Good business move for them. I always chuckle to myself how these things come full circle - this is now back to the old "banking with a credit card" model. The core value of crypto and it's anonymity are now gone, and it's regulated.
Coinbase was never about the original cryptocurrency vision anyway. They always wanted to be the crypto ‘bank’ and be the middleman collecting fees. Even the name ‘Coinbase’ [0] was deliberately chosen to confuse people and make them think that they are somehow core to Bitcoin.
0: In the Bitcoin protocol a transaction which generates new coins and issues them to the miner of a block is called a coinbase transaction.
Yes, it was quite devious of them to name themselves in a manner that would confuse some tiny fraction of the cryptocurrency geeks [1] that know what a coinbase is, but don't know what Coinbase is.
[1] Which constitute some tiny fraction of the user-base of cryptocurrencies - which is predominantly a gaggle of day-traders, conmen, and the occasional normie who needs to pay a ransomware operator in Belarus.
I don't think anonymity is THE core value; it's more of an added advantage. (I'm looking to the Bitcoin white paper, where anonymity is given one mention, under the tenth heading) The core value is removing custodians (which of course, storing your money at Coinbase or another exchange violates that value)
It depends on your trust model. If you believe in fancy cryptography then shielded zcash is even better than monero. Monero keeps increasing the size of the anonymity set as it becomes more clear to them that modern deanonymization techniques are quite good: https://mudit.blog/mixers-are-insufficient/
If you give me a link I'm happy to "read more" but you're going to have to give me a link or make an argument, I have no interest in going searching for something so likely to be wrong.
Here is an active deanonymization attack [1]:
> We show how an attacker can take advantage of Monero’s Bulletproof protocol, which reduces transaction fees, to flood the network with his own transactions and, consequently, remove mixins from transaction inputs. Assuming an attack timeframe of 12 months, our findings show that an attacker can trace up to 47.63% of the transaction inputs at a cost of just 1,746.53 USD.
Sounds pretty bad to me.
Here's another attack [2]:
> First, about 62% of transaction inputs with one or more mixins are vulnerable to “chain-reaction” analysis — that is, the real input can be deduced by elimination. Second, Monero mixins are sampled in such away that they can be easily distinguished from the real coins by their age distribution; in short, the real input is usually the “newest” input. We estimate that this heuristic can be used to guess the real input with 80 %accuracy over all transactions with 1 or more mixins.
I don't care what "calculations" say, if so many transactions can be deanonymized then those calculations were calculating the wrong thing.
A small user base is absolutely a problem, if there are only so many zcash nodes then traffic analysis becomes very easy.
Though, if there are only a few transactions each day that's not as large of an issue as it sounds; the blockchain still has no linkability between transactions. Active attacks might work but few attackers can pull those off, and no attacker is able to go back in time to deanonymize older transactions (assuming the cryptography holds).
Bitcoin is not as traceable as a swift payment. You don't have to register your name and address and social security number to transfer bitcoin.
You may be able to trace the addresses that bitcoin is connected to, but you will at some point have to do additional work to investigate ip addresses and hope that they don't all lead to anonymous VPNs ran through a coffee shop wifi before the bitcoin is passed on to someone else.
Only if people re-use bitcoin addresses, or deal with people who re-use addresses. If there is one thing I would change about the protocol it would be to prohibit address reuse. There are techniques like HD wallets that allow you to do this.
Tari is an evolution grin’s mimblewimble chain combined with being merge-mined with monero for increased security. The testnet has been operational for a while, although I don’t follow it closely and haven’t heard anything since they were stress testing it a couple months ago.
It's been a while since I looked into Grin. My understanding is that it lacks some privacy features compared to Monero, which is what allows Grin to scale better.
Mimblewimble is about simplicity and elegance which benefit both scalability and privacy. It solves 2 of the 3 major privacy issues (amounts and addresses), while leaving potential to reduce the 3rd (linkability) by making coinjoins trivial (tx aggregation).
