Pay with Bitcoin for a cup of coffee, buy groceries with Ethereum, pay for travel in public transport with Litecoin coins – all with a regular debit card. This was discussed in 2012 but failed at that time because the market was not ready yet.
In 2012, CNN released an article with a loud headline “Be ready for a debit bitcoin card.” Then the head of the communications department of the BitInstant exchange, Eric Voorhees, announced the creation of the first plastic card with the support of digital coins. And it really was released in conjunction with Mastercard, but this project did not cause much excitement among users. BitInstant later closed altogether, its CEO Charlie Schrem was arrested for money laundering, and Eric Voorhees became the CEO of another company that is not connected with debit cards at the moment.
In recent years, many companies have emerged that have lit up with the idea of issuing cryptocurrency cards. In 2015, Bitfinex announced a partnership with Blade Payments and announced the release of debit cards for its customers. In 2016, BitPay processing service, in partnership with Visa, presented its own debit Bitcoin cards. With the help of them, users of the platform were able to load funds in a cryptocurrency, pay for purchases through POS-terminals and cash money in ATMs. A year later, BitPay representatives said that the cards will be available in 131 countries and that already about 20,000 people worldwide have applied for pre-ordering this payment instrument.
In the same 2017, a startup from Singapore, TenX, launched ICO and collected 245,000 Ethereum to launch a project to issue bank cryptocurrency cards. The company kept afloat to this day. Visa prepaid cards could also be used by customers of large Japanese crypto exchange bitFlyer. The British company London Block Exchange has also released a debit card for cashing digital money and purchases.
On July 10, 2018, the Litecoin Foundation bought out about 10% of the shares of the German WEG Bank to create a Litecoin card, which then did not appear. The processing service LitePay was also not launched due to the “hostile actions” of payment card issuers.
The creators of LTC took a whole year to issue plastic cards again. On June 18, 2019, the Litecoin Foundation’s official Twitter account revealed information about a partnership with the digital asset exchange Bibox and the blockchain-company Ternio. Within the framework of cooperation, the issue of physical debit cards will be implemented, allowing payment for goods and services using cryptocurrency.
A week before this announcement, Coinbase representatives announced that they would issue a debit crypto card in six European countries: Spain, Germany, France, Italy, Ireland, and the Netherlands. The card is tied to the Coinbase mobile app, with which the owners can spend BTC, LTC, ETH and other digital coins in places where they accept Visa cards.
Despite numerous announcements appearing on the network, not all debit card issuance projects were brought to a logical conclusion. According to many developers, the creation and mass introduction of cryptocurrency “plastic” inhibit various problems existing in the digital industry.
Why the sphere of cryptocards develops so slowly
Last winter, it became known that Visa breaks off relations with the WaveCrest payment platform and stops supporting European cards of several cryptocurrency projects, including Bitwala, Tenx, Xapo, and Bitpay. Visa representatives themselves said that they had suspended work with WaveCrest because of “non-compliance with the rules of work,” and not because they changed their attitude to digital money. However, Bitwala employees considered that the Visa solution was connected precisely with the reluctance of large financial corporations to provide services to the “rapidly growing blockchain economy”.
Many banks have indeed boycotted the digital industry. Around the world, cryptocurrency companies are denied opening accounts from banks. Financial institutions fear additional regulatory compliance issues.
Earlier this spring, the Basel Committee on Banking Supervision (BCBS) published a report on the impact of cryptocurrency on the global financial system. An organization that was established by the Bank for International Settlements (BIS) criticized digital money since it cannot be used as a medium of exchange or value accumulation.
There are also problems with the competition when large financial organizations do not allow Fintech startups to enter the market, who have ideas for the introduction and distribution of digital coins. Last year, the conflict was widely publicized by Tinkoff Bank and a British company with Russian roots Revolut, which offers banking services, including a prepaid debit card, currency exchange, cryptocurrency exchange, and peer-to-peer payments.
The founder of Tinkoff Bank, Oleg Tinkov, speaking at the Finopolis forum, said that it was pointless for Revolut to start working in Russia. Since his bank has already launched a similar service: Tinkoff Black debit cardholders can pay in 30 currencies, including dollars, euros, and pounds, but not Bitcoin or other altcoins. Tinkoff Bank did not deny that the idea was taken from a British company and that such FINTECH startups should show examples of innovation and technology to large organizations. However, with regard to cryptocurrency technologies, the adoption process is much slower. This year, the accounts of one of the clients of Tinkoff Bank were blocked after he conducted a bitcoin transaction on the LocalBitcoins service.
In March of this year, Bitcoin.com published material that developers of cryptocurrency debit cards become an “endangered species”, and the crypto cards themselves are threatened with extinction. The Revolut technical director is confident that Bitcoin will not become a normal means of payment until people are free to buy goods and services using digital money. However, according to him, for this to happen, the approval of regulators and heads of different states is necessary, and they are ready to accept only proven economic options. Therefore, it turns out a vicious circle, which inhibits the developers.
In addition, Visa and MasterCard cannot be called fully commercial and independent organizations. Both companies pay attention to the regulations of the regulators and the new sanctions. And yet, despite a number of difficulties and problems, today there are quite a few companies that produce and maintain cryptocurrency cards.
Types of cryptocurrency cards
Any citizen of the included countries can order a plastic card, the place of residence does not matter. The cost is about $ 15. For registration, you need to be verified on the site, you can replenish the cryptocurrency card from the account in your Cryptopay account, transfers are made in Bitcoin, Ethereum, Litecoin or XRP. Developers do not charge a separate amount for maintenance.
The card is valid in 200 countries. You can order it through an application that is available for both iOS and Android. The card can be either physical, with a delivery of about $ 49, or virtual.
After the developers had problems with Visa in 2018, and they stopped working with the WaveCres payment platform, the blockchain start-up announced a partnership with the Berlin-based Fintech-based company SolarisBank. Cards are now issued from MasterCard. In the official Twitter account of the company, there are many posts about using a plastic card.
The project aimed at the Russian-speaking audience and cryptocurrency markets of Russia, Ukraine and Kazakhstan, has not yet been launched. The site says only about the soon release of debit cards. No exact dates. The developers promise free service and free shipping.
BitPay and Spectrcoin
Debit cards of these companies are popular in many countries.
The startup cooperates with Visa and serves clients from the Asia-Pacific region.
Cards for European residents support the conversion of several main cryptocurrencies and return about 0.5% BTC if you pay in stores.
Cryptocurrency cards have many advantages: round-the-clock access to funds, the ability to quickly cash out and automatic conversion. The user does not need to memorize numerous passwords from digital wallets but only needs to keep in mind a short pin code. However, the high volatility of the crypto bank can play a bad trick on cardholders.
Cryptocurrencies are exchanged for Fiat mainly at the time of the transaction, and this may not be the most profitable rate for the market. In addition, the main essence of digital money is lost: according to eToro analyst Mati Greenspan, digital money was created to work independently, but it is impossible with plastic cards. Despite the fact that there are several services that offer anonymous cards, the confidentiality of players in the digital world with the advent of cryptocurrency “plastic” has also become threatened.