Bitcoin Cards: A Revolutionary Fusion of Cryptocurrency and Traditional Payment Methods

1. Introduction

Bitcoin, a cryptocurrency that is revolutionizing the global financial system. Introduced in 2008 to provide an alternative to the traditional centralized financial system, Bitcoin has gained widespread attention and it has encouraged the various use of an alternate currency on the market. Over the years, Bitcoin has become an ever more popular method of payment as it has given people the freedom to exchange a decentralized share of value. This is why the introduction of Bitcoin in the product such as Bitcoin cards in the market could potentially help the rise of a more fast and reliable source of payment. Bitcoin cards are the products using the Bitcoin as a mean to perform regular or everyday purchase. This is a type of card that is very much alike with the prepaid cards which are issued by the various banks as well as available in the market. Customer can top up the funds for the Bitcoin card with the Bitcoin in the card currency. As a result, customer could use the Bitcoin card however and whenever as long as they are in a place where accepted. With many different types of payment options available for consumers in today’s society, it is essential to identify through a research a study of what the current opinions and thoughts of the industry means are in relation to the potentially new and rising payment cards such as the Bitcoin card on the market. This is an important factor in assessing the necessary improvements and influences that is in need to be development of the new digital payment methods, for example the Bitcoin cards and the impact of it. There are a wide range of different type and methods of the modern day digital payments that are available to consumers and businesses such as mobile payments, radio frequency identification technology and digital wallets. Such alternatives to the traditional cash or checks methods of payments have become ever increasingly popular among the people due to the advancement and development of technology and improved public access to the services. However as it must be, whenever a study to be conducted and a need to choose the content of the study, the research proposed must be able to lead to an in-depth insights that can bring to the new knowledge of the industry. So, is in critically, the Bitcoin card is a fascinating and a relatively new concept on the market. Its various unique selling points such as transparency, speed, security and also the opportunity to utilise the Bitcoin in similar as well as in a relative connected way is what could potentially become to be a more valuable method of payment for everyday life. It is emerged as a direct competition to the popular payment methods and even the traditional payment cards that are used today. On the next section will be focusing on the advantages that the Bitcoin card will bring and also about a detail explanation on what is a Bitcoin.

1.1 Overview of Bitcoin Cards

Traditionally, Bitcoin has not been widely accepted in most places, making it pretty useless. However, this is all about to change with the innovation of Bitcoin cards. A Bitcoin card functions more or less like a traditional bank card, except that it works with your Bitcoin account. This means you can use the card to make purchases in shops, online and to even withdraw money from ATMs. Generally, these cards will work anywhere that a traditional Visa or MasterCard card will work. The only difference is that rather than paying using money from your bank account, you pay with your value held in Bitcoin. People have been able to use Bitcoin debit cards for a few years now but these new Bitcoin cards are something quite different. So the future for using Bitcoin in our everyday lives is looking brighter, thanks to the development of Bitcoin cards. It also opens up the potential for the card to eventually replace banks and credit card companies. The potential benefits in terms of being able to make completely anonymous transactions without fees; as well as the fact that it uses anti-money laundering systems, means that this card could be incredibly useful for certain groups in society. Also, the global nature of Bitcoin means that this card can be used anywhere and is not limited by local currencies. This is a significant benefit, especially for people who need to make international transactions on a day-to-day basis.

1.2 Benefits of Bitcoin Cards

The first and most obvious benefit of bitcoin cards is that they are widely accepted. And it turns out that using a bitcoin card is probably the easiest way to use your hard-earned bitcoins. Because no matter how great bitcoins are, most people are still wedded to the standard brick and mortar type of shops. These shops only accept the local fiat currency and the number of online retailers that are beginning to accept bitcoin is still only a small percentage. With a bitcoin debit card, every single one of these places can accept the digital currency. Lastly, security is a great plus. When you add your bitcoins to a bitcoin card, you’re effectively moving them from a ‘hot’ state to the ‘cold’ state. We won’t go into any heavy technical jargon, but in effect what that means is that your bitcoins are at a much lesser risk of being stolen. This is because when bitcoins aren’t connected to the internet, hackers can’t get to them – it’s as simple as that. By using a secure bitcoin card, not only can you now pay almost anywhere, but you also have the comfort of knowing your bitcoins are safe. So not only are you spending a lot less on fees when you use a bitcoin card, but also the exchange rates you’ll receive are up to 3% better than if you were spending typical bank currencies. All of your fees and exchange rates can be managed and seen through your account by logging in through a computer or an app. And better still, most cards are delivered for free!

