Bitcoin has gained increasing acceptance throughout much of the world. As more people use the digital currency, the more useful it comes.
Unfortunately, there remains a problem with bitcoin and it's rather significant. Only a relatively small number of people actually use the virtual currency for buying and selling goods or even sending money. Instead, the great majority of bitcoin use is by people who are simply speculating, meaning they are buying the digital currency with the expectation that it will rise in price and generate a profit. According to a report published by Wired, 80 percent of bitcoin transactions are speculation based, in which the digital currency is traded as a commodity1.
In 2016, in an effort to increase the use of bitcoin as a payment method for buying and selling items, Coinbase unveiled the first Bitcoin Debit Card in the United States. Previously, Xapo launched the first ever Bitcoin Debit Card in Europe. The card is connected to Xapo Bitcoin Wallets2.
The US card, called the Shift Card, allows consumers to spend the digital currency at any merchant that accepts VISA. Shift Card can be used at both online and offline merchants. Ultimately, the goal is to make bitcoin easier to use and spend. With the release of a mainstream debit card based on the virtual currency, that goal could be within sight.
Overcoming Regulatory Issues for More Mainstream Use
To date, the card has been approved for use in 25 states, including New Jersey, Washington, and Texas. Regulatory hurdles, including requirements for licensure, still must be overcome before the card can be used in other states.
In order to use the card, users must have an account with Coinbase. Getting signed up requires the user to verify his or her identity and pay a nominal insurance fee. After users receive the card, they can make purchases from any merchant in the United States that accepts VISA and pay for the goods in bitcoin without incurring any additional fees.
The card can be used overseas, but users will be required to pay an international exchange fee. Additionally, Shift Card can be used for getting cash from an ATM with the funds coming from the user's Coinbase balance rather than a bank account. This will also incur a fee.
Along with increasing more mainstream adoption among consumers, it is also hoped that the new card will encourage online and offline merchants to accept digital currency payments. In fact, merchants might have even more of a reason to make the transition to bitcoin. By switching, merchants can avoid the expensive processing fees typically paid to credit card companies, such as Mastercard and VISA. Although the Shift Card is a VISA card, the credit card company itself is not actually involved directly. Coinbase has partnered with Shift, who in turn has a partnership with VISA.
Eliminating One of Bitcoin's Biggest Challenges
If the card should prove to be successful, it could help the digital currency to overcome what has been the challenge of few people using it because so few merchants accept it. In many ways, it is a Catch 22 situation because relatively few merchants accept bitcoin because so few consumers use it. Should more consumers begin using the virtual currency, the problem could be resolved and eventually lead to more widespread usage of bitcoin among both consumers and merchants.
Consumers could find there to be many advantages associated with using the new bitcoin debit card rather than their standard credit card. For instance, consumers can make purchases even if they do not have a bank account.
1) Coinbase Just Debuted the First Bitcoin Debit Card in the US
2) Xapo Now Offers The First Debit Card Linked To Your Bitcoin Wallet