding the power to set rules and define compliance standards.

More importantly, they always retain the option to: ban your card, blacklist your company, or even blacklist the bank you work with.

Therefore, crypto cards are not the ultimate solution for the future of payment revolution; they are more like a transitional tool that will eventually be replaced by purer, more decentralized technologies.

Why has the crypto industry, which has always pursued "permissionlessness" and "decentralization," now willingly handed everything over to payment processors?

Your card is Visa, not Ethereum;

Your card is a traditional bank, not MetaMask;

You are still spending fiat currency, not cryptocurrency.

In fact, most of the "crypto card" companies you like have done almost nothing except print their logos on the cards. They are merely riding the narrative hype and may disappear in a few years. Moreover, even the digital cards issued now may not be usable by 2030.

Making Crypto Cards Has Become Easier

Today, making your own crypto card is very easy—even in the future, you might be able to create one yourself!

The Same Problems + More Fees

The most fitting analogy I can think of is "App-Specific Sequencing" (ASS). Yes, the idea that applications can autonomously process transactions and profit from them sounds cool, but it is just a temporary phenomenon: infrastructure costs are decreasing, communication technology is maturing, and economic issues exist at a higher level, not a lower one.

The same goes for crypto cards: yes, you can deposit cryptocurrency and let the card convert it to fiat for payment, but the issues of centralization and permissioned access still exist.

Undeniably, crypto cards are indeed useful in the short term: retailers do not need to adopt new payment methods, and cryptocurrency consumption thus becomes "invisible." However, this is merely a transitional phase toward the true goals of cryptocurrency believers:

Goal: Pay directly with stablecoins, Solana, Ethereum, Zcash, etc. Not needed: Indirect payment methods through USDT → crypto card → bank → fiat.

Each additional layer of abstraction means an additional layer of fees: exchange rate spread fees, withdrawal fees, transfer fees, and even a share of custodial earnings. These fees may seem trivial, but they accumulate over time—"a penny saved is a penny earned."

Crypto cards may be a short-term solution, but in the long run, they are not the ultimate answer to achieving decentralized payments.

Using Crypto Cards Does Not Mean You Are "Unbanked" or "Bankless"

There is a popular belief that people using crypto cards are "unbanked" or "bankless." But this is not the case. There are still banks behind crypto cards, and banks are required to report certain user information to the government of their respective countries. Of course, not all data, but at least some information.

If you are a citizen or resident of the EU, the government will have access to information about your bank account's interest income, large suspicious transactions, certain investment income, account balances, etc. If the underlying bank is in the U.S., they have even more information.

From the perspective of cryptocurrency, this situation has both good and bad sides. Good side: Transparency and verifiability are improved, but these rules also apply to standard debit or credit cards issued by your local bank. Bad side: It is neither anonymous nor pseudonymous: banks still see your real name, not an EVM (Ethereum Virtual Machine) or SVM (Solana Virtual Machine) address. Meanwhile, you still need to undergo KYC (Know Your Customer) verification.

Restrictions Still Exist

Some may argue that the advantage of crypto cards lies in their convenience: download the app, complete KYC, wait 1-2 minutes for verification, top up with cryptocurrency, and then you can use it. Indeed, this convenience is a major highlight, but it is not available to everyone.

Citizens of Russia, Ukraine, Syria, Iraq, Iran, Myanmar, Lebanon, Afghanistan, and half of Africa—these countries' citizens cannot use cryptocurrency for daily consumption without residency in another country.

But you might say, this is just 10-20 countries unable to use most crypto cards; what about the other 150+ countries? The issue is not whether "most people" can use it, but rather the core values of cryptocurrency: a decentralized network, equal nodes, equal financial access, and equal rights for all. Crypto cards do not align with these values because they are not true cryptocurrency products.

Max Karpis provided an insightful analysis on why "neobanks" are destined to fail.