1.3 Evolution of Payment Methods

Over the centuries, a wide variety of payment methods – from the barter system, to coins and bills, to checks and electronic transfers have evolved. After the barter system, the first ‘payment method’ was lumps of metal, known as ‘specie’. This was in fact used as a store of value for thousands of years. In order to make transactions possible in the absence of the right amount of specie, people made banking arrangements with goldsmiths from about the 17th century, and would be given a ‘receipt’ which was in turn used as currency. This process of ‘receipts’ for specie leading to the use of paper for transactions represents one of the first moves towards a more modern system of currency and payments – primarily that of exchanging notes that stand as promissory representations for said notes or metal value. Such methodology still lives on in the form of the “gold standard”, which was a monetary policy in the 19th century and early 20th century that required that money be backed in a reserves money system by gold. As the world moved into the 20th century, a surge of different payment methods and banking systems came into play. With the rise of credit and debit cards, mobile payments and digital currencies, the last few decades has seen these methods become the dominant ways in which consumers make payments and store their money. The real advent of what we might call ‘modern’ payment technology could be associated with the introduction of debit and credit cards in the 1960’s. The move from paper based systems (such as checks) to electronic authorization and data transmission was groundbreaking, and marked the start of a large-scale shift towards more efficient and user-friendly technology within the payments industry. Gradually, cash and checks are being used less and less and so the systems used in conjunction with card payments are constantly being developed, from contactless technology to mobile wallet apps. It is now the case that most banks issue contactless cards and nearly all payment terminals are enabled with contactless functionality. Such advances in payment technology suggest that the future may be moving to a truly cashless system of payments.

2. Understanding Cryptocurrency

Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. Unlike traditional currencies, including the dollar or the euro, a cryptocurrency is not regulated by any central bank or government. For many people, the most well-known form of cryptocurrency is Bitcoin, which is the original and most widely used cryptocurrency in the world. Created in 2009 by an unknown person using the alias Satoshi Nakamoto, Bitcoin uses decentralized technology for secure digital payments, and is now used by millions of people. If you haven’t already read about how Bitcoin works, you should now go to section 2.2 in “Bitcoin Cards: A Revolutionary Fusion of Cryptocurrency and Traditional Payment Methods”. However, there are now over 1,000 different types of cryptocurrency, many of which are growing in popularity. Well-known forms of cryptocurrency, other than Bitcoin, include Ethereum, Ripple and Litecoin. Some cryptocurrencies like Auroracoin are specifically created for countries, and their release and distribution was designed to national populations. For example, every one of Iceland’s 330,000 citizens could claim 31.8 free Auroracoins each, which could then be used in shops across the country.

2.1 What is Cryptocurrency?

There are thousands of cryptocurrencies available on the market, and a wide range of them use either one of or both underlying technologies: blockchain and consensus. According to a research article published in the Journal of Systems Integration by Sarah Meiklejohn, those transferable digital tokens are called cryptocurrencies. They are based on a technology called distributed ledger technology. Blockchain and the payment history use public-key cryptography and cryptographic digital signatures that provide the safety and security of the transactions. Also, the technology supporting cryptocurrencies is decentralized. This means that it is based on the use of the consensus protocol or algorithms for adding new transactions to the blockchain digital. It does not rely on any centralized points or centralized trust model. This allows cryptocurrency transactions to have one of the key advantages over traditional transactions, which is that the whole process should be quicker and the transaction costs associated should be minimal. Also, the distributed nature of this technology also provides extra resiliency and reliability as there is no longer a single point of failure. This system has been brought over to a wide range of industries such as banking and insurance so that they adopt blockchain technology to provide secure means and more efficient of the current processes. As such, understanding the benefits of using blockchain is important for those studying information systems, but blockchain is not just about cryptocurrency. It has the potential to provide a wide range of solutions in different industries, and this is also known as providing the ‘Value Creation in Blockchain’ according to a research paper.

