By Guest Author- Danie, Philippines
It was only last year when the bridge between cryptocurrency and fiat materialized in crypto enabled Visa debit cards. At the onset, predictions were optimistic about the fusion of these two. Cryptocurrency aficionados were delighted. For a while, they were able to use their cryptocurrencies in establishments that already accept Visa debit cards.
Companies like TenX blossomed with promises of easier transactions for customers. The possibilities of merging legacy banking networks with cryptocurrencies seemed like a good idea. But that ended today with no warning. Thousands of customers are left bewildered at the sudden announcement. Many cryptocurrency enabled Visa cards would no longer be usable. It all rooted with a purported Visa terms and conditions violation by debit card provider Wavecrest.
Bitwala, Xapo, Wirex, TenX and Cryptopay cards and customers are affected. Some users still have access to funds. But they are now finding alternative methods to transfer their cryptocurrencies.
This comes at the heel of TenX co-founder Dr. Julian Hosp’s tweet that “they are anticipating the time when they would be the only debit card provider in the space“. A reddit thread discussing the debacle noted that only a few users of TenX are affected. TenX’s recently shifted to a new payment provider. The new issuer for TenX is Wirecard.
Wirex issued a statement announcing that new contactless debit cards will be issued for free. All customers’ funds are safe and refunds would be issued.
For some in the industry who have long followed the banking sector’s relationship with cryptocurrency fintech startups, the mood is one of caution and derision.
Cryptocurrencies’ relationship with banking networks such as Visa and Mastercard have long been an on and off affair. It was only last year when news of Visa hiring blockchain engineers became viral on social media. Analysts note that the banking network is proactively studying how cryptocurrencies can fit in the current network.
The fusion of cryptocurrencies and bank network debit cards is undergoing its growth pains. The banking industry is well known for being traditionalist in adopting new technologies. This could be the reason why network terms and conditions are stringently enforced. On the other hand, Visa’s website endows the vision of “cashless transactions” all over the world.
It is important to note that this has always been possible in cryptocurrency. Litecoin and Bitcoin Cash are two iterations of bitcoin that allow for peer to peer payments with very little transaction fees. Cryptocurrency adoption may be at an all time high. And yet, market penetration and merchant availability is still lacking. The fact that cryptocurrencies would still rely on legacy systems such as debit cards to make payments portends of this lack of adoption.
Visa and Mastercard are both centralized financial networks that could be controlled by governments. While the actualization of combining fiat with cryptocurrency has its conveniences, those who are familiar with Bitcoin’s ethos know that the real solution lies in having true decentralization.