Bitcoin Visa debit cards are cancelled
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Oh dear. I hope that was said with tongue firmly in cheek, because anyone who truly believes that their Bitcoin Visa card being cancelled is a form of "oppression" needs a reality check.
Now we get this.
Sometimes it seems the thought process has evolved to - Heads I win, Tails you lose.
1. There are very few issuing banks for crypto <> fiat debit cards. Internationally there has been 1 WaveCrest; which as of a few months ago decided to discontinue support.
2. Even when a bank will sponsor a crypto <> fiat debit card into one of the payment networks, the company offering the card will face constant pressure from their own bankers.
3. This happening is from my perspective just a quick look behind the curtain of the Digital Currency infrastructure problem as it exists today. There is no good way in, or out of digital currency at the moment, and the ones that exist are tenuous at best. The base truth is that Traditional banks are not capable of supporting new methods of value transfer. That means that the companies that build and provide infrastructure for those methods are currently at the mercy of a partner who basically wont help them.
I always try and make the charitable assumption about the motives of others and my take on the banking <> digital currency relations is basically this: Banks have a business model that has worked well for generations; they do a little fractional reserve, they extract as many fees as they can invent, and they centralize the control of wealth. The promise of digital currency is that everyone will have the capability to do that for themselves. So, its not surprising to me that it is hard for them to work with those of us who are building bridges and on/off ramps between the two systems.
With all of that being said, I am sorry for all of the debit card users who are currently without an off ramp, and I can assure you that the folks at BitPay, Xapo, and all of the other companies that lost access to the EU are working as hard as possible to bring those programs back online.
2) Stop saying crypto is decentralized. The vast majority of cryptocurrencies are mined by a small minority, and most participants have zero say in the direction of each currency. Yes, you can have a "decentralized" architecture, but not "democratization". Crypto-space ended up with an oligarchy.
There are exceptions (XRP), but for the most part your comment reflects a misunderstanding of "crypto-space".
If anyone knows of similar articles or studies please share them.
When you find that you can't sell your tulips for dutch guilder, you don't set up a mirror economy that uses tulips for currency. Instead, you find tulip prices collapsing, and yourself broke.
Why would my landlord, who is not vested in crypto, want to exchange goods and services for bitcoins that he can't cash out to pay his contractors, taxes, etc? Nobody wants to be paid in illiquid assets, what on earth would possess him to get into that horror show.
So instead of saying "this is false", you should be saying "well, this is just, like, my opinion, man."
I think what you really mean is "your statement does not contribute to my argument," not "your statement does not contribute to the discussion." There are arguments besides your own, and I am living proof that they live in people.
Also being a little cynical, some landlords may be up for getting rent in an anonymous crypto like zcash and forgetting to pay the income tax on it.
You can pay tax with a shift payments visa card via coinbase. In general, you pay through an intermediary that swaps it for you, or cash out just what you need to pay tax when you need it.
There is context for this. China and Venezuela's capital controls are why everyone wants to hold renminbi and bolivars.
By the way re "no good way in" I've found coinmate.io pretty good once you get the money to them but it has to come from a bank account in your own name and those can be funny about letting you transfer to them. Also it's kind of slow - once your money arrives you have to wait a day or so for a human to process it.
What country do you live in? This has not been true in US or EU for years as Coinbase and Kraken are two excellent options to get in and out. Bitcoin debit cards are a bit of novelty, not some central infrastructure.
Unacceptably poor customer service, significant markup when buying bitcoin, sometimes a week or more delay between purchase and fulfillment, arduous verification process for new customers, being arbitrarily (from the customer's perspective) flagged for a verification even though you already sent them a photo of your passport 3 months prior, banning customers for sending coins to certain addresses, and did I mention unacceptably terrible customer service? Sometimes just never even responding to a customer ever?
I can't say it's not usable... I have bought bitcoin from there and I did receive it, but the experience has been very far from good.
Inconsistent card verification, ID verification is pretty much broken (intentionally or not).
If I'm not missing anything, I believe this must have happened because of unusually high levels of fraud on Bitcoin visa cards. Certain acquirers might've complained about abnormal amounts of "shady" volume from WaveCrest BINs.
Alternatively, Visa might have seen a settlement risk on WaveCrest's end. I.e. Visa might be worried that fluctuations in BTCs price would put WaveCrest in a position that they wouldn't be able to settle funds with Visa (and consequently the acquirers + merchants).