2.2 How Bitcoin Works

So, how does the ingenious technology behind Bitcoin really work? It isn’t as complicated as you might think. Bitcoin transactions are sent from and to electronic Bitcoin wallets. They are digitally signed for security. Everyone on the network knows about a transaction, and the history of a transaction can be traced back to the point where the Bitcoins were produced. These are the three key parts of Bitcoin and how they work together: 1. Bitcoin wallets 2. The blockchain 3. The transaction process. Each Bitcoin is just a computer file which is stored in a ‘digital wallet’ app on a smartphone or computer. People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people. Every single transaction is recorded in a public list called the blockchain. This is like a digital ledger – it shows the history of every single transaction. Digital wallets have a private key, known only to the owner, that is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet. The signature also prevents the transaction from being altered by anybody once it has been issued. When a transaction is made, information about it is broadcast to the network. Your digital wallet will create a new digital signature and the amount of Bitcoins you wish to send which is then sent out to the network for validation. People on the network known as ‘miners’ will then validate the transaction by ensuring that the digital signatures are correct and that the user has enough Bitcoins to make the transaction. Upon completion of these checks, the transaction will be complete and the Bitcoins will have been sent to the receiving party. Miners are people across the globe with the necessary computer skills and technology to be able to validate each one of these transactions. The blockchain is called this because it’s a chain of ‘blocks’ which are lists of transactions that have been created. Every new transaction that is made with Bitcoins is a valid block which in turn is attached to the previous blocks in the chain. Documenting the whole transaction process and allowing the transaction process to be verified and trusted across the entire network is one of the key principles behind the technology. This feature is known as decentralization. As the blockchain is updated by many thousands of people across the world, no one person or entity is in control. Every aspect of the Bitcoin network ensures that the digital currency works as intended, but ultimately the combination of all these individual processes creates a safe and secure, distributed ledger that is continually up to date and can be trusted with every transaction. This is how the digital currency, and the technology underpinning it, is gradually transforming the world’s financial market.

2.3 Advantages of Cryptocurrency

In addition to the benefits that cryptocurrency can bring to your personal finance, this new age of currency offers a wealth of new opportunities for both consumers and businesses. Security is often an important factor for many supporters of cryptocurrency. Unlike traditional banks and credit services that hold onto your personal data and account information, many cryptocurrency users appreciate the fact that they can make online transactions without having to provide any sensitive financial data. For example, when using Bitcoin, all transactions are publicly recorded and available for free to anyone through the blockchain. This means that if you wanted to, you could look up any payment in the history of the cryptocurrency, which provides an extra level of transparency and security. The payments industry is currently evolving at an unprecedented rate and the development of cryptocurrency is no exception to this. As established brands and payment platforms begin to understand the potential of cryptocurrency to revolutionize the online payment world, we are likely to see more and more opportunities for cryptocurrency to go mainstream. Not only does the relatively low cost of cryptocurrency transactions make it a more attractive offer for many businesses but its decentralized nature means that there is no need for lengthy card acquiring processes – in the case of Bitcoin, anyone can start accepting the currency almost immediately.

3. Traditional Payment Methods

In this section, the text will explore the digital evolution of traditional payment methods. We will start by explaining credit cards and their relationship with digital transactions and then move on to debit cards and the digital advancements in that sector. Finally, we will complete this section by discussing traditional cash payments and the potential consequences of a completely digital marketplace. This flow of information ensures that the reader will feel informed and closely guided as they progress through the text. This makes the underlying topic matter more understandable and digestible, for all readers of varying levels of technical expertise. The details contained within the text will outline the extensive digitalisation in western countries such as America and the United Kingdom. I will discuss how contactless payments and similar features have become industry standard in these nations, before turning to the potential for cryptocurrency to replace existing traditional payment methods. This ensures that the conclusion of the section will provide a legitimate ‘hook’ for the rest of the dissertation, which is the competitive growth of Bitcoin Card technology as a breakthrough in the digital payment market and how it compares to traditional payments. This will be covered in the next section and as such brings the previous details to a coherent and logical conclusion. Therefore, by outlining the entire section in this manner, this ensures the development of the text from explaining research, to conducting research, to finally discussing wherein the field thus far, is concise, fluent and engaging for the reader.

3.1 Credit Cards

In the case of using a credit card, a user will usually sign up for such a service with a bank or credit card provider. To make any form of payment, a user will have to provide the full card details, such as the long number, expiry date, security code, and apparently increasingly frequently, their billing address. When providing payment details just to make a simple online transaction, a user is effectively sharing every piece of information required for a direct debit or recurring payment – rather over excessive just to pay for a £5 takeaway. However, each of these cards has a tiny microchip in them which takes care of the actual transaction. After the card is inserted into the chip and pin machine and the pin has been correctly entered, the microchip and the card take the relevant information and generate a one-off digital signature for that transaction. This means that if someone was able to intercept and record the details of the transaction, such as the sixteen-digit card number, this information would be useless to them unless used without the card.