Monero has much better privacy, but it pays a heavy price in having 20x more chain bloat, and needing to have random access to some info of all spent outputs. It also lacks (scriptless) scripts which makes possible things like payment channels.
It further highlights how Bitcoin has failed to deliver on any of the heavily advertised changes. Most people do not use Bitcoin and if you talk to to the few who do they almost inevitably are using something like this which keeps all transactions in a real currency.
The reason you should care about that is a pure fiat currency like Bitcoin only has value with other people who agree. Using USD for all real transactions means that merchants continue to have no reason to take on the additional risk and expense of directly accepting it. It lets some speculators cash out but it's not contributing to the growth of the system or give anyone who hasn't already bought in a reason to do so.
I fail to see your point. It's much better to keep your money as bitcoin because it appreciates in value vs. fiat currency. With payment solutions like this, you get the benefit of a solid currency and also be able to spend it easily.
> because it appreciates in value vs. fiat currency
So did Beanie Babies, until they didn't. But the point of Bitcoin was not supposed to be a vehicle for speculation, it was supposed to be...
well, I've been around HN long enough to know that it's impossible to finish that sentence in a way everyone would agree with. But, remember all those breathlessly optimistic posts and essays from early 2010s about what Bitcoin could be? It seems pretty inarguable that the Bitcoin of 2020 ain't that, and isn't on track to be.
I think most of the progress is actually being slept on. The other day I was checking in with a buddy who works in the crypto space, and he was describing a whole world I wasn’t aware of where people have been driving forward many of those original ideas - decentralized exchanges, flash loans, literally billions (with a B) of dollars of value being moved through a ton of different systems and use cases. Not the “one currency to rule them all” vision, but people are creating lots of cool things with crypto whether they see a lot of use or not.
Bitcoin is a pure fiat currency, which means it only appreciates if you can talk other people into believing it's worth more since it lacks intrinsic value or the inherent demand of a sovereign currency. The theoretical basis for its value is the network of other people who have also bought in but if you're using the credit card network to make transactions in USD you're not giving merchants a reason to accept it directly or seeing any advantages from using Bitcoin.
If you enjoy speculation, that's no more weird than keeping your money in a stamp collection but you don't grow into a real part of the financial system by giving people fewer reasons to care.
I don't think you're using the term Fiat currency properly. Gold is only worth something if other believe it is worth something. It's use in electronics and industry only makes up around 7% of total supply [0].
Yet, gold isn't a fiat asset because its value is anchored to its physical properties. It is finite and cannot be freely created. It doesn't oxidize, is resistant to most acids and other corrosives, and has the highest specific gravity of any naturally occurring element. It is a naturally good store of value because of these properties.
Bitcoin also has underlying properties, but instead they are guaranteed by mathematics and game theory instead of physics. Take that as you will, but both assets are much more solid than Fed Coin (USD) which is effectively backed by the government's commitment to enforce the federal reserve act while trying their best--and failing--to resist printing more and more money to perpetuate an unsustainable system.
> Bitcoin also has underlying properties, but instead they are guaranteed by mathematics and game theory instead of physics.
The Bitcoin algorithm has some interesting properties but they don’t have much practical value to balance the enormous inefficiency and, far more important to this topic, that doesn’t make any particular blockchain valuable - anyone who wants those properties can set up their own for free without enriching the current Bitcoin holders. The only reason why you would consider those hashes to be worth paying money for is the community belief that they have a certain value - nobody has any need to use it otherwise. That’s why Bitcoin is an especially pure fiat currency: the community consensus is quite literally the only thing backing it’s valuation. In contrast a currency like the US dollar has curbs on fluctuation not just from much greater usage but also because millions of people receive it from government salaries and purchases or need that currency to pay taxes — unlike Bitcoin, which has value only to the extent that you can find someone else who thinks it’ll be worth more in the future.
Presumably what gvhst means is "It's useful gold is dense, as if there were cheaper denser metals you could create fake gold bars by gold-plating alloys of equal density"
After all, you can already get gold-plated tungsten bars [1] from companies like chinatungsten as 'novelty paperweights' [2] - even though tungsten is fractionally less dense than gold.
