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Coinbase, a Silicon Valley startup that operates digital bitcoin wallets, has launched a bitcoin based debit card called the Shift Card in the US, reports Wired. The company mentions that the card is approved for use in all states in the US, although it’s currently available only in California as a part of a beta launch.
The new card is available to anyone with a Coinbase account, although the company is accepting only the first 1000 users. Users need to verify their identity and pay a $10 insurance fee to sign up. Post this, the card can be used to pay when buying from merchants based in the US, without paying a transactional fee. However, for international transactions and ATM withdrawals, users will be required to pay a small fee.
How it works: Coinbase has partnered with Shift Payments for the card. Shift essentially users the Coinbase connect API to get access to a user account to carry out the transaction. Coinbase mentions that it might charge a fee to Shift for the conversion of bitcoin in the future, which seems to imply that Coinbase converts the crypto currency to USD, which is then transferred to Shift. Note that Shift has a tie up with Visa, which allows it to carry out secure transactions in bank currency, which is required as the end transaction is carried out in USD.
As of now Coinbase claims that around 20% of the transactions on its network involves payments where bitcoin is used as a currency, while the rest 80% of the currency is traded as a commodity or investment for profit. With this move, the company hopes to make bitcoin easier to spend conversely increasing the use of bitcoin as currency. Note that startups like Xapo also have bitcoin debit cards, which ship to multiple countries, although not India or the US.
MediaNama’s take: The transactional use of Bitcoins has been on the increase, although its value has remained volatile. Developments like these will help further propagate the use of crypto currency as mainstream currency. Eventually, if merchants start accepting payments in bitcoins, it can eliminate the transactional fees paid to companies like Visa and banks since users don’t need a bank account for using bitcoins and the nature of cryptocurrency makes transaction inherently secure.
Bitcoin acceptance has been increasing in India as well. Last year Intuit started letting businesses accept payments in bitcoins while various exchanges like Bitquick, Unocoin and BTCXIndia allow for bitcoin transactions in the country. However, there is no clear policy by the Government on these matters. In February last year, the RBI appeared pretty clueless on how to regulate crypto currencies, after a notice sent to the RBI demanded clarity on Bitcoin law in India.