3.2 Debit Cards

Finally, other than financial strategies and operations that Bitcoin nurtures, Bitcoin debit cards are being utilized to authenticate the worth of Bitcoin. Basically, Bitcoin debit cards are as of now acknowledged. But the vicinity of these cards in the traditional innovation is a key step towards widespread notoriety. This is due to the requirement to join the planet of digital currency and conventional payments. Presently, Bitcoin debit cards work fair like traditional charge cards that are acknowledged in most retail establishments. Customers can effortlessly make buys online and in-store as well. Buyers moreover have the opportunity to make remote buys using these cards. Usually since the cards are issued by financial establishments, Bitcoin showcase esteem must be checked from time to time in arrange to load the cards with Bitcoin. These cards are helpful in situations where a digital Bitcoin wallet has no collaboration with the internet. Postponed exchanges are empowered for such cases. The client stacks the cards with a critical sum of Bitcoin in advance and this establishes the Bitcoin record an value on the days that the cash was stacked. When the stack was made, Bitcoin record and blockchain ended up with one exchange more. So, Bitcoin got the knowhow of unused esteem convey on an advanced shape. The recharging of the esteem into a card requires the client to show up in individual to a bank or a cash trade center. It is critical that the card holder carries a charge card in expansion to the Bitcoin card to permit correlation of the two. This is often not at all a confounded strategy but in many cases clients who wish to use Bitcoin found it a particularly awful, slow and expensive.

3.3 Cash Payments

Cash payments not only deliver ubiquity of access but also anonymity. They also allow for immediate finalization and settlement, a property that cannot be offered by credit cards, for instance. This is due to the fact that, traditionally, once a payment is made in cash and verified, the recipient does not need to trust that the payer will fulfill the monetary promise in the future. The settlement is immediate, therefore cash transactions eliminate payer risks. This immediate settlement is very important in practical applications like car vending machines, where after the car is delivered, the payment process is initiated. The recipient of the payment, in this case, the vending machine, cannot afford to have the payer retract the payment. Bitcoin cash payments seek to exploit these benefits that are enjoyed by traditional cash payments and improve upon them where necessary. By utilizing the transaction verification and security properties of the underlying blockchain technology, the users can realize a “cash payment experience” that equally offers immediate finality but with reduced fraud and counterfeit risks. Satoshi Nakamoto recognized the challenge with double spending in a purely electronic system. However, cryptocurrency exclusive to cash payments has been a tall order. By creating a payment method that delivers a “cash payment experience,” it emphasizes one of the key properties of traditional cash payments – immediate finality. With traditional cash payments, once a payment is accepted and verified, the recipient doesn’t have to worry about payer risks such as a payer reversing the payment at a later stage. This property stems from the very nature of cash transactions whereby the physical exchange of cash for goods or services realizes the completion of the transaction. The detail of how cash payments operate in the current traditional sense is not only important in understanding the design of Bitcoin cash payments but also in appreciating the kind of payment experience the work realizes to deliver. By seeking to deliver a ‘virtual cash payment experience,’ the work combines the convenience of digital payments and privacy of cash transactions.

4. Bitcoin Card Features

The users could connect their cryptocurrency wallets to the Bitcoin cards. This benefited users because now users could use the cryptocurrency value to make purchases and transactions. The credit cards are connected with the wallets of the users. All the management of the cryptocurrency and the cards would be in a single location. This ease of use helps the users to spend their appreciated cryptocurrency values. The credit card companies have been slowly adopting the contactless payment system in the new credit card technologies. Well, the Bitcoin card is one step ahead of the typical credit cards. All the Bitcoin cards are invented with near field communication, a type of technology used in the contactless payments. However, the Bitcoin cards also have the quick response code technology, a newer and more efficient method of the contactless payments. The security measures of traditional credit cards are vulnerable and weak due to the private information being stored in the centralized location. This created a prime target for the hackers. However, Bitcoin cards employ a single blockchain technology to eliminate the centralized areas of the attack for the hackers. Every transaction in the Bitcoin cards would be authorized and verified using the secure blockchain digital ledger. This decentralization offers multiple layers of security against the unauthorized activities of the hackers.