As iridium and osmium are traded in very low volumes and toxic/acidic, platinum is more expensive than gold, and tungsten is fractionally lighter, fake gold is seldom undetectable.
Bitcoin is digital gold, essentially a reserve currency but not very useful for small daily transactions. All of the criticisms of Bitcoin can be equally leveled against gold, and have been (“barbaric relic” as Bernanke called it). And yet even central banks still hold massive amounts of gold. So I don’t see any reason why Bitcoin can’t fill the same role that gold does in the modern financial system.
Unlike gold, Bitcoin has zero intrinsic value and hasn't been used by as currency by civilisations throughout human history.
Central banks would be crazy to hold Bitcoin. If a better technology came along which had mass adoption Bitcoin could be made worthless overnight. Many people predicted this could happen in 2017 during the rise of Ethereum.
Personally I can't ever see bitcoin surpassing the the market cap. of gold.
Gold has intrinsic value based on the industrial and jewelry uses: you could lose a lot more over the industrial demand point but it won’t go below that point because people use it for things other than speculation.
In contrast, random hashes have no value outside of a particular community consensus. You can’t do anything with them and the ones in the Bitcoin blockchain have no more inherent value than those in any other network.
>[Bitcoin] only appreciates if you can talk other people into believing it's worth more
I would say the same about gold (though you probably disagree). Gold has some "intrinsic value" (e.g., as a plating on electrical conductors) but would be worth much much less if no one believed that it is a good way to store money.
But perhaps more importantly, Bitcoin differs drastically from most fiat currencies in that its rate of inflation is capped: over 85% of all bitcoin that will ever be created have already been created.
The same BTW cannot be said of gold, which is being mined at an increasing rate:
it doesn't have to, but governments can't steal from the poor and give to the rich as effectively if they don't devalue the currency. It's such a mind trick that it gets nearly universal support regardless of if the policymakers is on the left or the right, and everyone who is opposed to it is labeled a kook. If it's gradual enough the increasing divide between the rich and poor will be pointed at other causes like 'capitalism'. Naturally, governments would like to continue such a universally beloved source of revenue, so the state of affairs of bitcoin vs fiat is unlikely to change, and of course bitcoin and similar forms are like to suffer restrictions and limitations imposed on it by governments.
It's also worth noting that the meteoric rises of bitcoin since its inception has very little to do with this fundamental form of cryptocurrency relative appreciation, outside of attracting the kooks who want to believe in alternatives.
You're also making the mistake of assuming equal demand: Bitcoin is inherently deflationary but it's also completely voluntary — few people use it and nobody is required to use it. Bitcoin's high variability over the years shows that speculator demand can last for years but there's no lock-in and many competing options. There are a few people who've put large amounts of money into it but statistically almost nobody uses it so there's little defense against a competitor because most people have no sunk cost and most of the percentage who do have only a small holding at risk.
USD is being actively and significantly devalued (take a look at the US Dollar Index, as an example), as are most other major fiat currencies. I was using hyperinflation a bit hyperbolically, but the point still stands. One potential interpretation for the the appreciation of bitcoin vs. USD (which, I should add, is the longest its ever been over 10K/btc spot) over the last few weeks is a reaction to the ongoing attempts to jumpstart the various economies of the world that have been put on life support since the start of the pandemic.
Obviously bitcoin and USD don't have equal demand curves, but compare the supply curves: stable vs. arbitrary. If you're comparing two assets, they don't necessarily need to have equivalent instantaneous demand functions - that seems a bit specious.
> even in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts.
Sir, do you want workers to make a fair wage? We can't have that. You should be supporting inflation.
"The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ — which states that the number of potential connections in a network is proportional to the square of the number of participants — becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s."
I was under the impression that spending your crypto required you to file and pay capital gains tax. If this is true, won't you have to have a line item for every single purchase you made with this card for the whole year on your schedule D?