In fact, the only time I truly used cryptocurrency for payment was when booking a flight on Trip.com. They recently added an option to pay with stablecoins, allowing you to pay directly from your wallet, and this payment method is available to everyone globally.

My sincere recommendation: Don't use Booking; use Trip.com to experience true crypto payments. Here, you will find a real cryptocurrency application scenario and payment experience. I believe the ultimate form of the future will be like this: the user experience (UX) of wallets will be optimized for payments and consumption, or (less likely) they will evolve into crypto cards (if crypto payments somehow become widespread).

The Functionality of Crypto Cards Is Similar to Cross-Chain Liquidity Bridges

Another interesting observation is that the functionality of self-custodial crypto cards is very similar to cross-chain liquidity bridges.

This only applies to self-custodial cards: cards issued by centralized exchanges (CEX) are not self-custodial, so exchanges like Coinbase are not obligated to mislead users into thinking that their funds are entirely under their control.

A useful scenario for CEX cards is providing proof of funds for government, visa applications, or similar activities. When you use a crypto card linked to your CEX balance, technically, you are still within the same ecosystem.

But the situation is different for self-custodial crypto cards: their functionality is akin to liquidity bridges. In this model, you lock funds (cryptocurrency) on chain A (crypto balance) and unlock them as fiat on chain B (real world).

This bridging mechanism in the realm of crypto cards acts like the shovels during the California Gold Rush—becoming a valuable link between crypto-native users and businesses wishing to issue their own cards.

@stablewatchHQ conducted an in-depth analysis of this bridging mechanism, essentially defining it as a "Card-as-a-Service" (CaaS) model. This is a key point that many overlook when discussing crypto cards. These CaaS platforms provide the infrastructure for issuing branded cards.

Rain: The Core Protocol Behind Crypto Cards

You may not know that half of your favorite crypto cards might be powered by @raincards. Rain is one of the foundational protocols in the neobank system, as it handles almost all the technical support behind crypto cards. What those crypto card companies do is merely add their brand logos to the cards (though it sounds harsh, this is the truth).

To help you understand how Rain works and how easy it is to set up crypto cards, I specifically created this chart.

(It's clearer when enlarged.)

Rain empowers businesses to issue their own crypto cards, and frankly, Rain's execution model can even transcend the cryptocurrency space to become a broader infrastructure. So, do not be misled into thinking that teams need to raise tens of millions of dollars to launch a crypto card. They do not need that; they only need Rain.

The reason I mention Rain multiple times is that people generally overestimate the effort required to issue crypto cards. Perhaps in the future, I will write a dedicated article about Rain, as this technology is truly underestimated.

Crypto Cards: No Privacy, No Anonymity

The lack of privacy and anonymity in crypto cards is not an issue with the cards themselves, but rather a problem that those promoting the development of crypto cards have overlooked under the guise of so-called "crypto values."

Privacy is not a widely applicable feature of cryptocurrency. Pseudo-privacy (pseudonymity) does exist because we see addresses instead of names. However, if you are someone with strong on-chain analysis skills, like ZachXBT, Igor Igamberdiev from Wintermute, or Storm from Paradigm, you can significantly narrow down the association between an address and its real identity.

Of course, compared to traditional cryptocurrencies, the situation with crypto cards is worse—they lack even pseudo-privacy. This is because when you activate a crypto card, you need to complete KYC (Know Your Customer) verification, and in reality, you are not activating a crypto card; you are opening a bank account.

If you are in the EU, your crypto card provider will still submit some data to the government for tax or other government interests. Now, you have effectively given the government an additional opportunity to track you: directly linking your crypto address to your real identity.

The Currency of the Future: Personal Data?

Cash still exists (currently the only anonymous payment method, aside from what the seller can see), and it will continue to exist for a long time. But ultimately, everything will transition to digital. The current digital payment systems offer no benefit to consumer privacy: the more you spend, the higher the fees you pay, and in exchange, they learn more about you. This transaction is truly a "bargain"!