4.1 Integration with Cryptocurrency Wallets

The user interface of the app is well designed and easy for any type of user to navigate. When a cardholder accesses their Bitcoin card app, they are shown a very concise and easy to understand home screen. At the top of the screen, cardholders can quickly see the real-time balance of their Bitcoin card in both the cryptocurrency of their choice and the equivalent value in their local fiat currency. Directly below, they are prompted to choose between either the PIN or contactless method to ensure the payment will be processed promptly. In addition, cardholders have the option to view all recent transactions made on their Bitcoin card. These transactions will be shown in plenty of detail, which a user might find very useful if they spot a payment that they didn’t recognize. When the user goes to complete a Bitcoin card transaction, they will see the app’s cryptocurrency conversion screen. First, they select their desired cryptocurrency and will then be able to view the real-time exchange rate of that currency to their chosen local fiat currency. This two-step process ensures that the cardholder is always kept fully informed on the value of their digital currencies when making a Bitcoin card purchase. The app is linked with the cryptocurrency wallet so the user rewards are instantly updated and they can check their rewards in the Bitcoin card app. All the user has to do to reveal their current total of loyalty points is select the rewards option from the menu on the home screen. Also, the user can quickly and easily search for a specific retailer with the ‘search by name’ option or just find the nearest retailer by selecting the ‘show on map’ function. Thanks to its partnership with both Visa – an established multinational financial services corporation – and innovative fintech firm, PayrNet – who provide world-class payment solutions – Bitcoin is able to offer a state-of-the-art card that utilizes existing payment infrastructure while driving digital currency spend forward.

4.2 Contactless Payment Technology

Most Bitcoin cards are built with contactless payment technology. This technology includes near field communication, using antennas in the payment device and the chip of the card. Within close proximity, generally up to 2 inches (5 centimeters), a transaction can take place between the reader and the card. The new standard EMV (Europay, MasterCard, and Visa) chip technology continues to implement a safer and smarter payment system. Each transaction generates a unique code that helps protect stolen data. This technology, combined with the cryptocurrency integration, presents a very advanced and modern payment solution. Also, contactless payment technology allows for fast, convenient, and secure transactions. With the increasing popularity of contactless payment technology in recent years, it is likely that point of sales systems and hardware will be more supportive of it, meaning that Bitcoin cards will see a much higher real-world adoption rate once contactless technology becomes even more prevalent. The expansive network of contactless payment acceptance across the globe has ensured major compatibility of Bitcoin cards across different countries, making it an ideal payment solution for those who travel frequently or live in multiple countries. And of course, all it takes is a simple tap to pay. There is no need to type a PIN or sign a receipt; it is incredibly quick and convenient. So, even if it is just a trip to the grocery store or a subway ride, Bitcoin card holders can experience the ease and joy of fast and secure contactless payments.

4.3 Security Measures

The chips used in credit cards are not so advanced. They only form communication with the payment system. For example, the credit card chips generate a different, one-time-use code at every instance of a transaction. This is in contrast to older credit cards, which had chips that stored the exact, permanent account information. However, the technology is not so reliable as most of these cards still have a magnetic strip, which stores data permanently; it’s used by old machines which cannot read chips. On the other hand, Bitcoin cards use more complex technology. The chips in Bitcoin cards not only communicate with the payment systems, but also contain software that is able to understand the cryptocurrencies. In addition to that, Bitcoin cards generate unique, one-time codes for signing each transaction. Also, the entire transaction process is done in the Bitcoin network. This assures the user that security is maintained as their funds never leave the secure and encrypted Bitcoin network, which contains miners, exchanges and wallets from all over the world and uses vast computing power to maintain top-level security. The funds held in a Bitcoin card in the traditional money form are also well guarded. All Bitcoin card providers have to operate under protocols that are set by each card association. Such a protocol makes sure that the card issuer or any third party does not seek too many details for the issuing of the card. Also, any communication made during the transaction process, for example, the transmission of the unique, one-time code from the card to the payment system, is well protected and encrypted. This ensures that digital pickpockets with electronic devices can have a difficult time illegally obtaining the unique, one-time code during the wireless transmission. With such digital security measures, it can be said that the security of Bitcoin cards is quite strong. However, unless you carry around all your money exclusively in Bitcoin, you still need a lock and key for the traditional money that you have. The usual physical security, like not losing your card, also applies to Bitcoin cards. These security measures mentioned assure the user that both the traditional, non-digital form of their money and their cryptocurrencies are secured.