Any other ideas on what could've prompted this? I think if this was anti-BTC regulatory action, the prompt to turn off these cards would've come from WaveCrest's banking partners and not Visa.
I am an insider in the Bitcoin industry, and within 1 day of opening a new bank account we started seeing fraudulent wires flooding in. When we dug deeper, it was shocking to see how many Americans' bank credentials have been hacked. It takes almost no effort for a EEU/RUS hacker to send a wire from a hacked bank account.
Once the fraudulent wire is sent, rest of the wire transfer system is tediously manual. So wire network participants simply choose to block bank accounts that receive repeated bad wires. This is why Wells Fargo cut out Bitfinex and Visa has decided to stop working with Bitcoin companies.
ACH fraud is even more rampant because you can pull money from someone's account without their consent (as long as they don't notice/contest within certain number of days). Coinbase profit margin is 0.5% per trade, so they need to keep their ACH fraud rate below that number to not lose money. ACH fraud rate is well over 1% industry-wide. This is why I strongly believe that Coinbase has to be losing massive amounts to ACH chargebacks.
1) Providing the username and password for online access to the bank account; or
2) Allowing Coinbase to make two micro-deposits to the bank account, and then providing the correct amounts of the deposits when they are received.
Maybe it's possible that so many people are signing up for Coinbase right now that it's flooding out the fraud?
They would. However, typical ACH fraud entails pulling money using only the routing and account numbers, which can be found on all paper checks; this mechanism prevents that.
It's really quite shocking how a ecosystem that touts decentralization has a glaringly centralized failure point - the fiat exit exchanges. When one or two of them goes, it will bring down the whole house of cards. And given how shitty CB's software was (or maybe still is) I just hope I can get my gains out before the whole thing comes crumbling down.
The Discorientating Use of the Word "They": https://www.youtube.com/watch?v=i_xVAqJ-NY0
I do think this is pretty reasonable, but it sounds like you meant something else.
https://www.sec.gov/news/public-statement/statement-clayton-...
It's also, ahem, a house of cards for its investors, but that's another story told on my blog: https://gyrovague.com/2017/06/16/monaco-doing-the-math-on-an...
There are more naive people than the other kinds.
Sure looks like someone pressed a panic button.
Not at all? You obviously don't understand what a bitcoin debit card is. It's just like a normal debit card, but you fund it with bitcoin. The company you get the card from sells your bitcoin for fiat currency at the time you make a purchase (or at the time you top up the card, depending on how they do it).
The properties of bitcoin are completely irrelevant to the mechanics of the card.
A million dollars perhaps used to be problematic, but is now a drop in the bucket on any exchange's daily volume. A normal bank transfer will suffice, but check with your bank if you aren't moving those amounts regularly. For bigger volumes there is a quite functional OTC market as well.
These types of investors also panic easily, once the bank run starts, nobody will be buying. In fact, I bet most exchanges will simply close up shop.
Do you have some numbers to back this up?
And they say crypto isn't decentralized!
On what planet? If the price fluctuates the way bitcoin has been, Wavecrest could literally be bankrupt before Visa even knew about it to pause any further transactions. At which point VISA is responsible, you think they're going to risk billions of dollars on a currency that is clearly a bubble at this point?
1.) Wavecrest assumes absolutely no exchange rate risk as they don't deal with the BTC, a company like Xapo does
2.) Xapo make a very big margin on the bitcoin sale
3.) The companies that perform the sale at topup time rather than purchase time work out how many GBPs you get after they've sold your BTC, so they assume no risk at all, and the companies like Xapo that perform the sale at purchase time structure their operations to minimise the risk of losing money, and they're aware of the risk, and they're far from the first company in the history of the world whose operations require them to adequately manage risk.
This is identical to Paypal, or any other payment rail in the industry. Payment companies don't in general make loans to their customers (though anything is negotiable in principle).
Source: have integrated with Wavecrest.
The details are very dependent on commercial negotiations (i.e. how much volume the payor is bringing, etc).
I don't really know if that kind of condescension is called for. I know enough about BTC and general credit/debit card mechanics. I know, for one, that credit cards have very low margins as a percentage of volume processed. I figured that the mechanics of a BTC transaction would be similar to a standard forex conversion, which I would not expect to be 1:1 with actual transactions, but from a hedged reserve (which I assume would be very very difficult to accomplish with BTC volatility, but also possibly inevitable given BTC network transaction rate limitations, as card transaction rates scaled up). Also, though debit and credit differ, wouldn't you have to take some degree of fraud and chargeback risk into account on both sides of the transaction? It's not that these are technically insurmountable, but - back to my original point - it seems like a bad business given the overhead and peoples' expectations around transaction fee rates.
