One of the biggest frustrations for bitcoin users is the lack of cryptocurrency-accepting merchants. Even if you have a fortune in bitcoin, actually using it in everyday life ranges from being a huge hassle to completely impossible. Bridging the gap between the existing world of bank and credit-card based currency and bitcoin is the billion-dollar challenge to be solved before bitcoin can even be considered a viable alternative to traditional money. Palo Alto-based startup Xapo may have just cracked it.
According to a report on CoinDesk, Xapo has partnered with BitStamp to create a system that can convert BTC to dollars on the fly using the MasterCard network. In effect, it’s a bitcoin debit card. Unlike offerings by Coincard and Cryptex, which are little more than pre-paid debit cards bought for BTC, the Xapo card would be tied directly to a user’s hotwallet. The cards are expected to become available within two months, with an early-access list available on Xapo’s website.
According to a Wall Street Journal report, the Xapo card system will be free for online versions, and physical cards will cost $15. It’s unclear if additional fees will apply for individual transactions. Although the system will use MasterCard’s network, the project does not represent an official partnership between Xapo and the credit card giant. Xapo CEO Wences Casares also told the WSJ that future versions of the card are likely to use the Visa network.
From a user’s perspective, the card works almost exactly like any other credit or debit-card based transaction. Instead of processing through a bank, however, the transaction is checked against an existing Xapo hot wallet. If there are sufficient funds, the company authorizes the transaction and then sells the equivalent BTC amount through BitStamp. Merchant funds are delivered in local currency exactly like a standard MasterCard transaction.