Privacy has now become a luxury, and this situation will persist in the ecosystem of crypto cards. An interesting idea is that if we could achieve truly good privacy protection, to the extent that businesses and institutions would be willing to pay for it (not exploiting user data like Facebook, but based on our voluntary consent), then privacy could become a currency of the future, perhaps even the only form of currency in a jobless, AI-driven world.

If the prospects for crypto cards are bleak, why develop Tempo, Arc Plasma, and Stable?

The answer is simple—locking users into the ecosystem.

Most non-custodial cards choose to use L2 networks (like MetaMask on @LineaBuild) or independent L1 networks (like Plasma Card using @Plasma). Due to high fees and long transaction confirmation times, Ethereum and Bitcoin are generally not suitable for such operations. While some cards do use Solana, it is still a minority (not intending to spark another debate here).

Of course, companies choose different blockchains not only for infrastructure reasons but also for economic benefits. For example, MetaMask's choice to use Linea is not because Linea is the fastest or the most secure, but because Linea and MetaMask are part of a larger ecosystem owned by ConsenSys.

Here, I specifically mention MetaMask because it chose Linea. As most people know, almost no one really uses Linea; it is far behind competitors like Base or Arbitrum.

But ConsenSys made a smart decision to use Linea as the underlying support for its cards because it can lock users into the ecosystem. By providing a good user experience (UX), users gradually become accustomed to using it without needing to use it every day. Linea thus naturally attracts liquidity, trading volume, and other metrics, rather than achieving this through liquidity mining activities or begging users to bridge across chains.

This strategy is similar to how Apple approached the launch of the iPhone in 2007, keeping users within the iOS ecosystem and gradually making it difficult to switch to other ecosystems. Never underestimate the power of habit.

EtherFi: The Only Truly Crypto-Spirited Crypto Card

After some reflection, I conclude that @ether_fi may be the only truly viable crypto card that aligns most closely with the core principles of cryptocurrency. (This research was not sponsored by EtherFi, but even if it were, I wouldn't mind.)

In most crypto cards, the cryptocurrency you deposit is sold, and the balance is reloaded in cash (similar to the liquidity bridge model I mentioned earlier).

What sets EtherFi apart: It never sells your cryptocurrency; instead, it uses your cryptocurrency as collateral to provide you with cash loans while earning returns on your crypto assets.

EtherFi's model is similar to Aave. Most DeFi users want to seamlessly obtain cash loans through crypto assets, and EtherFi has achieved this. You might ask, "How is this different from a regular crypto card? I can also deposit cryptocurrency and use the crypto card like a regular debit card; this extra step seems unnecessary."

In simple terms, the difference lies in tax implications: Selling your cryptocurrency is a taxable event, sometimes even incurring a higher tax burden than everyday spending. For most crypto cards, every transaction is taxed, ultimately leading you to pay more taxes to the government. (Again, using crypto cards does not mean "debanking.")

EtherFi improves on this point because you are not actually selling your cryptocurrency; you are obtaining a loan against it.

Just based on this point (along with no USD foreign exchange fees, cashback, and other benefits), EtherFi becomes the best example of the intersection between DeFi and TradFi (traditional finance).

Most crypto cards try to masquerade as "crypto-native," but in reality, they are just a liquidity bridge. EtherFi's goal is primarily to serve crypto users, rather than simply promoting cryptocurrency to the masses. Their strategy is to bring cryptocurrency to local users, allowing them to spend in front of the public until the masses realize how cool this method is.

Among all crypto cards, EtherFi may be the only product that can withstand the test of time.

I prefer to view crypto cards as an experimental field, but unfortunately, most teams merely leverage narrative hype without giving due recognition to the underlying systems and actual developers.

We will wait and see where technological advancements and innovations lead us. Currently, the field of crypto cards is indeed expanding in a "globalization" (horizontal growth) manner, but it is lacking in "vertical growth." And for early technologies focused on consumer payments like crypto cards, vertical growth is crucial.

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