Xapo – Bitcoin debit card

It's sad to see that the united states has to be mentioned like this now.

If this is true, that's going to kill their business in the paranoid post-gox btc community. Most will probably wait until a competing service with a smidgen more reputability shows up in about 2 days.

Smart given the fees they must be charged for using the Visa network.

True, although they did waive the $15 fee for these early-birds, and of course the product is completely optional. You can say no thanks whenever you want. I also wouldn't say THEY decided. You can't create your own debitcard, well you could but no merchant would accept it. You need a partnership with an existing network, they have one with VISA, which means they had to negotiate terms on a card and this is probably the best they could come up with given they're a relatively small unproven company in the debitcard space. Although it was naive and sloppy to not have communicated earlier that it'd be unlikely to be able to negotiate a completely free card with a partner like VISA, sure.

People might want to participate in and support the Bitcoin ecosystem, for economic, political, or technological reasons. People might just be curious about the technology and want to play with it.

Many people in this world don't have access to International banking. (because of local conditions or restrictions). This solves the problem.

The 1% fee is separate from the debit-card, it's just a way to buy bitcoin which isn't super easy and frictionless everywhere in the world. Of coure this is improving rapidly globally.

So why buy bitcoin in the first place? Well, bitcoin itself represents a financial system with much more autonomy, as, if you'd like, you could store your money yourself (and not with Xapo, after buying bitcoin there) instead of e.g. at a bank.

This may not sound like a big deal for people in OECD countries, but look at Cyprus where many lost funds in their banks after the government essentially seized them. Look at places like Argentina with high inflation rates, there are numerous places with rates beyond 15-25% for whom owning bitcoin may be a better solution.

And then there's the fact that bitcoin allows cheap transfer of value once you have it. Perhaps not great to buy some orange juice in the US, but if you're remitting money back home (global average of 9%), paying 1% is a bargain as crazy as that sounds.

And lastly there's the general idea of simply supporting a nascent bitcoin ecosystem. It's not much different from people spending 10% more on a fair-trade product, or a product that has harms animals less. It may be exactly the same quality, more expensive, yet attractive for more ideological supporting reasons.

to make it feel just like a real debit card

If that's really all the security they have, it's kinda bad, but it does encourage the right attitude for early bitcoin adopters, which is only put as much bitcoin in any online wallet as you would in your actual wallet.

It's not that bad. Firstly the account is rate-limited. a 4-digit pin has 1/10k chance of getting it right, you get a few chances. It's about the same chance of being killed by an airplane hitting you, or being killed by a grizzly bear.

Then there's the 2FA the account has. Meaning if you have $50 on your account, you can secure it with a quick pincode. If you have $50k on your account, you can add extra authentication.

In fact, 2FA can be set up not just for login or for entering what is called the 'vault' (which by the way, is an insured product), but it can also be configured specifically for daily payments above a threshold, of say $50 a day.

That vault, the insured product, has an additional password by the way. So you can have a pin, a password, 2FA and spending limits AND the bitcoins themselves are insured by them.

So it's not as bad as you might think :p

Fees are here: https://anxbtc.com/faq#tab4 under "What are the fees?"

My intuition for their setup was something like this: You know how a company like Oracle might give its top sales people creditcards with spending limits (for sales dinners with big customers), and Oracle pays for this?

I think Xapo is similar. But instead of giving the card to its employees, it sells it for $15 to its customers. And the spending limit? That's dynamic, based on the amount in the bitcoin wallet.

At the moment a payment is made, Xapo pays for it and it's a regular debitcard transaction. No bitcoin involved.

And then Xapo goes and removes the equivalent value in bitcoins from the respective user's wallet, which is not much more than earmarking those coins in their internal accounting as being 'company funds' now, no bitcoin blockchain involved.

That means there's no bitcoin or blockchain technology involved anywhere in the process. And yes, it's just as expensive as legacy banking products.

Why is it cool? Because it allows people to store their wealth in bitcoin, yet use a debitcard as they normally could. They need not a bank, or trust a bank. They need not a national currency or indeed trust monetary policy. If you're in Cyprus in 2012, that means your money wasn't seized by the government. If you were in Argentina in 1990, you wouldn't have suffered from 300% annual inflation. This debitcard is really to plug bitcoiners into the existing payment channels, and allow them to store wealth not in fiat but in bitcoin, for reasons similar to those of goldbugs. (e.g. it'd be no different from a debitcard connected to an account with gold-deposits/certificates)

I see it as a temporary product. IF and when bitcoin gains mainstream traction (if everyone follows Newegg, Expedia, Dish, Overstock, Tigerdirect, Reddit, Wikipedia etc) then one could not only store wealth in bitcoin, but also pay cheaply and securely and quickly with actual bitcoins. At that point, a debitcard will be redundant. But that's a long way away. Until then, a debitcard allows those who wish to hold wealth in bitcoin (again akin to goldbugs) needn't inconvenience themselves by being disconnected from the regular payment system everyone uses, they can now use a debitcard that's as shitty/brilliant as usual.

Also: “Note that there is a fee to store your coins in Xapo's Vault of 0.12% per year. The storage fee is charged in bitcoins and is calculated based on the number of coins you are transferring into the Vault.”

No I don't think so. The currency conversion as I understand it is when e.g. a European customer gets a Xapo card linked to an EU issuer, when he or she makes purchases say in India with that card, there's a currency conversion. These are rare occurrences and no different from other cards (that tend to charge lower for fx conversion, like 2% though)

The currency conversion fee doesn't relate to regular payments which are completely free. (except of course, for merchants paying 1-3% on any card transaction from anyone pretty much)

I was in Ontario for a few days and saw no problems using a mag stripe instead of a chip. (We do use a chip when we can thanks to Amex though)

I've successfully used chip and signature in Canada and in Europe.

Hell, in larger cities I've successfully used mag stripe in Canada and in Europe.

My general experience is that all the "you must have a chip and PIN card or you'll never be able to buy anything anywhere" advice is overblown.