Xapo – Bitcoin debit card(xapo.com) |
Xapo – Bitcoin debit card(xapo.com) |
Unfortunately, due to financial regulations in the U.S. and India, Xapo cannot currently ship debit cards to addresses located in the U.S. or India. --> http://help.xapo.com/95428-Is-the-Xapo-Debit-Card-available-...
Can someone explain -- I am not attacking this, I am seriously wondering -- why anyone would wire funds into this account, pay a 1% fee, and then pay with a debit card like they could from any other bank account?
(I get if you already have bitcoin, but I'm wondering what the point of the wire transfer support is.)
Source: http://help.xapo.com/questions/94070-Does-Xapo-charge-a-fee-...
So why buy bitcoin in the first place? Well, bitcoin itself represents a financial system with much more autonomy, as, if you'd like, you could store your money yourself (and not with Xapo, after buying bitcoin there) instead of e.g. at a bank.
This may not sound like a big deal for people in OECD countries, but look at Cyprus where many lost funds in their banks after the government essentially seized them. Look at places like Argentina with high inflation rates, there are numerous places with rates beyond 15-25% for whom owning bitcoin may be a better solution.
And then there's the fact that bitcoin allows cheap transfer of value once you have it. Perhaps not great to buy some orange juice in the US, but if you're remitting money back home (global average of 9%), paying 1% is a bargain as crazy as that sounds.
And lastly there's the general idea of simply supporting a nascent bitcoin ecosystem. It's not much different from people spending 10% more on a fair-trade product, or a product that has harms animals less. It may be exactly the same quality, more expensive, yet attractive for more ideological supporting reasons.
No thanks
Also, your password to the account is a 4-digit pin? What?
Then there's the 2FA the account has. Meaning if you have $50 on your account, you can secure it with a quick pincode. If you have $50k on your account, you can add extra authentication.
In fact, 2FA can be set up not just for login or for entering what is called the 'vault' (which by the way, is an insured product), but it can also be configured specifically for daily payments above a threshold, of say $50 a day.
That vault, the insured product, has an additional password by the way. So you can have a pin, a password, 2FA and spending limits AND the bitcoins themselves are insured by them.
So it's not as bad as you might think :p
And they ship the card to the US, among other countries.
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...
The currency conversion fee doesn't relate to regular payments which are completely free. (except of course, for merchants paying 1-3% on any card transaction from anyone pretty much)
Hell, in larger cities I've successfully used mag stripe in Canada and in Europe.
My general experience is that all the "you must have a chip and PIN card or you'll never be able to buy anything anywhere" advice is overblown.
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.
Except I'm pretty sure that a bitcoin transaction for a money company is more expensive in every regard than a "legacy banking product".
Seeing as they've not ever communicated any lending product and as there's no hint of that anywhere, and seeing as they're the most funded ($40m) bitcoin company by reputable VCs who do due diligence and stress regulatory compliance, I doubt they'd be so blatantly breaking the law on this point.
The fee is indeed for the wallet service of insured storage with easy configurable pincode, password, 2-factor authentication and daily spending limits. If you can do all that yourself, awesome. But there's plenty of mainstream users who haven't a clue of proper security measures, and paying 0.12% annually for secure and insured storage, sounds like a decent deal.
I don't use it myself, I can easily set up my own secure cold storage. But it's a nice product, particularly for securing something many see as an investment vehicle that can easily do 10x, perhaps 100x value increase in the next 10 years. Paying 0.015x every 10 years to store, secure and insure that vehicle isn't such a big deal, and that's their fee structure.