4.4 Rewards and Loyalty Programs

The rewards and loyalty programs available to Bitcoin card users provide a unique and interesting case for the intersection of cryptocurrency, traditional payment methods, and customer engagement techniques. Nearly all Bitcoin card offerings (in fact, all that I am aware of) employ “prepaid” card mechanics. This is because cryptocurrencies, by definition, do not require trust in a credit system – they interface directly with the underlying blockchain via its consensus protocol. However, when currencies are converted from Bitcoin or another cryptocurrency to traditional “fiat” currencies (that is, an official currency issued by a government), trust in a credit network is involved. When a user makes a transaction with the Bitcoin card, it is composed of three distinct stages which are illustrated in Figure 1. These are: the user adds Bitcoin to a “wallet” on the Bitcoin card, they use a built-in “exchange” function to convert an amount of Bitcoin to a chosen fiat currency (e.g. GBP, USD, etc.), and the transaction is processed using either the magnetic stripe or contactless mechanism on the card. As a result, the majority of Bitcoin cards are tailored toward convenience and everyday spending. Popular rewards include transaction bonuses (receiving a small percentage of money back on each transaction made with the card), cashback rewards, and discounts at selected retailers. However, I have found that different cards offer wildly differing compensations – for example, the Wirex card offers up to 1.5% back “in Bitcoin” with each in-store transaction, whereas Cryptopay offers a more meager 0.5% back “in Bitcoins/Great British Pounds/Euros” on all spending. In essence, users are “incentivized” to spend money with the card through the rewards program. This creates an effective method for companies to build brand loyalty amongst users, using “game design elements” such as earning rewards and achieving “levels” in order to engage customers with the product. On the other hand, Bitcoin cards also give users more direct control of their finances and potential savings through loyalty-based mechanisms than traditional banking rewards programs. Users can take advantage of the rising market of Bitcoin by choosing to save their rewards and enhancing their “investment portfolio”, or by seeking out the most bountiful of rewards in the market. This ties into modern day society’s focus on the need for “instant gratification”; user rewards programs are ever more successful because people want to feel “constantly satisfied and focused” in their lives. By taking advantage of the monetary returns and focuses of both modern and emerging ideologies through rewards schemes, companies offering Bitcoin cards are able to create a product that “encourages a more instant, topsy-turvy exploration of investments and growth”.

5. Adoption and Acceptance

Adoption and acceptance of digital credit and debit cards that enable the exchange of fiat currency for cryptocurrencies, such as Bitcoin, is growing within the trade and commerce communities. With the increase in use of Bitcoin cards, consumers can now use Bitcoin in more manifold and widespread ways. The currently emerging market trends in the acceptance and use of Bitcoin cards are tailored to ease the adoption rates of Bitcoin cards. In the present times, studies and surveys show that, though still relatively small, more merchants and service providers are starting to accept cryptocurrencies as a valid mode of payment. It is estimated that the global revenue from merchants’ acceptance of Bitcoin will grow to over $4 billion by the year 2024. In addition, counterintuitively, research has shown that popular credit card websites receive most traffic from people longing to purchase Bitcoins with their credit cards at a rate of over 53% compared to those looking to purchase Bitcoin with a credit card. In light of these studies and surveys, it is clear that both the consumers and merchants are responding positively to Bitcoin cards. This is a driver in attracting more businesses to integrate Bitcoin card payment options and to create more merchant services tailored towards Bitcoin card users. Such services include the day by day emerging Bitcoin card providers like Advcash, Wirex, and CryptoPay. Major and reputable companies in the mainstream financial technology industry are moving to embrace the technology and concept of Bitcoin cards. For example, in 2015, Microsoft Corporation – an international technology giant – confirmed that users could use Bitcoins to purchase content in the Windows and Xbox stores. Other major companies that have integrated Bitcoin card payments include the leading mobile top-up service provider in the United Kingdom – Ding. Ding offers mobile phone top-up services to over 500 mobile networks encompassing over 140 countries worldwide and is committed to increasing international mobile accessibility and connectivity. Through these companies’ acceptance for Bitcoin cards, the accessibility of Bitcoin for use in various transactions has increased significantly. As Bitcoin card providers focus and target a global market, the extensive list of countries where Bitcoin cards are now accepted is inculcated. For most of these providers, eligibility for Bitcoin card issuance is valid to residents in the European Economic Area and some additional countries. It is expected that as the market grows and as more businesses start incorporating Bitcoin card payment options, the countries where Bitcoin cards are accepted will grow exponentially.