Whenever the cardholder makes a payment, that payment is processed against the fiat-equivalent that they have with the card issuer; the card is funded by bitcoin you send in yes but it's backed by the currency they converted the bitcoin into the moment you sent it their way.
Depending on the fee, which atm can be rather high, this can easily be unprofitable or atleast expensive for the card issuer and even card holder.
It's sad you have to say this because HNers abuse their downvote privileges. You have an opinion and you express why. Voicing it allows us to see what other HNers are thinking, and as a result, it contributes to discussion.
Their later communications say "We've been working with a new card issuer for a few months and will be ready shortly" which, while not mutually exclusive to their previous "we had no warning" communications, at least _implies_ that they had some inkling this was in the works and either were playing the bluff / negotiation game and got called, or had hoped it would all go away and so hadn't communicated the possibility to their customers.
1. Unacceptable levels of fraud.
2. Governments changing the rules/clarifying the rules.
3. Discovery of immense counterparty risk.
Since #2 did not happen, I'm assuming that #1 was at play. Given that this is bitcoin, #3 is present, but it's not clear that VISA would go digging for it.
https://news.bitcoin.com/bitcoin-debit-cards-non-european-re...
Mastercard joined:
https://www.reddit.com/r/Bitcoin/comments/75gu4d/mastercard_...
So, now only Bitcoin Mastercard remains for European countries?
Edit: Added "Bitcoin" to make sure the gentleman below is not confused.
Visa works perfectly fine like it always did. Let's not mix things up.
>This shows one important thing: banksters are DESPERATE to stop BTC and they act without control. Hilarious...
The Bitcoin community is a source of endless cringe, :-)
Average fees are hovering around 30 dollars. That's an average. Unconfirmed transactions has been at over 100k for months. The mempool is also hovering around an ATH. The Bitcoin is crippled. Sentences like "store of value" are now the term used to describe Bitcoin. Very far from what the Bitcoin used to be.
I think there is a real possibility of a "death spiral of the blockchain". Fees will increase and it will become impossible to move coins on the blockchain besides the upper 10% of bitcoin holders. For traders on exchanges bitcoin seems fast; because no transactions are taking place. When you actually decide to move your bitcoins to a wallet you own you'll pay high fees... if not your transaction could take months to clear or never actually clear.
No wonder Visa cards are being cancelled.
The fork that occurred on 1st August created Bitcoin Cash. This fork is much closer to what the Bitcoin was. Bitcoin Cash is this today. Removal of the segwit code (which hasn't solved anything), disabling of RBF (replace-by-fee) enabling 0-confirmation transactions again. A new DAA (difficulty adjustment algorithm). Finally increase the block size to 8MiB.
The Bitcoin has been crippled on purpose by Blockstream deep in the pockets of bankers and insurance companies. Blockstream is the main contributor to the Bitcoin development. Look at the sponsors; https://www.blockstream.com/about/#investors
Before the bankers, and their followers, got indirectly involved in Bitcoin development there never was any discussion about limiting the block size to 1MiB; in fact the opposite was discussed. See; https://twitter.com/adam3us/status/636410827969421312?lang=e.... https://bitcointalk.org/index.php?topic=1314.msg15143#msg151.... https://np.reddit.com/r/btc/comments/71h884/pieter_wuille_im....
Now all of this has led to a complete divide and clusterfuck of the community. It is an very ugly and toxic environment and is sad to look at. On top of that we now have thousands of alternative coins and blockchains.
Bitcoin was the proof of concept and it was very successful in that light, but as a consumer product it is quite flawed. The survivors of the current bubble will be the ones that change the world. I'm not sure Bitcoin will be among them.
I agree that the environment between the bitcoin and bitcoin cash communities is extremely toxic but I downplay how much that matters for a simple reason: bitcoin has been steadily losing dominance in the space and bitcoin cash is completely useless feature-wise, when compared newer-gen cryptos and even older ones like Litecoin. So sure, it's a nasty environment but it's one that I suspect we can just let die quietly in the corner.
You mean when the Bitcoin Core implementation of the Bitcoin protocol decided decentralization was an important feature of the currency and transaction compression should be the prioritized means of scaling.
