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Coinbase Cards: The Future of Crypto Spending
1. Introduction
Some introductory stuff about how crypto is increasingly mainstream – especially Bitcoin. Also, how more and more businesses are accepting Bitcoin as a form of payment. The Coinbase Card is a Visa Debit Card that is associated with your Coinbase cryptocurrency balance. It allows users to spend their digital funds online and in-store – anywhere that accepts Visa. When payments are made, Coinbase instantly converts the cryptocurrency, and the merchant receives the payment in traditional money. Perfectly good everyday cash, like pounds, dollars, or euros – though using Bitcoin. At the moment, the Coinbase Card is limited to the UK and EU, with the rollout in other countries expected soon. Also, the card only works with the following cryptocurrencies: Bitcoin, Ethereum, Litecoin. Using the card bypasses having to transfer funds from a cryptocurrency exchange (like Coinbase) to a bank account. Instead, the user can instantly access cryptocurrency balances. Also good for people that occasionally sell or ‘cash out’ their investments and want to spend the money normally. There is no need to make a sale back into a bank account – incurring transaction and transfer fees. They would simply have unused funds on Coinbase, which can then be used immediately without fees using the Coinbase Card.
1.1 What are Coinbase Cards?
Coinbase Cards are a UK-based provider of prepaid cryptocurrency debit cards. They were the first ones to introduce this type of cards to the United Kingdom and the European Union. However, only last month, the card was made available to customers in Spain and Germany. They have announced that they intend to make the Coinbase card available to even more customers in France, Italy, Ireland, and the Netherlands. Unlike other companies operating in the cryptocurrency debit card market, the Coinbase card is linked directly to the Coinbase cryptocurrency exchange. This means that customers can spend their digital currencies’ balance instantly in millions of locations all around the world. Furthermore, the cards offer both Android and iOS compatibility, and customers can fund their cards using Bitcoin, Litecoin, Ethereum, and Bitcoin Cash. The cards are also free to get and all mobile app, no fees for paying with either in GBP or foreign transactions. Therefore, with the advent of cryptocurrencies, the emergence of Bitcoin banks and payment, and now companies like Coinbase providing convenient ways to spend digital currencies, cryptocurrencies are slowly becoming a bit more tangible and convenient way to spend money in addition to traditional GBP.
1.2 Benefits of Using Coinbase Cards
Asides from very informative sections titled “What are Coinbase Cards?” and “How Coinbase Cards Work”, for the sake of this series of essays or articles, the benefits of using Coinbase Cards are of key interest for both users and Bitcoin or Altcoin enthusiasts and advocates. On the web page of Coinbase immediately after introducing the Coinbase Cards, the first section is about its advantages. The same is normal when one researches on any product in today’s commerce and cloud integrated markets or economies. When using a Coinbase Card, you are not expected to be charged any additional withdrawal fee or cash advance fees by your card’s issuer if you want to withdraw your money at an ATM. I still learnt that banking fees differ by banks and what one pays for certain services available at their local bank branches. However, in a short time, without having to delve deeply into the main terms and conditions under which the Coinbase Card services are offered to and utilised by users, one gets an understanding of what the tangible benefits are. If one has ever tried out any alternative way currently in existence in accessing one’s Bitcoins or Altcoins to help out and support their activities as one travels, trades, shops, saves, donates or sends money to relatives and friends, a Coinbase Card would be a very good choice. As per the information on the main Coinbase web page, by just having a Coinbase Card, which is accepted in all Visa Card capable points of sale, cryptocurrency investors and users can enjoy not just the convenience of a normal everyday card but also the benefits offered by using the cryptocurrency in terms of personal financial management and from savings that result from reduced or no fees when using the Coinbase Card.
1.3 How Coinbase Cards Work
Coinbase Card is becoming more and more popular for cryptocurrency lovers because it is the easiest way to convert digital currency into fiat money. The first and foremost thing is that the user must sign up on their platform. After signing up, the user will be able to manage their account, spending, and find the best offers. But now the question is, how to launch a new cryptocurrency debit card? Actually, when the user goes to the platform, they will be able to apply for the desired card. For instance, Coinbase offers three types of cards that are very helpful for users to convert cryptocurrency into fiat currency on different websites, mobile applications, as well as in shops. Now let me tell you what fiat money means. It is physical money that does not have intrinsic value like gold or silver, but it acts as a medium of exchange. There are many different ways to spend cryptocurrency, but users have the power to choose between using the card or other methods. So, it is clear that by using Coinbase Card, the user will have a role in the cryptocurrency industry.
