This card looks like an OK product (still open questions about how much coinbase is gaming the ask/bid spread) but just realize that this card does NOT use Bitcoin, it uses "Coinbase Bitcoin"[1] which is Bitcoin for which the coinbase company is managing your private key: You only truly own Bitcoins if you own the private key for the account (users of MtGox learn this the hard way last year)
I do think Coinbase also offers a safer multisig account where you own an independent key and no one, including Coinbase, can withdraw money without your permission (was it called "Coinbase Vault?") If you put the majority of your funds in that independent system (or just keep them off Coinbase entirely) and put money in peace-meal to load up your coinbase Visa card you will greatly reduce your exposure to third-party risks.
[1] Reading the documents, it actually uses "Coinbase USD" which is the same difference.
Well no you're not really using bitcoin, not even Coinbase bitcoin. At the end of the day the creditcard simply uses a normal credit card transaction, which is denominated in dollars and paid for by Coinbase, in dollars, to the merchant.
All Coinbase does is
1) make sure you enough bitcoin to cover the transaction
2) sell your bitcoin to recoup the dollars they're paying on your behalf to the merchant
None of this has anything to do with the blockchain or bitcoin as a technology. It's purely a practical product to make it a bit easier to make payments when you have a lot of money stored in bitcoin. I doubt it'll be anything significant, various other players like Xapo did this in a similarly reasonably professional manner and none of that blew up, either.
The reason it's not all that interesting is
1) again, it has nothing to do with bitcoin/blockchain
2) you need to store your bitcoin at a centralised company, essentially creating the equivalent of a traditional bank or financial service with the same issues and with no real extra benefits
3) it solves none of the myriad of security and fraud issues that have plagued creditcards we've had for decades (creditcards are basically plastic sheets of text, the text being the password to your money vault, and you have to hand it over all the time to make payments. It's an insane security premise)
4) it's actually pretty expensive, not only are creditcards expensive (both due to fraud and because you're putting profit into the pockets of a middleman), but on top you're essentially doing a forex currency conversion (in this case bitcoin -> usd) everytime you make a payment.
They're advertising 'no fees' at the moment, of course that's not structural. In fact I'm a bit surprised that legal gave the OK to charge customers $10 for a product without communicating usage fees for said product on any specific timeline whatsoever, normally that's guaranteed trouble & customer complaints down the line. That's like your ISP charges you $100 to install your internet connection, then says 'no monthly internet fees for a limited time'. You can bet your ass it'll turn into a gigantic mess a few months later when you suddenly start charging usage fees.
Still, I welcome it. Making bitcoin more pragmatic for mainstream users is something I applaud. I just don't have high expectations for this particular product.
Doesn't the funding source (BTC) make it at least a bit interesting? For example a card user in the US could have this credit card, and international relatives could fund it with BTC and not have to pay international transfer fees.
It seems like a small step in the direction of using BTC as an actual primary account on the backend and making transactions in the real world.
When I legally changed my name last year, I got all new credit cards. Only two of my new cards have chips.
Earlier this year, one card expired, and the new card has a chip. A couple of months ago, one of my cards was compromised by identity theft, and the replacement they sent me has a chip. Both of those were still chipless after I changed my name, so it must've been a recent change.
Also, I applied for yet another card, and this one has a chip.
Yes, they are coming. I received my chip card replacements recently. The reason they are finally doing it is because of the so-called EVM fraud liability shift [1], which changes who will be held responsible for card fraud.
In all possible worlds, bitcoin has to begin with use as a currency-of-currency before it can operate stand alone. Which isn't something you necessarily disagree with, based on your comment. But I think it is interesting because it is a natural and necessary step before the "bitcoin and bitcoin only" applications start to really develop. Bitcoin needs legacy support first before a transition to those really lofty bitcoin ambitions.
I don't see how a debit card could work any other way, since VISA is a pull-based system. If I have Bitcoin on my own computer and I swipe the card, how does the right amount of BTC get sucked out of my computer and exchanged?
Right, I just want to warn people away from putting significant Bitcoin holdings directly into Coinbase to use this card without being educated on the risks.
The risk of what? Coinbase stealing everyone users bitcoins and running away? Better not use any bank, credit union, or money transferring service to stay safe.
Banks, credit unions, and money transferring institutions are heavy regulated businesses that have to follow rules. Money you have in bank and credit union accounts are also insured.
Coinbase is a private company that is barely regulated. Any money put into Bitcoins should be money you are willing to lose.
Sorry dude but I can't down vote this hard enough. Please read about the history of Bitcoin exchanges, and for that matter the history of banks. They arent trustworthy, and become insolvent all the time. The FDIC exists for a reason.
This is only insurance for their hot wallet (Quite literally, the cash that a bank would keep in their teller registers.) The overwhelming majority of their deposits are not insured.
How many traditional financial institutions have done an exit scam on their users, though? Exit scams happen all the time with Bitcoin exchanges and dark net markets.
Your issuer could talk directly to your private wallet (e.g. on your phone or on server). You could preapprove requests coming from your issuer to be automatically executed so that there is no payment delay. This scenario would be somewhat similar to Direct Debit transaction and would require wallet software supporting automated requests.
Implementing interactive approval would be more difficult to integrate. Authorization systems typically respond pretty fast, so there might be automatic timeout in the payment chain (terminal, acquirer, schema network, issuer) if the transaction was waiting for your interactive confirmation.
Maybe some magic with initial pre-auth and subsequent post-auth attempts at regular intervals could work but would be no fun to implement either.
The idea is to use it like a charge card and not like a depository for your bitcoins (since any bitcoins you put towards the system isn't yours anymore).
"You only truly own Bitcoins if you own the private key for the account"
Here we get into the distinction between ownership and possession. You own coinbase bitcoin the way you own the stocks in your brokerage account. You don't possess coinbase bitcoin the way you possess the dollar in your pocket.
Wait, you give them your private key? Doesn't that defeat the entire security model of Bitcoin? Once Coinbase is hacked all of your money will be gone. It seems crazy to me that you would give them the private key.
Technically, you send the funds to a Bitcoin address you never had (and never will have) the private key to, but yeah, if Coinbase gets hacked, then the hacker gets your funds.
The bank has a legal obligation to fulfill those IOUs, which in practical terms is essentially as good as "owning" the dollars.
There is always the risk of a Bernie Sanders kind of scam, but it's rare enough and regulation is heavy enough that for the common person it's not a real concern, or worth worrying about. Coinbase is regulated similarly, though obviously they are young and have to continue to prove themselves over the course of decades.
This card looks like an OK product (still open questions about how much coinbase is gaming the ask/bid spread) but just realize that this card does NOT use Bitcoin, it uses "Coinbase Bitcoin"[1] which is Bitcoin for which the coinbase company is managing your private key: You only truly own Bitcoins if you own the private key for the account (users of MtGox learn this the hard way last year)
I do think Coinbase also offers a safer multisig account where you own an independent key and no one, including Coinbase, can withdraw money without your permission (was it called "Coinbase Vault?") If you put the majority of your funds in that independent system (or just keep them off Coinbase entirely) and put money in peace-meal to load up your coinbase Visa card you will greatly reduce your exposure to third-party risks.
[1] Reading the documents, it actually uses "Coinbase USD" which is the same difference.