So you and your buddies are arguing about an all-crypto lifestyle. Some of you may have a shiny new crypto-savings account or may invest somewhat in crypto. Perhaps one of you may have even purchased a property or two with crypto—and now you are googling to find out if an all-crypto lifestyle is possible.
Well, you're not alone. A lot of people are skeptical about their real-world value and utility. Despite pressure from crypto-natives, many policymakers are cautious in their approach to regulation; some are banning it outright. With such hiccups in accepting crypto assets, it is not farfetched to see why you might be on the fence about an all-crypto lifestyle or why many still view crypto as a speculative investment.
Yet crypto assets hold high potential to become part of our day-to-day life. Economic analysts anticipate a significant transformation as institutional money continues to enter the space. There are now several notable use cases for crypto assets. By highlighting them, you can decide for yourself if living an all-crypto lifestyle is truly possible.
What is a crypto lifestyle?
The crypto lifestyle is shifting from the fringe to the mainstream—both by what it means and the people adopting it. According to the Chainalysis index, the global number of crypto wallet holders has increased by 45% since the pandemic began, to an estimated 66 million users.
But what exactly is it?
If you find yourself using crypto solutions in your daily routine like paying for gas or buying something as simple as a lamp for your bedroom, then chances are, you're already living a crypto lifestyle. Most crypto-natives use crypto assets in all types of financial transactions the same way they would fiat.
However, living the crypto lifestyle in the early days meant mining and trading coins. It involved spending time on online crypto forums like the bitcoin subreddit and bitcoin talk. The first vendors to accept crypto emerged during this time—Richard Branson's Virgin Galactic, the retail store Overstock, and the tour company CheapAir. Most of these merchants accepted bitcoin through payment processors like BitPay, which instantly converted the coins into fiat currency. Nevertheless, Bitcoin devotees bought mainly from these merchants to prove that bitcoin can work like fiat.
Over time, shopping using crypto has become more conventional, especially as people earn more in crypto and want to guard their assets against inflation. Today, users can borrow, lend, chat, play video games, blog, and buy properties with crypto. And powering this new lifestyle are crypto debit cards.
Crypto debit cards
Companies like Coinbase and Binance now offer crypto debit cards that function like regular debit cards. They let you make purchases from either your exchange account or a specific crypto account without going through the cumbersome process of withdrawing and converting crypto.
Additionally, many providers offer a substantial cashback program, no ATM fees, and reward schemes for streaming services and other offerings. With proper research, you can get some great cashback deals.
The advent of crypto debit cards means that transactional possibilities are endless. For example, salary earners can earn and spend their pay in crypto. Crypto debit cards could open the floodgates and support cross-border remittances for the thousands of people working remotely for companies worldwide. But first, it has to start with access. Many crypto debit cards aren't available everywhere—for example, the Binance debit card is offered exclusively in Europe.
Ways to live a crypto lifestyle
Paying bills with crypto
Thanks to startups like Ramp and Paysail, working in expense management, bill payments, and accounting automation, paying essential bills has become accessible and straightforward.
These services work for credit card bills, utilities, healthcare, mortgage, and auto loans, with integrations that allow interoperability and networking between startups to access consumer transactions and other financial data. In other words, open crypto. Open crypto can, and is, facilitating this exchange by allowing secure access and control of customers' financial data. Now, startups such Bitrefill even let their users pay property taxes and funeral service payments in crypto.
Buying a property
In other articles, we talked about borrowing and lending with crypto. You can take out an auto loan, pay back your mortgage, or maybe even get a student loan using crypto.
Crypto loans are new and exciting and represent a marked shift towards living a crypto lifestyle. Many cryptocurrency platforms let you borrow money in as little as 24 hours without a credit score. And while it's a relatively contemporary area with wrinkles that need ironing, blockchain applications can offer speed, transparency, and trust for both traditional mortgage lenders and crypto startups.
For one, lenders can make faster decisions while ensuring customer data security using open crypto. New ideas and technology powered by open crypto can reduce the data points needed to be manually evaluated, and include risk-critical information while allowing transactions to be tracked and verified by all parties.
Crypto-powered travel and leisure
Now that you can get debit cards tied to cryptocurrency portfolios, it’s simpler to use digital money while traveling. But for those travelers who want to avoid the extra costs associated with using a crypto card, it’s best to seek out merchants who take cryptocurrency.