5.1 Current Market Trends

Bitcoin and cryptocurrency as a whole are in the process of land establishment. It’s still a niche market for what is considered an “alternative.” However, we have seen the first “mass adoption phase” and that is created by usage for transactions. The main draw to cryptocurrencies is their ability to be used as a true currency and not just as an investment, although that undoubtedly is a large draw for those looking to shift onto cryptocurrencies. One of the key trends that we have seen is mainstream companies now accepting cryptocurrency in order to fund their businesses. A great example of this is the introduction of Jeff Bezos and Amazon accepting Bitcoin and other top market choice cryptocurrencies. Visa’s around the world are also taking on the trends, with France and Singapore being mentioned as having the most active cryptocurrencies in circulation. With France’s love for Bitcoin so far being its main draw to the French as a country, and the overall aim is for Bitcoin to rival Sterling and the Euro in overall acceptance for trade. Furthermore, with the aforementioned usage within online marketplaces, nation marketplaces such as ATMs now accepting cryptocurrency as a format of funding and withdrawing real money legalization. In line with Visa and mainstream companies starting to begin public acceptance and awareness, larger companies which are well known for being at the face of niche market change are moving onto this trend. Cybersecurity enterprise SonicWall is offering discounts and special support for those who use Bitcoin and other cryptocurrencies for making payments. The same is found with WebHosting. These points should be considered on a global basis and do not disclose to the United Kingdom alone. As of January 12th, Coinbase, one of the most used platforms for buying, selling, and but at present not Uber. It is a time for companies who lead their industry to start taking on these trends and cryptocurrency should hopefully gain more ground and trust from business beginnings. Every day more and more companies are listening to what people want and accepting cryptocurrencies. Gyft is a digital card application that has relatively recently started accepting Bitcoin.

5.2 Major Companies Embracing Bitcoin Cards

Another area of significant growth and adoption of Bitcoin cards lies in the partnership between major companies and Bitcoin card providers. One major example is the partnership between Visa and Fold and BitPay. Visa had earlier launched the Visa FastTrack program for Fintech startups that focused on the integration of Bitcoin and other cryptocurrency systems. Fold joined the Fintech program and later created a card that supports Bitcoin. Similarly, BitPay became a principal member of the Visa network and now offers a Visa card. The BitPay card allows for instant conversion of Bitcoin into U.S. dollars, while the Fold card provides a 2% cashback in Bitcoin for every purchase made. Both cards are usable in more than 40 million merchants around the world that accept Visa cards, making them a viable option for people looking to use Bitcoin in their daily transactions. Such partnerships have been a major selling point for companies producing Bitcoin cards as many potential users are looking for convenience and global acceptance. By partnering with major global companies such as Visa, there is a potential for wider usage of Bitcoin and therefore the Bitcoin cards. Visa’s Head of Crypto-Cuy-Shepard echoed this by stating that the partnership is at the forefront of a turnkey solution for companies looking to launch quality Bitcoin card products and more. He noted that the vision is to allow anyone, no matter their background, to easily access products linking Bitcoin to the everyday economy. The emergence of Bitcoin cards has also seen increasing partnerships between big motor companies and Bitcoin card providers. For example, BMW has recently established a partnership with Bloom and BitPay to develop a blockchain second-hand car purchasing system. This system utilizes the Bloom card, that supports Bitcoin, and BitPay. BMW’s decision to explore such partnerships came after the European Union suggested in the context of 2 provisions in the Fifth Anti-Money Laundering Directive that commercial car dealers would have to report large transactions. The use of Bitcoin cards provides an opportunity for real-time settlement for such large transactions and has the potential to significantly reduce relative reporting burdens and costs.

5.3 Global Acceptance of Bitcoin Cards

Due to being connected to well-established card companies, Bitcoin cards are widely accepted in global markets. Visa, which was the first major company to work with a Bitcoin Card issuer, has over 44 million merchants worldwide that accept Visa credit cards. This means that instantly, Bitcoin had 44 million possible merchants all around the world at which it can be used. In turn, it is much easier to get a Bitcoin card accepted anywhere and everywhere from cafes and supermarkets to smaller businesses, thanks to the vast Visa network. There are other companies joining the market and choosing to work with Bitcoin Card providers, focusing on their own regions of the world. For example, companies such as UnionPay, who are China’s main card issuer, and JCB, who are based in Japan and have 22 million merchants associated with the company, have both made the move to work on Bitcoin Card projects. By further tapping into the merchant availability of these well-established card companies, Bitcoin card users will find it even easier to have their card accepted at almost anywhere they choose. These kinds of companies are integral to the growth of Bitcoin as a financial currency; even though it is the most well-known and established cryptocurrency on the market, it is still important to provide options to its users in terms of how they can spend and store their money.

