Unlike the developers of Dark Wallet which launched today I am not an extreme libertarian or anarchist, nor do I feel any compelling need to keep every scrap of my financial activity away from the prying eyes of the government. The reason Bitcoin works for me is precisely because it can integrate with my more traditional financial dealings. In practical terms that means that I can convert my Bitcoin (and by extension my other crypto earnings) into US Dollars and use them to pay bills or buy things I need and want. The ability to easily convert Bitcoins to US Dollars and then get those Dollars to my bank account is the lynchpin for me. Without it Bitcoin would hold little to no value for me. Sure, I can buy all kinds of stuff with Bitcoin, but at this time in my life my focus is not on buying stuff, but on paying bills and getting out of debt; I need fiat for that.
Coin RNR provided that crucial point of exchange for me. It is true that many trading platforms will convert Bitcoin to US Dollars. All I’d have to do is place a sell order for Bitcoins, and presto, I have Dollars. The complications lie with trying to transfer my Dollars to my bank account. In the US, various anti-money laundering and Know Your Customer (KYC) laws actually make that transfer complicated. I can’t just move fiat around. The institutions on both ends need to know who I am. My banks all know me, or at least the relevant stats about me, but the various trading platforms vary widely in terms of how in depth they want to get with me just so they can send me my funds upon request. For many it’s just a lot easier to not do business with people in the US, or make doing so as complicated for us as possible. I had my issues with the Camp BX trading platform not getting me my Dollars in a timely fashion. Then I found Coin RNR and decided that I really didn’t need a full blown trading platform, but rather, a business which specialized in getting me my Dollars as quickly and efficiently as possible, and I was happy to pay their premium in exchange for that service. Yes, I had to go through their verification process, but Coin RNR made even that part quite easy. It looks like Cryptsy is getting into the BTC/USD market soon, and I may be able to use a full blown trading platform after all. But it still remains to be seen how easy it will be to then transfer my Dollars. Coin RNR has already proven itself time and time again.
With the Devcoin/Bitcoin exchange rate being what it is now (in the gutter!), it takes me about two weeks to accumulate enough Devcoin to be able to come up with enough Bitcoin to make a Bitcoin sale on Coin RNR. Trading out Bitcoin for Dollars every two weeks over time works out to some pretty decent Dollar cost averaging. By Dollar cost averaging, I mean that on average I get a good exchange rate. Some days I might sell too low (and wish I’d either sold the day before or held out another day), but other days I might sell higher than usual and consider myself fortunate. But over time it all averages out. This is in contrast to making one epic trade a year where once I’ve sold I don’t have a chance to do better for a long time after that.
But still, what would be even better would be if rather than making a big trade every two weeks, I could instead make little trades as needed throughout the week. Since over time I see the price of Bitcoin trending upwards, I see no reason to sell it off until I actually need it to make a purchase. I’d love to hold onto it as Bitcoin until that moment when I pull up to the gas pump and fill up my vehicle. If the gas station accepted Bitcoin directly, that would be great but if it doesn’t, then it’s at the point where I pay for the gas that I make the exchange from Bitcoin to US Dollars. I’d like to be able to do the same for groceries and other items that I need.
This is why I really, really want a Bitcoin Debit card. I’d like to have an online wallet where I send my Bitcoin, and have that wallet tied to a debit card which I can carry around. I should be able to log into my wallet with a smart phone or tablet PC and check the balance and the equivalent amount of Dollars I could get were I to spend it all in that moment. And when I swipe the card, my balance instantly turns into just enough US currency to complete the purchase while the rest of my balance remains as Bitcoin.
It seems so simple, and yet in over a year since I’ve been involved with Bitcoin, nothing satisfactory has come on the market. Yes, there are services which say they provide you with a Bitcoin debit card. But it’s not a true debit card. Or there are some major issues.
Take Xapo, for instance. I filled out their form to order a debit card, and it also registered a wallet with them. I now have this online wallet which is protected by nothing more than my email address, which is public, and a four digit pin number which could be hacked in five minutes. Only keep the funds I use every day in my wallet, the site tells me. For more protection I should move them over to the “vault.” Um, how about a secure random password? 2FA? You don’t have those things? But you want me to store my funds with you? I don’t think so.
Then there’s BitPlastic. You sign up for an online wallet and send some Bitcoin over. Then you “withdraw” Bitcoin to your debit card by exchanging them for US Dollars right then. So basically, I’m back to the situation I’m in now where I make a big trade all at once. But it gets even better. Once the money is transferred to the card, it can not go back. And if I lose the card, the money is gone. I could call the 800 number and get the card number and spend it online (if someone didn’t find the card and beat me to it), but there is no way to cancel it and order a replacement card or anything like that. Seriously? The whole point of debit cards is so that I don’t have to carry around wads of cash. So why would I put a whole bunch of value onto a piece of plastic which I could fairly easily lose? Really, I already have a perfectly good debit card. It’s the one issued by my bank. When I “withdraw” my Bitcoins into cash, that cash gets sent straight to my bank account where I’m free to spend it using the bank debit card. Only, if I lose my debit card, the bank happily cancels it and sends me a new one within ten business days.
I’ve run into other services touting various pretensions of Bitcoin debit cards, and the most memorable feature is that you have to pay something like $20 just to get the card in the first place and then there is an annual fee and a per transaction fee and all kinds of other weird tacked on costs. This is highly ironic considering part of the reason for Bitcoin’s existence in the first place was to overcome those kinds of hidden costs.
Clearly, people are having a lot of challenges with integrating Bitcoin into our existing financial structures, at least when it comes to debit cards.
But I really do want a Bitcoin debit card. I understand that it’s not exactly easy or simple for someone to provide essentially instant Bitcoin/USD trades at the point of sale. I totally understand that the ability to make that sort of trade will likely involve a premium. I won’t get the absolute best possible price for my Bitcoins at the point of sale. I don’t mind paying a premium as long as it’s clearly disclosed and explained.
But let’s all at least start off by providing an actual Bitcoin debit card. It really is more than a piece of plastic that can be swiped. What’s behind the debit card is way more important than whatever sense of prestige one gets by advertising oneself as a Bitcoin debit card provider.
In the mean time, I’ll carry on with trading out my Bitcoins every couple weeks and transferring the proceeds to my fiat bank account. Then I’ll use the debit card provided by my bank. Say what you want about fiat banks, but they do understand what a debit card is and what it takes to safely and securely provide one.