Co-Founder of CoinTracker (https://www.cointracker.io) (YC W18) here. You're exactly right. We built software to specifically automate this crypto tracking and tax compliance process. We've partnered with Coinbase and TurboTax to specifically solve this pain point.
Makes me sad that they are further entrenching their tentacles in our tax system which further discourages the government from simplifying this process.
It's pretty well known that they lobby congress to keep the tax laws complicated to ensure their business.
The solution is less government and simpler taxes.
> But the success of TurboTax rests on a shaky foundation, one that could collapse overnight if the U.S. government did what most wealthy countries did long ago and made tax filing simple and free for most citizens.
If the system is vulnerable to exploitation, that’s not the fault of Intuit. They’re fixing inefficiencies in the market, and adding upsells (common for many companies in tech), is part of their business model.
I don’t get the hate of TurboTax if you’ve actually used it, since it’s incredibly simple and saves time and money (from my experience).
>If the system is vulnerable to exploitation, that’s not the fault of Intuit.
Sure, the vulnerability isn't Intuit's problem. But exploiting it is Intuit's problem.
>They’re fixing inefficiencies in the market, and adding upsells (common for many companies in tech), is part of their business model.
How are they fixing inefficiencies? If they simply wrote software I could see that. But they're lobbying for increasing inefficiencies. That's the opposite of fixing.
>I don’t get the hate of TurboTax if you’ve actually used it, since it’s incredibly simple and saves time and money (from my experience).
TurboTax has many dark paths and misleading sales pitches to bring people in with impression of free and prevent checkout without collecting money. Aside from that, their lobbying has created the mess that essentially requires 3rd party support to file your taxes.
It's not a game and a matter of hate, it's just a fact that filing your taxes is complicated because of Intuit.
Are they looking at solving the fact that spending appreciated "assets" will lead to a tax bill at the end of the year? Do they plan to sell extra to cover the gains, and then withhold them? If they don't and crypto collapses again, people might actually be out money at the end of the year for using their card right?
We support positions across exchanges, wallets, DeFi, and derivatives. Depending on your straddle situation, reach out and we'll find a solution for you. https://www.cointracker.io/contact-us
Most crypto users have custodial assets (e.g. those held on an exchange) which don't have a unique address. Therefore we need some identity layer to tie together a specific users transactions for tax purposes. That can be Google sign-in, Coinbase sign-in, throwaway email + password
I asked if I could pay with BTC and my bank passed it up until they got word back from Fanny Mae that it was okay so long as you can demonstrate X years of ownership. I think they made a public announcement about it. It was shortly after BTC hit its peak a couple years ago. Coinbase let me export something that satisfied the bank and government that I wasn't money laundering (I'd bought the BTC many years before for less than $10k with money for a bank account I still owned, so I could show the transactions there too).
For my taxes, Coinbase has a tool for exporting that calculates that sort of thing. You just select the time range and it gives you all the transactions and how much they appreciated from when you last bought that much.
It seems like most people go with a simple FIFO or LIFO strategy, and crypto transaction tools support usually one or the other or both. Tracking cost basis for specific coins is considerably less common and I'm not sure what tools off hand even support that - none of the major exchanges that I'm aware of.
Reporting a few thousand small capital gains transactions on a US Tax Return is feasible. If you exceed the import transaction limits in, say, TurboTax, you can enter and e-file the summary of your transactions, and print out and snail mail the 50 pages of the statement itself.
(I've done this before with Betterment, when a bunch of $10 deposits each turned into like 7-8 small lots that were a few dollars each.)
I did this with the Shift Card way back, which was the original card for Coinbase spending. It was a massive pain in the ass to explain the transaction history. I wouldn't be surprised if Coinbase has improved upon that experience, but to what degree I'd be curious about.
I don't particularly understand why everyone's happy to gloss over tax implications being undiscussed on things like this. Whether or not it's right (I don't believe it is), the fact remains that the average new user is not aware of this quirk of Crypto.