They could've easily gone both ways: block size increase to 2mb, segwit and lightning network. Hell, Litecoin is well on its way to becoming the de-facto transfer currency between exchanges because it iterates so much quicker (and those 2.5 minute blocktimes sure help).
No, they're not. Exaggerating your numbers makes your entire argument less strong.
I made a transaction yesterday and the price was only ~$19 if I wanted it confirmed fast (in <2 blocks). The price was about the same last week when I did the same thing. You also have the option of paying a much lower fee if you don't care how fast it transfers. If you're trying to buy a coffee, don't use BTC. If you're transferring 5-6 figures to an exchange, paying $19 to get the money there in minutes is far and away superior to the ETF system, which typically takes days.
Isn't this sorta what we were hoping to do one day? A proper digital cash replacement? This Bitcoin scalability problem seems like a much bigger deal than most seem to realize. And it's only getting worse.
"Visa have today instructed us that we must close all WaveCrest issued Visa Prepaid Cards."
This is Wavecrest specific, nothing to do with crypto.
I can't imagine payment services are actually worried about bitcoin (yet at least) ?
Except that of course it was:
https://www.reuters.com/article/us-hsbc-probe/hsbc-to-pay-1-...
"Mexican traffickers used boxes specifically designed to the dimensions of an HSBC Mexico teller’s window to deposit cash on a daily basis."
No, they were fine with actually being complicit with money laundering when the amount of monry they could make from it was big enough.
But even then they tried, even if ultimately unsuccessfully, not to appear complicit in money laundering
They’re also not payment networks. In any case, that lawbreaking occurs is not sufficient evidence that the banks don’t care about AML. By and large, AML procedure is generally well enforced. (The penalties are draconian.)
1. Infrastructure company pre funds an account with an issuing bank.
2. User sends digital currency to infrastructure company to add to their card.
3. Infrastructure company receives that currency, and alerts bank to debit their account for fiat.
4. Infrastructure company has to find an exchange to trade OTC as often as possible to protect against as much volatility as possible, while keeping in mind the minimum OTC trade size is generally $250k USD.
5. Infrastructure company has to wait 3 days for a wire to then add more funds to the pre funded account.
One can loosely think of an appreciating cryptocurrency as a short-term loan. You're out cash up front. Later, and only later, you get it back plus a little more.
The infrastructure company in your example is thus, by turning cryptocurrency's promise of cash tomorrow into cash today, providing maturity transformation [1]. This is one of the core services of a bank. It is also an inherently risky business on account of the asset-liability mismatch.
Speculating on currency prices is a business; it is *not however the business that digital currency infrastructure companies are in.
Yes it is. It may not be how they market themselves. But it's the principal risk they take and, directly and indirectly, the principal determinant of their profitability.
We take the risk as a service to the community, and the product is a cost center.
JPMorgan Chase could just as well say it issues mortgages and accepts deposits as a service to the country, that its retail operation is a cost centre for the real business of this or that. (It was popular, before the crisis, for banks to claim mortgages were simply a cost centre for winning wealth management and investment banking business.)
The business you're in is the business from which you earn profits and in respect of which you hold risks. Railroads and trucks [1], McDonald's and real estate [2]...this is an adage in business as old as commerce.
[1] http://www.lessonsoffailure.com/tag/railroads/
[2] https://qz.com/965779/mcdonalds-isnt-really-a-fast-food-chai...
+ the legal system is based on English law
+ English is the first language
+ time zone is central to Europe
+ lots of things are allowed such as gambling (hence why online gambling sites are located here often),
+ Part of EU yet self governing. (well technically an UK Overseas Territory but they are far from listening to anything the UK says).
+ No exchange control...
etc.
https://www.coindesk.com/price/
Maybe there's a crack down from EU on Bitcoin backed cards WaveCrest didn't want to deal with it yet.
If we want to destroy these payment monopolies in place of a (more, but I understand not completely) decentralized system, we need to encourage merchants to just implement payments directly.
edit: typical hackernews. any pro bitcoin comments result in downvotes.
I'm sure a lot of people said "this is good for bitcoin" when they launched this
Looking forward to read how having long confirmation times, high fees and high volatility is good for bitcoin
Think of it as gold for the digital space almost literally (it's expensive to mine, exist in limited quantity and expensive to keep secure)
People keep talking about high volatility but any currency can be exposed to high volatility and there was a time when currency was that. Now we have central banks but they have their own problems with systemtic bubbles.
