Top Banks are Banning Bitcoin Purchases with Credit Cards

The top five credit card companies have banned the use of their credit to purchase cryptocurrencies. This is very telling. The banks are concerned that the use of such credit is going to an unsafe investment. Credit cards are meant for consumer purchases, not investments. Much of the Bitcoin phenomenon has been made up of people who’ve never invested before, dumping their money into a volatile field.

In their experience many retail investors are using credit cards as leveraging tools, purchasing more cryptocurrency than they can afford. Those investors are probably in trouble right now. The current price of Bitcoin is 50% of what it was back in December at a high point. It’s not looking like they’ll be able to pay off their initial purchases. This is increasing the possibility of default. The banks are right to put a stop to it.

Real, experienced investors use bank loans with their specific use listed as the reason for the loan. Credit cards, by contrast, are a line of credit available to almost anyone for consumer purchases. This is accounted for in the books quite differently than an investment. The risk for the banks on a credit card default is, hopefully, repossession to recoup losses. Investment accounts are quite different, their risk is calculated differently, placed into a column of higher risk loans. The use of credit cards for the purpose of purchasing cryptocurrencies places these high-risk loans into a column intended a smaller risk. The columns are necessary for banks to keep a handle on how many high-risk loans they are making. Adding these into consumer credit hinders their ability to control how much of their credit is going into the high-risk category.

It seems that many would-be investors with no experience, only the fetishism of Bitcoin, are using credit cards this way. The banks know that Bitcoin is an unsafe investment, and want to curb as much of their consumer credit from flowing into this sector as possible. The banks, the experts, are aware how much of a bubble this whole cryptocurrency racket really is – and don’t quite feel like loaning out money for it.

This largely discredits one of the claims behind the creation of Bitcoin. Its fetishists claim that Bitcoin was going to be an alternative means of payment in competition with the US dollar. What we’ve seen is quite far from the truth. Bitcoin has been what I, and many others, have predicted – it has become an asset that is speculated on. The idea of using Bitcoin as a medium of exchange is dead. The only time it’s used is for black market transactions. Bitcoin as an investment is greater than it ever has been before. And as we predicted, the price of it skyrocketed and plunge accordingly.