6. Challenges and Potential Solutions

Regulatory issues present a concern for new markets and new financial technologies. Bitcoin is no exception, as its legal status has not been firmly established. Other than such observations, it is painful with clear outcomes about the validity of contracts under regulations. Consumer protection under such regulations is also under a cloud, especially when one’s Bitcoin is hacked. From a business perspective, lack of proper legal provision on Bitcoin is a worrying issue. Merchant businesses are tentative to adopt this debatable currency because they have to narrow their service to a smaller section of the market by appealing to a group of people who trust this currency. To mitigate against these concerns, it is suggested that cryptographic key should be used to trace any transaction – making the transaction verifiable. Cryptographic key is the steps towards eradicating any possibility of using Bitcoin for laundering and hacking. It works by use of the technology which all stakeholders in the Bitcoin network including users, miners and developers to secure the network effectively. This would help to affirm the trust of the community because the integrity of the entire Bitcoin network would be underpinned and more users, including the merchants, would develop trust in this currency. If the community of Bitcoin users, who are the potential customers, is vast and widespread, businesses will be encouraged to accept Bitcoin as well. Such advances will push the Bitcoin technology and make it increasingly attractive to potential customers. Always using testnet might be a useful way to engage users, encourage business to start using it, and keep the Bitcoin money supply under check as well. Testnet coins can be generated freely and are used extensively in the Bitcoin community for testing and experimental purpose. Spurious and unnecessary encroachments on the legitimate usages of Bitcoin can be avoided because there is a separate set of testnet only. These scholarly findings have rationalized the Bitcoin phenomena through giving insights. However, it is necessary to comprehend that Bitcoin is a currency that operates separately from the world’s societies and independent from any interference. It can be anticipated that the stormy voyage of Bitcoin adoption will be seen; nevertheless, numerous potential solutions have been suggested and the future for Bitcoin is positive.

6.1 Regulatory Issues

Some commentators suggested adapting money transmitting regulations, which were designed for traditional payment systems, to this new technology. They argue that such an approach would give the real innovators some breathing room while reining in the worst excesses of consumer endangerment and money laundering. However, this approach might be overly simplistic, as other authors suggested. Writer Richard Levin proposed a dynamic form of regulation, under which different payment methods would be given differing levels of increased freedom of action, reflecting their demonstrated track records in protecting consumers and preventing fraud. According to MacCarthy et al, the current position under U.S. law is that the FinCEN regulations apply to Bitcoin money transmission. They speculate that the legality of a Bitcoin-exclusive money transmitting license at a Federal level is still a far-off prospect, given the strong consumer protection laws and regulations in the U.S. However, it should be noted that local regulations can vary, although the cost of compliance in each state is significant. This is because each state has its own uniquely cumbersome licensing process and often requires a surety bond to be posted. On that basis a Bitcoin start-up would need to post fifty separate bonds in different proceedings, triggering significant costs. The main argument in favour of a surety bond is that it secures the payment of any possible default judgments; in other words it protects consumers. However, the high cost of compliance, including the requirement for such bonds, may still shut out Bitcoin start-ups and prevent them from entering the market and innovating in the field of retail financial services.

6.2 Consumer Education

The section will explore the necessity of consumer education as a part of the effort to found a new payment system in a financial ecosystem and how it can be severely difficult to realize such an ambition. Several areas are identified as requiring immediate attention, namely the launching of large-scale education campaigns, the need to work with local universities in establishing educational courses that embrace general technological advances, and the introduction of legislative support that mandates the inclusion of digital education as part of the national curriculum. It is explained that such an approach is necessary to provide knowledge that future generations will require in understanding the basic mechanisms behind cryptocurrencies and how they fit into the bigger picture of modern computing and digital technologies. Another provision of assistance for those already in work can start with outreach programs that seek to partner experienced but small local businesses into using such forms of new payment methods. By forming communities where all smart practices can be shared in an informal setting and distilled down into a shared body of knowledge over time, the barriers for switching to a cryptocurrency-based system can be severely reduced and the relevant businesses can quickly assimilate into a new way of conducting transactions.

6.3 Scalability and Transaction Speed

Given that our initial inquiries didn’t turn up any standard operating procedure on knowing the specific test to perform for transaction speed analysis or automated testing, I asked a government representative about it. Jennifer O’Leary, the Director of the Financial Services Division in the Nevada Department of Business and Industry, explained to me that the transaction speed performance is considered an infrastructure change. She told me that “Any time a program manager proposes a change to its technology infrastructure, the program manager must inform the NITC and submit its proposed changes for review and approval by the NITC. Such changes include but are not limited to the technology infrastructure operating environment, data center, networks, telecommunications, server platform, client device platform, and transaction speed performance.” So it’s this last part of the sentence – after the last “and” – that includes transaction speed performance. That gets me close to understanding where the industry-wide tests are dictated from: the National Information Technology Center, or the Nevada Information Technology Center. Alas, the first of Jennifer had my greatest fear come true – no one has sat in on a test because the test just doesn’t have it written down anywhere. Alas, the undiscoverable quest for industry-wide transaction speed tests continues.