Most interesting thing here is that this came without any prior notice to any parties in the process, effective immediately.
Sure looks like someone pressed a panic button.
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.
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.
And they say crypto isn't decentralized!
Do you have some numbers to back this up?
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.
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.
The details are very dependent on commercial negotiations (i.e. how much volume the payor is bringing, etc).
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.
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.
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.