The taxable event occurs because the IRS sees crypto as property rather than a currency. Let's say you buy $100 worth of Bitcoin in the past. Now the value of your coins is $120.
If you decide to send $5 worth of bitcoin as payment for something, they consider that a taxable event. You sold X amount of bitcoin, which appreciated 20% value from when you bought it. That X amount was worth $4, now it is worth $5, so you would owe a tiny amount in capital gains tax on $1 you gained.
Edit: This exact same scenario happens for Foreign Exchange, but the government excludes most transactions under a certain amount because it's too complicated for travelers. Also, the rate of USD to EURO doesn't fluctuate as wildly as crypto can, so the gains are minimal anyways.
> The taxable event occurs because the IRS sees crypto as property rather than a currency.
The IRS doesn't make the tax law. How cryptocurrency transactions get taxed is a matter for legislatures and the courts.
Obviously, not everyone has the resources to fight the IRS, and your life will go much easier if your interpretation of the tax code matches that of the IRS. But the way you explain it here puts the cart before the horse.
IRS guidance aren't laws but they detail how the IRS is going to treat tax collection based on current law. At some point in the future Congress may classify crypto currencies as actual currencies such as the Yen, Euro, etc. at which point the tax laws about currency exchange would apply instead of capital gains on property.
The IRS doesn't make the tax law, true, but they are behaving consistently with the relevant laws; putting "currency" in the name of something doesn't define it as a currency.
Legislative action could of course change this, but until then you are probably tilting at windmills.
IANAL but tax is also levied on fiat currencies where similar profit/loss occurs. In that sense, the IRS is treating crypto like it treats other currencies.
Congress addressed this in 1986, the IRS is just administering duly enacted tax law:
You have to pay capital gains on bitcoin if you spend it, even if you don't convert it to fiat first.
e.g. buy $10 of coins, use same coins to buy a meal later, if the value of the meal is $20 (whether denominated in fiat or the equivalent bitcoin), you have a $10 capital gain.
Maybe Coinbase sets things up in such a way that the cap gains event is triggered only when the balance is paid off?
E.g. imagine I incur $10 USD on the card. From Coinbase's perspective, I just owe them $10 USD + maybe interest at the end of some fixed time period. I could pay them in USD or I could pay them in crypto. Since it's not mandated I pay in crypto, you can't really say I've "spent" my crypto until I use it to pay off my balance. In which case you only end up with 12 taxable events per year.
I'm sure there's some arbitrage opportunity I'm not accounting for, but it seems like this might work?
I wonder how smart this system is going to be — it’d be wise to have the rewards & purchasing happen on a stablecoin to avoid this. Then make users have to choose to then stash it somewhere they won’t draw from and trigger these events, if they want to “invest in a crypto”. It’d also be wise because coinbase can then charge their fees as they so do.
This is also fundamentally not so different from e.g. having spend vehicles with your brokerage. But the addressable market may be higher / different for coinbase which could cause a lot of headaches, like this one, if not carefully managed.
The transaction in the back end probably is just an internal transfer. You do a one off transaction say 1000 and you spend from that. So you only did a single asset sale
It's one of those things that gets complicated pretty quickly. Essentially, for every transaction you make you have to determine if you made a profit or a loss with your crypto. The purchase date of the crypto you're converting into USD matters because you need that for short-term vs long-term capital gains. This problem also gets worse if you buy crypto at regular intervals, like I often do, because now you have different gain/loss potentials in the same transaction.
Sure, a program can calculate this for you, but it does make filing more complicated. You'll probably have a very long list of items on your 1099.
I day traded for a while, and got an IRS fine.
If you simply accept they are right, then pay nothing will happen.
Their fines aren’t extra ordinary, and they are very much willing to help you come into compliance.
For example, if you do have software that can output all your crypto trades, they will accept that in an audit, and likely only fine you for what you got wrong and not merely not following procedure.
They take the interpretation of tax laws and your personal situation that is most favorable to the IRS, though. This can amount to tens of thousands of dollars that you pay them needlessly.