2. Security and Privacy
Contrary to popular belief, cryptocurrencies are not anonymous. Every transaction is recorded on a public digital ledger known as a blockchain, and these records can be used to determine the identities of the people making transactions. With Coinbase Cards, your wallet is designed to be the most user-friendly hardware security solution. All supported cryptocurrencies can be securely stored in Coinbase Cards. Access to Coinbase Cards’ digital money is protected by biometrics, which unlocks the card so that users can authorize all transactions with their fingerprint or 6-digit passcode. This advanced security technology lets you enjoy all future software feature upgrades which will further improve transaction security and privacy. However, we still understand that hardware wallet loss is a serious matter. There are built-in security measures in Coinbase Cards that stop anyone from using the card without proper authorization required, thereby keeping your digital assets safe even if the physical card is lost. Also, Coinbase Cards provides the common criteria EAL 5+ certified secure element. This means that the hardware and software used in the card have been independently tested and verified to provide a superior level of security. This certification process involves an evaluation of the design, development, and management processes for the secure system – including the security functions of the system. With this feature, we can ensure that Coinbase Cards are protected against all known attacks, and that our card is virtually indestructible due to the enhanced protections of our secure element. Last but not least, Coinbase Cards support multiple cryptocurrencies, which include Bitcoin, Ethereum, Ripple’s XRP, Litecoin, Stellar Lumens, and ERC20 tokens. With the secured support of multiple different cryptocurrencies, the future of crypto spending has never sounded more promising.
2.1 Secure Transactions with Coinbase Cards
Besides allowing you to spend your cryptocurrency, Coinbase Cards features a host of security measures which ensure the validity of your crypto transactions. The most notable security feature of the Coinbase Card is the two-factor authentication or 2FA. The 2FA is a system which doubles the security of any online account by generating a unique code every 30 seconds. In order to complete a transaction with the card, users ought to use the code first to activate the card. After the activation step, accessing the card for other transactions demands that the user logs into their account and validate their identity using a biometric feature like a fingerprint. This considerably strengthens the security of any transaction with the Coinbase card. Also, because the card is integrated into the main Coinbase platform, users can easily control and monitor their spending through the use of the mobile app. For instance, users are able to turn on or off the cards whenever they want, set a default payment card and more importantly, there is no need to load the card – one can spend directly from their digital currency wallet on Coinbase. Last but not least, the Coinbase cards uses high security standards and are Chip and PIN protected. This not only means that users can make quick contactless payments but also makes the card widely accepted. With contactless payments, the card never leaves your hand and contactless technology is designed in such a way that card details cannot be skimmed or copied. All these characterise the Coinbase card as a secure, user-friendly and efficient card to spend digital currencies, regardless of where you are.
2.2 Protecting Your Personal Information
Coinbase is careful to protect your private information. All the data we collect is encrypted, meaning it’s translated into a code to prevent unauthorized access. This safeguard is known as Secure Socket Layer (SSL) protection, and it’s used by many reputable websites and tech companies. The SSL security features ensure that your personal information remains just that – personal. It’s important to sign out of your account and close the web browser if you’re using a shared browsing environment, such as in the office or a public library. By doing so, you’ll prevent others from accessing your account. Also, avoid using an easily guessed password and use a combination of letters, numbers, and mixed casing to keep your account secure. You can protect your personal information by using a safe and secure password that you’ll remember but that others wouldn’t guess, and by not sharing your password with anyone. If you need to share your computer or device with others, you should set up your user profile to require a password when logging in. This ensures that your information is safe, no matter who else uses the device. By keeping a few important security tips in mind, you can protect your personal and financial well-being while using Coinbase Cards and other online services.
2.3 Privacy Features of Coinbase Cards
From a data protection perspective, this is a really important feature of the card. The European General Data Protection Regulations (GDPR) provides that whenever personal data is gathered and processed, it must be processed in a way so as to not be personally identifiable. This helps to prevent the potential for fraud and identity theft. By virtue of the fact that using the card does not require data to be sent to the blockchain, and the card itself is a form of cold storage, this means that the security risk associated with the card is actually more akin to signing a transaction offline than online. In fact, the limit of data stored on the card is only to the details of current and previous transactions – a feature unique to current models of cryptocurrency cards on the market today.
