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A house of cards: mysteries of cryptocurrency cards

21 June 2018 00:00, UTC
A house of cards: mysteries of cryptocurrency cards
By Bogdan Vinogradov

Prospectivity, multifunctionality, decentralization — one can list the benefits of cryptocurrency in comparison with traditional means of payment for a very long time. Though, there are some minuses as well. One of them is the low prevalence of technology. Some news about Japanese cafes and shops, where you can pay with Bitcoins came out a few months ago on the Internet. However, these are single cases. Still, the basic operations with cryptocurrencies require a lot of actions — creating a wallet, buying coins, performing transfers on the exchange... Meanwhile, the time for payment processing often leaves much to be desired — few people would like to wait for payment within half an hour to get a cup of coffee. In a digital era, time is the most valuable resource, and such inconveniences reduce the number of crypto community members.

The concept of ​​cryptocurrency debit cards appeared a few years ago. Developers have been thinking of combining plastic cards with a cryptocurrency account. Thus, one can pay with a crypto card as well as withdraw cash from ATMs everywhere. Soon this idea was implemented in practice — the number of companies providing such services has already exceeded a dozen. It is both a virtual card for shopping on the Internet and a conventional plastic card — for example, Wirex company, known in Russia, already provides the first cards and is preparing to release others. The current list of services can be easily found on the Internet.

As a rule, coins transferred to "ordinary" bank cards turn to fiat money at the time of the transaction — unfortunately, an additional commission is charged. Otherwise, the transfer from the virtual currency to the real one occurs immediately after the transfer of funds to the account — at the internal rate of service, which is usually tied to the rate of a particular crypto exchange. Of course, if you pay for goods in Bitcoins initially, the conversion is not needed.

If you want to receive a card, it is necessary to formalize an agreement on the website of the dedicated firm, pay for the issue and delivery (in some cases). Not all companies require you to specify the first name, the second name and other details. However, it is worth noting that an increased commission is often introduced for anonymous cards.

You will have to pay in any case — about 15-20 dollars for the release of the physical card, the commission of 2-5 dollars for each withdrawal of cash at the ATM, and about 10 dollars for annual servicing. The specific conditions depend on the company, but in general the cost fluctuates in the specified ranges. As you can see, right now this is a more costly case to use crypto cards than the ordinary ones.

Some services that provide plastic crypto cards already exist over the years. And eventually, it became clear that the integration of new technology into the current financial system has not been working out so well. For example, in January 2018, an unexpected event happened — the Visa payment system broke off cooperation with Wave Crest, based on "non-compliance", which resulted in the termination of several services: Xapo, Bitwala, CryptoPay, and others. However, it did not bring much trouble — the failed companies quickly switched to alternative financing mechanisms. But the founders of the company Centra Tech Inc, which also produced plastic Bitcoin cards, were less fortunate. They were accused of using scam schemes during the ICO, due to which the project managed to attract about 25 million dollars.

We've got to recognize that crypto cards did not make the expected revolution. It can be assumed that people who order cryptocurrency cards are already using virtual coins actively. This means that these people will not likely make a special effort to transfer their funds to "fiat" in advance. The converse is also true — for the absolute majority of those who did not need a cryptocurrency, such cards simply could not come in handy. Why buy incomprehensible "non-existent" money, if a simple credit card works so well? Thus, Bitcoin has remained a specific tool for specific purposes.

Another important point: when using such cards, anonymity is completely or partially lost. It’s one of the main advantages of using cryptocurrency, considering law-abiding citizens too. It becomes possible to track even the impersonal cards, and of course, it goes without saying that it’s the same with the cases when the recipient needs to specify his passport details.

06.09.2017  |   in Guest posts

As the cryptocurrency penetrates into the everyday life of the community, the popularity of cryptocurrency cards will be also growing. How will the crypto sphere be integrated into the traditional financial system? Time will tell.

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