I missed the back of a capital gains worksheet once when reporting my taxes. Got a bill for $11,000+, between the missing stock sales and an education credit my wife took that the IRS was suspicious of. After actually tracking down the stock sales in question, reporting their cost basis (the IRS had assumed $0, because they don't have it so why not assume the value most favorable to them?), and refiguring the taxes, the ~$7K in tax liability had declined to $60. Then because that was so low, I got the ~$2K penalty waived. Then I produced documentation to show my wife was eligible for the education tax credit, and there went another $2K. By the time I had a full amended 1040, the $11K was down to $60, so I sent them a check for $60 along with all my documentation and got back a nice letter saying the matter was closed and no further tax was due.
Also be very wary of the CA FTB. They don't send you notices if you owe money; instead, they just record it as a debt, charge interest and penalties on it, and then send you a bill for the full total when the statute of limitations is about to expire. If you're aware of any problems in your federal tax return and you owe anything to California (which may occur even if you're not a CA resident - they tax stock granted at a CA job even if you later move out of state), make sure to pro-actively get in touch with them with an amended return and any money owed.
> They take the interpretation of tax laws and your personal situation that is most favorable to the IRS, though. This can amount to tens of thousands of dollars that you pay them needlessly.
I agree 100%.
Though, I think that most people hear stories about a multi-thousand dollar tax notice, and become terrified that the IRS will force them to pay that money.
However, as your story illustrates, the notice they give is the worst case scenario. If you have any kind of documentation, you can add that amend your return and it'll be accepted by the IRS drastically reducing your tax bill.
This is made easier, because you're working with a real live human being on the other end---one who at least in my case, I could call and ask questions like 'what do documentation do you specifically need to see for X?' instead of guessing as is the norm for non accountants working within the complex tax code.
But if they find posts like this, they won't be as kind. They care a lot about intent. And intent to flaunt rules is quite different than accidental noncompliance.
I think they are lenient if you try to comply, but fail because of the complexity of the rules. Even if you make a post that essentially says "I won't try harder, because the rules are difficult to understand" isn't Mal intent; but an admission that your actions weren't accidental.
This is actually reassuring, even if from a rando internet commenter. I have tens of thousands of crypto trades from the last few years, most of which are legs of complicated straddle positions. Spent dozens of hours trying to get the data straight for reporting but in the end I just put a single line item on my Form 6781 which captured the correct PnL (which was a very, very modest number). If I do get audited I can produce all of the trade data, so I’m thinking I’ll be okay.
For a few thousand bucks, they're not going to make an example of you. It's not worth it to them. If you're cashing in 6 figures to buy luxury cars, they might, I agree. You go after the big fish, not the small fries.
It’s actually the other way around surprisingly. The big fish tend to have resources to fight the IRS in court; which becomes expensive for the IRS. Hence the IRS goes after the not so rich since they rarely put up a fight.
That article describes lower income people taking an earned income tax credit. That sort of thing sounds very simple to find and is low hanging fruit. Most of it is probably a simple mismatch.
Your casual bitcoin spender is not going to be like that at all. Their under reported transactions will be difficult to even find. If you do find them, their true cost basis will be difficult to determine.
There have been times than I was more liquid in cryptocurrencies but it would take 3-5 business days (up to 8 actual days) before it would be in a bank account, and so therefore I was essentially illiquid.
There have been times when I don't want some financial institutions to get transactions from crypto financial institutions, which comes into play when I am considering a wire transfer from an OTC desk. OTC desks require larger amounts before talking to you.
Coinbase for example doesn't always have wire transfers available for withdrawals.
So just being able to spend from a debit card - which also gives rewards - is good.
The conversion possibilities between crypto and fiat change practically every month though. With the paypal and instant debit integration coming out over just the last few weeks after a decade of not existing and being specifically one of the financial institutions I wouldn't want to see my crypto use because their compliance officer would freak out on autopilot.
Regardless, I don't know or care how many people do it, I don't write blog posts or contribute to international headlines just because it was a solution for me. I have a transferwise card too, shrug.
