The convergence between cash and digital money in the financial services sector continues this past weekend. Visa unveiled a debit card that allows users to make purchases with cash converted from cryptocurrency stored in online portfolios.
The Coinbase Card is directly linked to the balance of the holder’s digital crypto money account managed by the eponymous exchange system. Coinbase allows you to exchange Bitcoin, Ethereum, Ripple XRP currencies, and Litecoin. And all these currencies can be used with the debit card.
Back to the roots
Successful or not, the Coinbase Card embodies what the Bitcoin was initially intended for. Satoshi Nakamoto, the pseudonym of the person or group who created the Bitcoin, had conceived crypto money as an electronic payment method and not as a currency to be exchanged on the stock exchange for its value.
Earlier this year, J.P. Morgan Chase announced his intention to launch his digital token backed by a currency. Tests of the new cryptocurrency should start in the coming months. In the Cryptomoney industry, an instrument such as the JPM Corner is referred to as “stable coin” because its value is intrinsic, unlike Bitcoin or Ethereum’s ETH currencies, whose value is based on the supply and demand for virtual money. However, when this currency is linked to a fiduciary currency, intrinsic value is created.
Stimulate the adoption of virtual currencies
Facebook would also consider developing its crypto money, an initiative that could bring billions of dollars to the social network and also help eliminate false news and robots. Facebook has already had contacts with crypto money exchange platforms to discuss the possibility of selling its crypto money to consumers. But some believe that the social network will not link payments to a strict cryptocurrency and that it will prefer to use a stable currency backed by the US dollar and other foreign currencies.
Reassure cryptocurrency holders
Visa provides not only a large merchant base but also high-level security, including two-step authentication and the instant freezing of their card if it is lost or stolen. Two characteristics of crypto money make it more expensive and slower to use than cash or traditional credit cards: the mining fees paid to Coinbase to encourage bitcoin and other crypto money miners to confirm transactions and the confirmation time required to authorize a purchase.
The blockchain technology of the distributed general ledger on which the crypto money is based requires that each transaction be verified by a consensus established between users before it is finalized. Currently, Bitcoin transaction costs are approximately $2.06. To artificially speed up the operation, the payment processor (Visa) will probably give instant approval and assume responsibility if something does not ordinarily happen with the transaction.
While Gartner’s Vice President of Research does not believe that there is a real market in the United States for retail purchases by bitcoin and other cryptocurrencies, she does believe that the Coinbase Card could be adopted in “other types of economies.” For example, in some African countries, China, Russia or Venezuela, in states where inflation is extremely high, where consumers do not have a bank account or try to hide their income from the tax authorities.