Bitcoin will be a kind of contract ledger perhaps between countries or large organizations.
For example, XRB.
I don't know how XRB makes it so fast but I'm calling it right now - whoever has the fastest transaction speed will become the first global currency.
Two years ago, I got sick of banks whose services I found of lesser and lesser quality, and tried a bitcoin/VISA debit card, just to see if it was working. The idea was this: I make a bitcoin transaction to add bitcoins in card provider wallet, and when transaction is complete, I could exchange it for fiat that I could use with my card.
"when transaction is complete" is the culprint :) I needed to have fiat in the card so that payments to a cashier was instant. If you remove that step, transaction delays make it not realistic for buying stuff while outdoor, especially given current delays (but even two years ago, it wouldn't do).
So, for bitcoin to work without VISA (or alike) as third party, bitcoin will first need to find a way to make transactions instant.
The alternative, obviously, being to use it for purchases where transaction delay doesn't matter (like online purchases), or to use an other cryptocurrency for that.
For online payments bitcoin works quite well. Still credit cards are often better for the consumer, because of the consumer protection (chargebacks).
Bitcoin payments could, theoretically, work well - but that's not currently the case given the prohibitive transaction fees.
It's probably best to stop hoping it will be a currency altogether (unless some radical changes occur). Best shot would be to see it as saving/investment accounts, with smart tricks like prepaid visa cards as a mean to tap into it (I want to buy a car, I charge my prepaid card and pay with it at car dealer, fast transfer compared to a wire transfer, no "weekly withdraw limit" issue and still as convenient as a debit card).
This sounds somewhat cumbersome, but AFAICT the gains apparently come from routing between channels, so if A wants to pay B, and channels exist from A->C and C->B then payments can route that way, without the need for more on-chain transactions.
To me this sounds really quite complex, and also like it's going to involve intermediary 'hubs' which will process off-chain transactions and... well it sounds like banks and centralisation again, something the BTC crowd apparently hate.
When the exchange rate fluctuates as much as it does, instant payment is an important requirement.
Suppose BTC is worth $15,000 today. I want to buy a widget for $150.
I want to see 0.01 BTC deducted from my balance. The merchant wants to get paid $150.
If the transaction happens instantly, everyone is happy.
If the transaction does not happen instantly...
Let's say I transact 0.01 BTC to the payment processor. It will clear tomorrow. The merchant will get paid when it clears. Tomorrow... The payment processor has 0.01 BTC in their possession.
... Except that by then, BTC went down to $13,000. The merchant still expects to be paid $150. The payment processor has 0.01 BTC on their books, which is worth $130... and a debt of $150.
That's the problem with using BTC as a currency. You either need to pay through the nose for fast confirmation, or you expose yourself to volatility risk.
This is, incidentally, why Steam has stopped accepting Bitcoin. You can't use it as a currency. [1]
[1] http://steamcommunity.com/games/593110/announcements/detail/...
Many people who tried to buy stuff on Steam with bitcoin seem to disagree. In fact Steam recently stopped accepting bitcoin since they apparently couldn't make it work.
Dell stopped accepting it too. Ironically the rocketing speculative value is killing the prospects for longer term use and stability.
I pay ZERO fees and it is instant (due to Segwit and the Lightning network).
Then people made fun of it.
Now current institutions will have to choose between embracing it and fighting it. Some of them do one thing, apparently VISA chose another.
Not everything is a grand ideological battle, and there's no need to go looking for complicated explanations when the simple and naive interpretation makes eminent sense.
For Bitcoin, the answer is no for all three but even if the first and last question were true for something else, the real question is whether #2 could be true: Visa is making a lot of money at 2-3%. If something else started making a serious play, what are the odds that they'd a) give up and go bankrupt or b) lower their fees and be slightly less profitable?
https://medium.com/@jonaldfyookball/mathematical-proof-that-...
Then you use a single, non-Lightning transaction with an output for each employee, and the fee for that transaction is most likely less than half a percent of the total amount being transferred[1].
[1] Actually just 0.35% ($170 fee / $48k wages) assuming a fee of 520 satoshis/byte, 34 bytes per output, 140 bytes of fixed overhead, $15k/BTC, 60 employees, and an $800 after-tax biweekly paycheck per employee ($20k/year). The ratio improves for higher wages since the fee is unaffected by the amount being transferred.
Or they could pay you via the bank and accept payments through their bank like every other business. Then the transaction fees are negligible. The Lightning network did not help at all in this scenario.