I assume this is marketing play to get more people into crypto by at least somehow creating the appearance of it being an actual currency already. I doubt many people will actually use it, but it may convince more crypto-curious folks to actually join the "movement"
Stablecoins. I can get 3-4% interest on holding DAI, and with this, I get to spend it as well. What's nice about holding DAI is that if I ever want to exchange it for crypto, I just send it to Uniswap. Never have to leave the ecosystem, and I have easy access to decentralized services.
Could you share how this works, getting 3-4% owning a stablecoin? Are there any risks associated with this, or is it a viable alternative to money that would be in a savings account?
You can earn 2% directly on coinbase [0] or 3% on compound [1] (actually closer to 6% if you include selling the governance tokens you receive - with some additional shenanigans you can push this up to 20 - 30%, but that would require a longer post). One neat thing about compound is that your returns can technically be considered capital gains rather than dividends, which is beneficial if you hold longer than one year.
Risk rise, you're holding DAI for both approaches, so you are exposed to smart contract risks from Makerdao + some market based risks (in cases where there are very large price swings). With compound, you take on additional smart contract risks from the compound platform.
"Crypto maximalists" are idiots, PERIOD. Bitcoin Cash and Ethereum are where the real users are now and both groups enjoy using crypto as it was designed and described in the White Paper.
I find it beyond fascinating that it's a Visa debit card. I'm sure they went with Visa to ensure it was accepted by default at most (nearly all?) merchants, but the legal trade-offs and concessions Coinbase had to make to appease Visa will be interesting to read through.
My guess is that when a transaction is made Coinbase sells the appropriate amount of your crypto at market-rate plus a small fee and then the cash goes through Visa's payment network. So on Visa's end this is probably just a normal debit card and they don't have to directly handle any crypto.
What legal trade-offs? I imagine Visa is willing to offer similar terms to what they give everyone else. As long as they make their per transaction profit, what else would they be concerned about (other than guaranteeing Coinbase pays them, but that's just contracts too).
It's powered by Utrust which doesn't add any fee (only the seller gets a fee: 1% of the selling price). They just actually just introduced what they called reverse stacking : If you stack 1000 utk, you can get the 1% fee payed by the seller.
I am not sure about how much fees Visa will add from their part of the currency transfer. But I guess these fees will stay the same no matter which project you use as long as Visa is part of the payment solution.
"Coinbase Card customers are able to spend their crypto from nine different wallets: BTC, ETH, LTC, BCH, XRP, BAT, REP, ZRX, and XLM" from the FAQ page
I think it's useful to think of this as a proxy to the fiat world. You can continue to use and hold your crypto where possible (hoping more places accept it directly over time), but have a way to spend it at existing locations that only accept credit cards.
I think the real death blow here is the 2.49% fee that Coinbase charges on every transaction for liquidating the crypto (I'm struggling to find this on their website, but I see someone posted it in another thread).
Yup people using this don't understand they are doing exactly the opposite of why Satoshi created Bitcoin. The whole idea was that users would transact directly with eachother avoiding middle men, especially banks and other criminals and robbers such as the governments and tax collectors.
Meh. The point of crypto is to bypass the present rails of commerce. Not to add yet another layer and middleman / middleware to the mix that adds fees and overhead.
I hate to say it, but this is what the future of crypto is going to look like. The signs were there ever since Neo & Bee spun up back in the mid 2010's (and then promptly blew up).
Yeah, I think this is why some more serious players are joining the space. They are going to further centralize things and make it more palatable for regular people to join. Even the Fed has started talking about digital currencies.
Originally, maybe, but even the most dedicated Bitcoin purists I've seen have long since agreed that we're going to need layers such as the Lightning Network on top. Some middleware serves a legitimately valuable purpose that can't easily be integrated end-to-end.
It's my theory that crypto is following the same arc that Microsoft used to dominate personal computers and office software.
