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Comment by kennyasare | Hacker News Reader

Also, FWIW none of us make any money on offering these debit card products. We actually do it to give people that have digital currency a quick off ramp. Here is how the programs technically work:

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.

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> 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

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.

[1] https://en.wikipedia.org/wiki/Maturity_transformation

The "appreciating cryptocurrency" part is tricky though, right?

Speculating on currency prices is a business; it is *not however the business that digital currency infrastructure companies are in.

> 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.

I am literally the CEO of LitePay, I know the CEO's of the other infrastructure companies, and it is NOT what our business are doing with the Debit Card product.

We take the risk as a service to the community, and the product is a cost center.

> 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...

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