Coinbase cards offer a high level of privacy when compared with traditional banking and financial services. This is because the cards are powered by Coinbase, and therefore it is not necessary to link the card to a bank account. The cards operate on a principle known as an offline stored value, which simply means that instead of cryptocurrency transactions being validated by miners in the usual way, the card itself performs the transaction. This means that there is no further trail of transactions being added to the blockchain which could be traced back to the owner.
3. Integration and Compatibility
Coinbase Cards’ compatibility covers the major cryptocurrencies, like Bitcoin, Litecoin, and Ethereum, but currently, it does not support every single one of them. On the Coinbase website, they state that in order to use the card, cardholders will need to have a verified Coinbase account, and that the card is available to customers in the UK and within the European Economic Area (EEA). The website also lists the currencies that the card itself supports – Bitcoin, Litecoin, Ethereum, and the GBP wallet. As for the supported merchants, Coinbase cards obviously can function at any merchant that accepts card payments. However, the process is slightly more complicated when one wants to use the card with a digital wallet. By definition, a digital wallet – sometimes called an e-wallet – is ‘a software-based system that securely stores users’ payment information and passwords for numerous payment methods and websites’. To use Coinbase Cards with digital wallets, the user must find payment processors that have registered their company’s wallet with a card network. Then, the process depends upon whether the given merchant supports tokenization – and so, the Coinbase card – with one’s chosen digital wallet. This step requires the user to access their wallet account and virtualize the possession of the card by taking and uploading a picture of the front and back; this creates what is known as a ‘virtual card’, which the user can then associate with a contactless payment method that their wallet will provide the details to. After this process is complete, and the user has made the Coinbase Card their designated ‘top of the wallet’ item, the physical card can be ‘added’ to digital services that the wallet may have. With the right smartphone application installed, users can set up the Coinbase Card for use with most modern digital wallets. Although not explicitly documented, it can be assumed that the card is supported on both Android and Apple mobile operating systems, as they are, by far, the most prevalent platforms for devices of this nature. However, the website clearly states that Android devices compatible with the card must be running Lollipop 5.1 or later. Apple wallets are supported from iOS version 9.0 onwards.
3.1 Coinbase Cards with Major Cryptocurrencies
3. Integration and Compatibility 3.1 Coinbase Cards with Major Cryptocurrencies As of now, the list of major integrated cryptocurrencies is not very big. While it is subject to change and there might be more cryptocurrencies to be added, the existing list is: – Bitcoin (BTC) and Bitcoin Cash (BCH) – Litecoin (LTC) – Ethereum (ETH) and Ethereum Classic (ETC) – Basic Attention Token (BAT) – 0x (ZRX) This is a pretty comprehensive list of major cryptocurrencies and more importantly, most of the cryptocurrencies that are listed are well adopted not just in the UK and EU, but across the world. So what we need to do first is comparing the exchange rate for these cryptocurrencies on Coinbase and any other cryptocurrencies that we might have in our existing crypto wallets. For example, use the conversion rate from Bitcoin to our local fiat currency and compare it with the rate offered for converting Bitcoin into other cryptocurrencies. Once we have chosen the cryptocurrency for the top-up, we can transfer the value of the chosen cryptocurrency from our crypto wallets to the dedicated cryptocurrency wallet and the card will do the rest in terms of converting and approving the transaction. For the first time of choosing a dedicated wallet, we have to link the wallet and corresponding cryptocurrencies to required digital currency area by allowing the card to connect with the cryptocurrency. Each wallet has to be linked separately so that different payments can be made through different cryptos. At the time of linking the wallet, a unique 1000 cryptos validation code which is refreshed every 20 minutes will be shown on the app and has to be entered to the digital currency area in order to finalize the linking process.
Table of Contents 1. Introduction 2. How Does “Coinbase Card” Work? 2.1 Cryptocurrencies Available 2.2 How to Use? 3. Integration and Compatibility 3.1 Coinbase Cards with Major Cryptocurrencies 3.2 Supported Merchants and Payment Processors 3.3 Using Coinbase Cards with Digital Wallets
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3.2 Supported Merchants and Payment Processors
To date, the Coinbase Card can be used in millions of locations worldwide. Users will be able to make purchases everywhere Visa debit cards are accepted. Users can also make cash withdrawals from ATMs. Customers can use their cards with any merchant globally that accepts Visa. As well as working with major retailers, the card supports some of the leading UK payment processors. The payment processors currently supported by the Coinbase Card include Paysafe, which operates leading digital wallets such as NETELLER and Skrill, and Circle, which has developed a US-dollar digital currency wallet, ‘USD Coin’ (USDC). Also, there are big names among the list of supported merchants. For example, the card can be used with popular tech stores such as Amazon, Handtec, and Samsung. It can also be used to buy everyday items from a variety of different shops, including the likes of Tesco, Lidl, Aldi, and Marks & Spencer. The list of merchants will continue to grow as more and more businesses start to accept cryptocurrencies as a method of payment.