Paypal recently announced crypto integration. Other payment processors will follow. Eventually merchants will want to save 3% and accept crypto directly. They might even pass the savings to the user.
I'm an existing customer but when coinbase asked me to log in with my device, clicking the link on the email didn't work. So I had to manually log into with my browser.
Additionally, it wanted to send my card to a 5 year old address but there was no way of changing that info within the app.
Lastl,, I was like: Wohh, finally I can get the card. When the app said that I need at least 5€ in crypto before proceeding.
> Coinbase Card is available for customers in Austria, Belgium, Bulgaria, Croatia, Cyprus, Denmark, Estonia, Finland, France, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the UK. We’re working on expanding the offer to additional markets.
Gresham's law: "bad money drives out good". Meaning when two forms of commodity money are in circulation, the more valuable commodity will gradually disappear from circulation.
This appears to be another step forward for cryptocurrencies, but consider paying with shitcoin and fiat before you liquidate the good stuff.
It's never been wise, so far, to pay in Bitcoin for pizza.
Why is this not true of the US dollar? In many countries with awful inflation rates, the government has to enact strict fines to prevent the dollar from taking the local currency's place.
I think this is key to Gresham's law: government regulation of the value of the bad currency is what makes the bad currency be used. Without that legal protection, the bad money wouldn't be accepted. If it's required to be accepted, then you'd be a fool to not spend the bad money whenever you have it. So it seems that your observations are just an example of Gresham's Law.
In many countries, you can exchange US$ for local currency, but not the other way around. That's by government decree. Yet the dollar is prized even though the decree says otherwise. In any case, there's much more than government decree factoring in what's bad money.
What's the counter example here supposed to be? Gresham's law says that people want to get rid of (spend) their bad money and get paid by the good money (US dollars, here). But government regulations mean they have to take the bad money and so therefore only the bad money gets used. You're describing the same situation where bad money gets used even though everyone would prefer to take USD.
Of course this is true of the US dollar. The US Dollar loses value over time. In this respect, it's no different than countries with awful inflation, just the inflation rate is lower. That's the very definition of bad money in Gresham's law.
> It's never been wise, so far, to pay in Bitcoin for pizza.
Given that Bitcoin is currently worth less than its highs in 2017, 2018, and 2019, I can think of at least three times in which it would have been wise to pay for pizza in Bitcoin (as opposed to holding it).
I wondered if they considered the Nexo model where the card is a credit card and each transaction is a loan against your crypto assets. Paying pack the money your borrow each month should trigger no tax events given your never selling your crypto. It also seems like a lending model most like todays credit cards.
Crypto currencies are essentially dead to me because recently, during 2020, banks and card issuers like Mastercard here in Sweden (Entercard) have started banning all transactions to known crypto exchanges like Coinbase.
So imo that's a death blow and no one is reporting about it.
Exchanges like https://localbitcoins.com/ or https://bisq.network/ should work for you. Personally, I have only ever used services like Coinbase (BitPanda, anycoindirect), but I guess person-to-person deals aren't bad either. You might even get better prices.
The more major economies have increasingly been supportive of crypto; Sweden on its own cannot death blow crypto as a whole when its legal in most other large economies.
I meant to me it's practically dead, unless I can find alternative methods. One user already suggested a few promising ones but all it takes is for whatever organisation is blocking exchanges to find them and block them.
It's basically done on an account by account basis, at the banks and the card issuers. Which means any IBAN known to be associated with a crypto exchange, or any account you attempt payment to with your card.
It's cat and mouse game.
And I'm afraid they're setting a precedence for other European countries. Of course their reasons for this are to chase small time tax evaders while big time corporations like Facebook are being given massive tax breaks because some moron thought a datacenter would bring 30000 jobs.
I would have loved to try this out, but it’s impossible to get past email verification on iOS. The verification link opens in Safari, instead of the webview inside the app, so it triggers a “not the same device” error.
The cybercrims don't actually believe this, and need off-ramps to get out of crypto. They are willing to pay high fees for this, and often hold confiscatable stablecoins over btc.
