Although it’s not the first crypto debit card in existence, Coinbase’s solution proves that the barriers to mainstream finance are lowering each year. Still, the Coinbase Debit Card has a few hurdles to cross moving forward.
Since the advent of cryptocurrencies, there has been a collective vision that sought to establish virtual currencies as legitimate financial tools, beyond that of high volatility or novelty.
As Bitcoin rose to prominence, developers around the world scrambled to create a cryptocurrency that could expand on the pioneer cryptocurrency, and bring forth a model that functions like regular money, or better.
The U.S.-based cryptocurrency exchange Coinbase, a poster child of sorts for the industry, decided to launch a Visa debit card in the UK, and luckily for me, I was able to order one immediately. Since then, the Coinbase Card has been my primary method of payment, almost exclusively.
With the Coinbase Card, I have booked a hotel, ordered food online, purchased groceries, ordered an Uber or two, and withdrawn fiat from ATMs.
As someone who has been paid in cryptocurrencies for well over a year, the recurring need to convert crypto into fiat, usually through LocalBitcoins, became tedious. The process would often result in a small loss due to incoming transaction fees and the oft-below market rates that traders would advertise.
The card comes backed with a neat app that displays all your transactions in real time, as well as offering the option to switch between a limited amount of crypto wallets, namely: bitcoin, ether, litecoin, and bitcoin cash. Users can also freeze the card, report as lost or stolen should you need to.
Crypto Finance and Fees
With that in mind, the card doesn’t quite make practical sense for individuals who have purchased bitcoin with fiat.
In terms of closing the crypto lifecycle “loop” and transforming the emerging asset into a robust currency for any industry, merchant, and employee, the Coinbase Card alone doesn’t quite make the mark. In tandem with crypto-payroll services like Bitwage, however, the loop could be closed. In doing so, a fully-functioning cryptocurrency economy akin to our traditional economy could be born.
Unfortunately, the Coinbase Card’s fees aren’t exactly competitive, making it a somewhat expensive way to spend crypto with a 2.49 percent crypto liquidation fee for every transaction. Comparatively, one of the other hot-picks for UK and EU residents is Wirex, who charge a £1 per month maintenance fee with zero fees for a majority of transactions outside of withdrawing hard cash.
It’s also worth noting that there are other merchant and payment services out there that preceded Coinbase’s latest product, with a crypto debit card to boot.
BitPay, for instance, has been in the game since 2011 and has been providing cryptocurrency payment and settlement services for “233 countries and territories,” making it an extremely dominant force in the space. But, the Visa-powered debit card BitPay offers is only available to U.S. residents. It provides a one percent fee on domestic transactions, which can be variable, as well as other fees for ATM withdrawals and overseas spending
Stablecoin Support, When?
Perhaps the most disappointing part of the experience thus far has been the fact that there is no stablecoin wallet for the card. With USDC and DAI now joining the Coinbase roster, this comes as quite a surprise.
When switching between wallets in the Coinbase Card app, users are offered the option to “Add a crypto wallet,” which results in an odd loop of re-signing into Coinbase, authorizing access between the two, and landing in the same place with no new wallet added.
That said, the Coinbase app, separate from the Coinbase Card app, allows users to convert from crypto to crypto with zero fee. So, if you’re uncomfortable with market volatility, users can swap between stablecoin and spendable cryptos with relative ease. Though troubling, a stablecoin wallet feature for the debit card may be added in the future; after all, regulations surrounding stablecoins aren’t exactly crystal clear, and the Coinbase Card is a mere two months old.
Having spent a few years following the rise of crypto and its ongoing battle for mainstream adoption, it appeared the technology would remain on the fringe and never quite overcome the wrathful cynicism with which it is treated time and again.
The very notion of spending bitcoin at the local supermarket or making online purchases seemed like a fantasy. Eventually, it became a novelty; one that would only ever be facilitated by the occasional retailer or online merchant that boldly placed a “Bitcoin Accepted Here” above their place of commerce.
Usually, these merchants or retailers would have to utilize a particular service or platform to facilitate the crypto transaction. While attitudes are becoming more open, multiple research efforts have shown that the usage of cryptocurrencies in commerce is still quite low. Moreover, Bitcoin payment systems continue to struggle to compete with the processing powers of Mastercard, Paypal, and Visa.
Bypassing these bottlenecks, however, are products such as the Coinbase Card.
The truth of the matter, though, is that having one of these cards only seems to make sense if you are paid directly in crypto. The purchasing fee for the crypto and the subsequent transaction fees when making purchases will only amount to a loss, unless, of course, you’re lucky enough to be riding a bull run while out grabbing a beer or groceries.
These are still very early days for the Coinbase Card, and perhaps the company will lower the 2.49 percent transaction fee to something a more reasonable at some point. But again, for someone who is paid directly into crypto, the fee seems to balance out against the crypto-to-fiat transactions I previously made through over-the-counter services like LocalBitcoins.