Thankfully, a growing list of businesses, resorts, and destinations are keen to do business with crypto natives. Nevada’s Resorts World Las Vegas collects crypto payments through a partnership with crypto payment firm Gemini. Along with over 700,000 hotels and accommodations available on the crypto-friendly booking platform Travala.com.
Cryptocurrency transactions “will matter for travel” and other leisure forms. Mobile game developers have also hit the market, creating several mobile games, such as Neon District, allowing users to win ether. Additionally, several movie theatres have begun accepting cryptocurrency rather than fiat currency, enabling users to have a premium movie-watching experience.
Investing for the future
Buying and holding crypto is a go-to for crypto enthusiasts when investing in anything but individual retirement accounts (IRAs). Today, solo 401(k) plans have given retirement investments a new look.
You can open a crypto IRA as either a traditional or Roth IRA and enjoy the same tax benefits as both. For example, capital gains are exempt from taxation in either account as long as the money stays in the account. This is a significant upgrade from buying and holding crypto in a wallet where your asset is taxed when you sell at a gain.
Crypto IRAs give you complete control over your investment vehicles. Simply put, you can choose, invest, and manage the asset in your account. Investors have the option of custodians like IRA Financial, which lets clients make direct investments and purchase all the leading cryptocurrencies through a crypto exchange. Investors also have many IRA platforms with different perks. However, picking the wrong IRA can lead to hefty fees.
Should you live a crypto lifestyle?
Before moving to an all crypto lifestyle, there are a couple of things to consider.
Crypto's volatility is something to consider before converting your savings to crypto. As a newer asset class, crypto cryptocurrency is considered volatile. But when people talk about volatility, they usually refer to historical volatility—the price of a currency over a specific period. For instance, the global cryptocurrency market lost $1 trillion as of January 2022. This loss was mostly from bitcoin increasing by 70% before dropping by 30%.
For many, this high volatility is part of the appeal, it creates the possibility for high returns. For less risk-tolerant investors, this feature has an opposing effect and being able to forecast and monitor up-and-downtrends is more crucial. Predicting these future movements is called "implied volatility," and some strategies like Crypto Volatility Index (CVI) are typically used to quantify volatility. But because nobody can predict the future, it's a less than exact science, creating opportunities for innovative startups to find ways to limit the downside impact of volatility.
The IRS views cryptocurrency holdings as "property" for tax purposes. So, virtual currencies can be taxed just like other assets, like stocks or gold. Including it in tax return documents isn't too tricky if you purchase and sell crypto through online exchanges. However, the more activity you have, the more intricate things can become. This intricacy is because the taxable worth of virtual currency depends on capital gains or losses, or put simply, how much the value your holdings increased or decreased within a specific period. Additionally, capital gains taxes will apply whenever you sell an NFT or buy one using a cryptocurrency like Ethereum.
There is also income tax, which usually involves buying, selling, or receiving cryptocurrency from a trade. However, most people are unlikely to satisfy the description of a 'trader' for income tax purposes. To fall into the definition of 'trading,' you would need to buy and sell crypto assets with such intention and frequency that the activity amounts to a financial trade.
Luckily, importing transaction data and syncing all exchange trading history allows RegTech startups to calculate your cryptocurrency taxes. And lets FinTech startups help you reduce them for the following year.
In the end
An all-crypto future seems natural, perhaps even inevitable, for Gen Z and the younger Gen-Alpha members. Still, the road to the crypto lifestyle remains paved with good intentions. Many studies show that exchange trades are still the most predominant use for cryptocurrencies—and contribute to more financial activity than loans or payments. This speculative behavior is expected, especially as things continue to mature. While there's a steadily growing number of merchants who accept cryptocurrencies, there are not nearly enough. For cryptocurrencies to become more widely utilized, others must be willing to embrace some version of a crypto lifestyle.
However, its general complexity compared to traditional money will likely dissuade many. Any solution looking to power this move to a crypto lifestyle must now satisfy widely divergent criteria. It would need to be complex (to avoid fraud and hacker attacks) but easy for users to understand; decentralized but with sufficient consumer protection; and preserve user anonymity without being a channel for tax evasion, money laundering, and other such activities.