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My intuition for their setup was something like this: You know how a company like Oracle might give its top sales people creditcards with spending limits (for sales dinners with big customers), and Oracle pays for this? 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. |