Seems like it was a very bad business idea in the first place, and I'm surprised it wasn't cancelled sooner. Before you downvote me consider the business model of credit card processors, and how volatility and rapidly deflating currency would effect their cash flow.
> how volatility and rapidly deflating currency would effect their cash flow.
Not at all? You obviously don't understand what a bitcoin debit card is. It's just like a normal debit card, but you fund it with bitcoin. The company you get the card from sells your bitcoin for fiat currency at the time you make a purchase (or at the time you top up the card, depending on how they do it).
The properties of bitcoin are completely irrelevant to the mechanics of the card.
The liquidity to sell to fiat is drying up after many are realizing the valuations for crypto are completely fraudulent. There is an astronomical amount of centralized crypto printing going on that has corrupted the entire crypto ecosystem. Tether just wrote in their legal terms that as a of January 1st tether can't be redeemed or used by Americans even though it backs USD. Corrupt exchanges inflated the prices and issued worthless tokens to buy bitcoin then sell it to main street. This is Bernie Madoff x 10,000.
This is not true. Liquidity in these markets is steadily increasing. It is easier now to sell large amounts of Bitcoin than it was two years ago, and it was easier then than two years prior.
Have you tried to sell millions of dollars worth of bitcoin to USD? As soon as there is a down day the exchanges shutdown and stop people from trying to withdraw. The money to cash out billions doesn't exist. All these headlines of founders being billionaires is false. $1.5 billion fake USD pumped crypto. Good luck to anyone holding millions of dollars trying to cash out when the market turns downward. This is adult musical chairs. There will be millions of bag holders and rich exchange criminals.
Moving the goalposts, are we? The question here was if "liquidity is drying up", which is the opposite of what's happening. While you probably couldn't move a billion, you never could and that's not a sign of anything drying up.
A million dollars perhaps used to be problematic, but is now a drop in the bucket on any exchange's daily volume. A normal bank transfer will suffice, but check with your bank if you aren't moving those amounts regularly. For bigger volumes there is a quite functional OTC market as well.
It's easier than ever to sell for other cryptocurrencies, including Tethers. In a fire, though, it's not the size of the trading floor that matters, but the size of the exits.
The liquidity is increasing because of the current gold rush. People who have no business getting into this kind of investment are buying in, thus increasing liquidity. I can no longer count the amount of acquintances who have bought 5-10K USD worth of BTC or Litecoin or Ripple or whatever, without having even a cursory understanding of the mechanics behind it.
These types of investors also panic easily, once the bank run starts, nobody will be buying. In fact, I bet most exchanges will simply close up shop.
>The properties of bitcoin are completely irrelevant to the mechanics of the card.
On what planet? If the price fluctuates the way bitcoin has been, Wavecrest could literally be bankrupt before Visa even knew about it to pause any further transactions. At which point VISA is responsible, you think they're going to risk billions of dollars on a currency that is clearly a bubble at this point?
1.) Wavecrest assumes absolutely no exchange rate risk as they don't deal with the BTC, a company like Xapo does
2.) Xapo make a very big margin on the bitcoin sale
3.) The companies that perform the sale at topup time rather than purchase time work out how many GBPs you get after they've sold your BTC, so they assume no risk at all, and the companies like Xapo that perform the sale at purchase time structure their operations to minimise the risk of losing money, and they're aware of the risk, and they're far from the first company in the history of the world whose operations require them to adequately manage risk.
Is Wavecrest not exposed to the risk that Xapo will not be able to fulfill its obligations, for example if an orderly market in bitcoin-USD conversions breaks down?
No, Wavecrest has a stored value account which their payors must top up ahead of time in order to be able to fund payments.
This is identical to Paypal, or any other payment rail in the industry. Payment companies don't in general make loans to their customers (though anything is negotiable in principle).
> Not at all? You obviously don't understand what a bitcoin debit card is
I don't really know if that kind of condescension is called for. I know enough about BTC and general credit/debit card mechanics. I know, for one, that credit cards have very low margins as a percentage of volume processed. I figured that the mechanics of a BTC transaction would be similar to a standard forex conversion, which I would not expect to be 1:1 with actual transactions, but from a hedged reserve (which I assume would be very very difficult to accomplish with BTC volatility, but also possibly inevitable given BTC network transaction rate limitations, as card transaction rates scaled up). Also, though debit and credit differ, wouldn't you have to take some degree of fraud and chargeback risk into account on both sides of the transaction? It's not that these are technically insurmountable, but - back to my original point - it seems like a bad business given the overhead and peoples' expectations around transaction fee rates.
Unrelated. You pay the card issuer with bitcoin and they sell it for eur. As far as they're concerned they only have to pay a one-time fee for transferring the received bitcoin to an exchange and selling it there.
Whenever the cardholder makes a payment, that payment is processed against the fiat-equivalent that they have with the card issuer; the card is funded by bitcoin you send in yes but it's backed by the currency they converted the bitcoin into the moment you sent it their way.
It's sad you have to say this because HNers abuse their downvote privileges. You have an opinion and you express why. Voicing it allows us to see what other HNers are thinking, and as a result, it contributes to discussion.
Well, I really was hoping to get some good faith feedback - even though I had a definite position - in a topic that can lapse into a more adversarial stances. To be fair, I was really happy at those who took the time to reply, and ... paraphrasing Taylor, downvoters gonna downvote. I did get at least 4 downvotes, for the record. I'll say no more of it. It's an interesting meta discussion for me, but this is off topic/being a bad guest in posting guideline adherence enough already.
Their later communications say "We've been working with a new card issuer for a few months and will be ready shortly" which, while not mutually exclusive to their previous "we had no warning" communications, at least _implies_ that they had some inkling this was in the works and either were playing the bluff / negotiation game and got called, or had hoped it would all go away and so hadn't communicated the possibility to their customers.
This is how anyone dealing with money transfer deals with:
1. Unacceptable levels of fraud.
2. Governments changing the rules/clarifying the rules.
3. Discovery of immense counterparty risk.
Since #2 did not happen, I'm assuming that #1 was at play. Given that this is bitcoin, #3 is present, but it's not clear that VISA would go digging for it.
Sure looks like someone pressed a panic button.