You may remember hearing about the P2P puesdo-currency Bitcoin: a virtual monetary system that allows users to pay anonymously, bypass bank regulations, and avoid transfer and withdrawal fees. Last year, Bitcoin experienced quite a crash and security breach that made the currency nearly worthless – dropping from the exchange rate of $17 to merely a few pennies. Bitcoin has surprisingly got itself back together in the past months, and now a New York City-based startup wants to normalize its use again by introducing a Bitcoin debit card system.
Known as BitInstant, this Bitcoin debit card would act like your average prepaid card that you can use to make every day purchases, withdraw money, or transfer amounts to friends and merchants. The card hold a maximum of $1,000 in Bitcoin credit (BTC) limit, and would contain QR codes in the front that are scannable by a BitInstant app to link users directly to their accounts.
“You’re at dinner with a friend? Forget PayPal, just scan his or your card with your Bitcoin app,” BitInstant CEO Charlie Shrem explains to Ars Technica. This process bypasses transfer fees if friends do not bank with the same company though users are allowed to keep each money transfer as BTU or convert them into US dollars, in which case a conversion fee would be charged.
So why would anyone use a Bitcoin debit card in place of actual prepaid cards in the first place? For one, BitInstant would attract those who’ve actually had successes at mining Bitcoin. Since the e-currency is in its own entire realm, advanced Bitcoiners can run complex softwares to generate BTC and BitInstant would allow these users to spend their hard-earned Bitcoins in real life, anywhere they want. The transfer would also be as instant as handing someone cash, meaning transactions can take place between any two users in the world without waiting for third-party middlemen to process the transfer.
Still, the entire concept of BitInstant cards seem ironic, to say the least. The point of Bitcoin is to provide anonymity and leave banks out of the money transfer equation, yet introducing a bank-issued Bitcoin card would bring both issues back to the forefront. We can’t imagine that a bank would issue a BitInstant card without so much as providing a trackable feature on the card, ruining the whole anonymous transaction feature Bitcoin had going for it. Even if BitInstant and the banks that issued the cards cannot publicly release transfer history made on the card, we’re pretty sure one can get a hold of that information if a user can acquire a police warrant to make banks give them that data.
But hey, if the whole futuristic e-currency idea seems fancy to you, by all means, preorder your Bitcoin debit card with BitInstant and its public Google Doc signup sheet.
(Photo mockup of Bitcoin debit card by Ars Technica.)