At the end of February, Shift announced it was shutting down its Coinbase debit card. In a message to customers, it explained that it hopes to relaunch in the future, but for now U.S. residents are left with few crypto debit card options.
A few days ago, Coinbase announced they were partnering with PaySaf, to launch a new Coinbase Card, and fill the gap left by Shift shutdown. Initially, the new card will available only in the UK and let users instantly convert their crypto balance to fiat.
A hundred years ago, no one could even imagine that it would be possible to buy things using a plastic card, instead of paper banknotes or coins. Now, we can’t even imagine our lives without debit or credit cards. To go one step further, now we are even funding our debit cards with cryptocurrencies.
Most Americans don’t carry cash. In an average week, roughly 3 in 10 adults make zero purchases using cash. Those who do carry paper money, have less than $50 in their wallets.
Cash isn’t king anymore, but neither is Bitcoin… at least not yet.
Using cryptocurrencies in the real world is difficult. The biggest challenge that cryptocurrencies face is how to integrate into the real world. There are not many merchants that will accept cryptocurrencies, and even though technologies like Lightning Network will change this, today using your Bitcoin to pay for products and services is hard. We’ve seen some progress, but we’re still a long way to go before cryptocurrencies on par with fiat currencies. For now, the biggest obstacle for the mass adoption of cryptocurrencies is that people don’t consider them as real money, because they can’t spend them anywhere, anytime.
Could crypto debit cards change this perception?
Crypto debit cards were hot in the first half of 2017. Their value proposition was simple: users wanted to spend their cryptocurrencies to buy things in the real world, but merchants didn’t want to accept them. Crypto debit card companies built platforms, that let users automatically use their cryptocurrencies when they swiped their debit cards. The only difference was that the necessary funds for the transaction were withdrawn from a cryptocurrency wallet and converted into fiat.
When Visa cut WaveCrest, the main issuer for most crypto cards, nearly all them stopped working. Many, like TenX and WireX, suspended their services. Others worked, but only in a limited number of countries and currencies.
Bitcoin’s Lightning Network is already comparable with Apple Pay. Bitcoin’s payment system is superior to the conventional international payments and wire transfers. Technical improvements to Bitcoin’s network are almost certain to make it the world’s main payment system.
Datalight conducted a fairly large-scale study, which was entirely devoted to the prospects of Bitcoin to become a global payment system. They believe that the Bitcoin payment network will surpass the current giants Visa and MasterCard in the next 10 years.
Potentially, crypto debit card companies are an endangered species. Due to the complexities of operating a crypto-fiat business, regulatory requirements, the changing stance of Visa and Mastercard, and Bitcoin’s Lightning Network, crypto card companies could have a hard time in the future.
Even though crypto debit cards have been the best solution for crypto-to-fiat spending so far, it’s not an ideal one. Anonymity has always been one of the most important Bitcoin features and absolute privacy is simply impossible here.
For now, they are an important stepping stone. There is no doubt that merging crypto with debit cards is a powerful driver for mainstream adoption. Crypto cards help legitimize cryptocurrency since they work just like a Visa or Mastercard, that most of us have and use every day.
For cryptocurrencies to make the leap from a traded asset to valid real-world currency and payment method, we need to think of it as real money, the money we can use to pay for things. Crypto debit cards can help bridge this gap.
All credits to the source below from Daily Fintech: