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by tgraham
4337 days ago
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This is interesting, an odd mishmash. whilst the FAQ is big it is not specific - eg 'we are not a prepaid debit card' (do you have a deposit license?) ... 'We automatically withdraw money from your xapo wallet' (and that doesn't count as preloading?). To me, it looks like they've taken a standard visa backed prepaid debit card (although not putting visa logo on it I thought was a breach of scheme rules). They've added a nice ui, and wrap around of saying you can use bit coins. However. Bitcoins stops at the point of actually using the card, where they convert it into the issuing country's currency (assume here: Usd). You're still using visa / other scheme network to transact and they don't take bitcoins. The other comments are bang on and prepaid cards are immensely profitable with trxn fees to load them up, and 'hidden' fees for doing fx. What's odd here is that people using bitcoin are presumably doing it because they like the idea of not having to pay for all that crap! Much comment about how the funds are insured for 100% against any loss - but no mention of FDIC... |
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I think Xapo is similar. But instead of giving the card to its employees, it sells it for $15 to its customers. And the spending limit? That's dynamic, based on the amount in the bitcoin wallet.
At the moment a payment is made, Xapo pays for it and it's a regular debitcard transaction. No bitcoin involved.
And then Xapo goes and removes the equivalent value in bitcoins from the respective user's wallet, which is not much more than earmarking those coins in their internal accounting as being 'company funds' now, no bitcoin blockchain involved.
That means there's no bitcoin or blockchain technology involved anywhere in the process. And yes, it's just as expensive as legacy banking products.
Why is it cool? Because it allows people to store their wealth in bitcoin, yet use a debitcard as they normally could. They need not a bank, or trust a bank. They need not a national currency or indeed trust monetary policy. If you're in Cyprus in 2012, that means your money wasn't seized by the government. If you were in Argentina in 1990, you wouldn't have suffered from 300% annual inflation. This debitcard is really to plug bitcoiners into the existing payment channels, and allow them to store wealth not in fiat but in bitcoin, for reasons similar to those of goldbugs. (e.g. it'd be no different from a debitcard connected to an account with gold-deposits/certificates)
I see it as a temporary product. IF and when bitcoin gains mainstream traction (if everyone follows Newegg, Expedia, Dish, Overstock, Tigerdirect, Reddit, Wikipedia etc) then one could not only store wealth in bitcoin, but also pay cheaply and securely and quickly with actual bitcoins. At that point, a debitcard will be redundant. But that's a long way away. Until then, a debitcard allows those who wish to hold wealth in bitcoin (again akin to goldbugs) needn't inconvenience themselves by being disconnected from the regular payment system everyone uses, they can now use a debitcard that's as shitty/brilliant as usual.