Bitcoin, depending on who you ask, is either “a revolutionary, stateless way to make payments online” or a “dangerous way for to criminals to launder money and undermine governments”. Regardless of these opinions, the reality on the ground (or in cyberspace), is that Bitcoin is booming, both in terms of the number of institutions trading in it, and the relative value of a Bitcoin against a ‘traditional’ currency.
Despite this, the major problem Bitcoin still faces is that it is hard to use. New users face a steep learning curve, and during this period, simple mistakes could cost them their money, or leave them open to opportunistic fraudsters. Now, however, it seems that all of this is about to change.
Xapo, a Bitcoin startup is launching its Bitcoin debit card in July for users who have an Bitcoin ‘account’ held by the company. This debit card will theoretically allow users to spend their Bitcoins at any outlet which is also accepting credit/debit card transactions. This they have achieved by created a system where the users Bitcoins are instantaneously converted to local currency via an electronic payments system, and the actual transaction itself happens in local currency, not Bitcoin.
The card will allow users to spend their Bitcoins at any outlet which is also accepting credit card transactions.
This system makes paying with Bitcoin much simpler than previous alternatives, which often involved long, arduous and complicated procedures. Additionally, in order to address the security concerns which many people have with Bitcoin, the company offers to insure Bitcoin deposits held by the company for a nominal fee which is calculated as a small percentage of the total account holding.
It is obvious that this system has numerous advantages, and indeed it is getting investors very excited, with news breaking in the last 24 hours, that Xapo has just received an additional funding injection of $40 million. However, this more mainstream Bitcoin ‘banking’ also runs the risk of undermining the original goals of the Bitcoin currency itself. Many early adopters were not so much interested in making money, as they were in creating a distributed currency which could not be controlled by governments or other financial institutions. As companies like Xapo begin to control more and more of the total number of Bitcoin transactions, these lofty goals will fall to the wayside in the face of practicality.
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