3.3 Using Coinbase Cards with Digital Wallets
A digital wallet is an essential tool that allows you to store, send, or receive cryptocurrencies. On the other hand, a digital wallet is software that helps to store your digital currency. The wallet is basically a bank account on the internet. Digital wallets are important in any kind of crypto world. The digital wallet is an important parameter and can decide how far you may be successful in your cryptocurrency journey. Now, the question is, can Coinbase cards be used in tandem with digital wallets? The answer is a resounding yes. If you own a digital wallet account, well, you will find Coinbase cards very helpful. Each and every time you spend coins using the Coinbase card, the system automatically takes money from the particular digital wallet you selected. This seamless connection allows you to shuffle and change the wallets as many times as you want. However, your selected digital wallet should have the cryptocurrency you’re spending. The payment process is always instant. So far, this is the easiest and most convenient way to spend your cryptocurrency. Whether shopping online or making payments across retail stores, the Coinbase card is a game changer in the cryptocurrency world. You don’t have to subscribe to various systems of payments such as bank wires to make payments. Also, there is no fear of fraud or coercion that you might be forced to make payments using real money.
4. Future Developments
So, it certainly seems as if both physical and virtual Coinbase Visa cards have a very bright future – both in terms of their use and their likely proliferation around the globe! Besides expanding to new European markets, Coinbase also has its sights set on launching its Visa cards in the USA. Based on statements from Coinbase, it seems that they are very much focused on enhancing the overall experience that the cards offer – with plans to add more crypto-assets to your choice of possible card wallets. For example, whilst customers have access to 9 cryptocurrencies at the moment when using the Coinbase Card, Coinbase says that it is already “exploring ways so customers can spend on other cryptocurrencies and has a pipeline of new features”. This means that spending your Bitcoin, Ethereum and “more” via a Coinbase Card could be easier than ever in the not-so-distant future. Finally, the company is fully aware that ongoing cybersecurity threats are a very real concern for all users of current account and ATM withdrawal cards like the Coinbase Card. Thus, a key part of the development of Coinbase Cards futures will be to ensure the highest standards of safety and security – and this will only be achieved through constant work and attention to detail. Indeed, although today the company has ensured that they implement some of the “latest in app security features” available, they have announced plans to launch a secure mobile app to further improve the practicality and usefulness of the cards – specifically with a mind towards streamlining the process of using the card whilst out and about. But again, as of today, whilst the company continues to update and improve the safety features surrounding the cards, it is clear to see from the sheer pace and scale of development ideas that it really does have big plans over both the short and long term.
4.1 Expansion Plans for Coinbase Cards
The company also has extensive plans to roll out its card outside of Europe by the end of the year. These plans could see the business moving into regions such as the United States and Asia, which will increase the overall accessibility and popularity of the card. Having a presence in America, which is leading the world in the adoption of cryptocurrencies, could prove to be particularly profitable for the business, and this is an aspect that’s touched on in the review of the company. This would be achieved through the business working closely with other financial technology firms in order to gain a footing in these markets. The regulation of cryptocurrencies is different in both the USA and Asia when compared to Europe and this has led to delays on the business developing its card in those regions; the business has been unsuccessful in having its application approved by the UK’s Financial Conduct Authority. This would need to happen before other markets will be considered, and this definitely represents a key hurdle to the potential expansion and growth of the business overseas. Also, the author of the review mentions that the company’s competitors, like Revolut, have made more progress outside of Europe than Coinbase and thus the business needs to act fast in order to take advantage of the first mover opportunities. By building partnerships with larger firms and tech companies like Apple and Google, the company could potentially make the Coinbase Card accessible through the likes of Apple and Google Pay. By doing so, this would greatly increase the accessibility of the card and this is a major attractor for potential and current users alike. This is also a focus in the review and forms part of the company’s expansion strategy.
4.2 Enhanced Features and Functionality
Another major change for Coinbase Cards announced in April 2020 was the introduction of new five cryptos which could be spent using the Visa-accepted cryptocurrency card. In addition to Bitcoin, Ethereum, Litecoin, and XRP, Coinbase Card owners now have the freedom to spend with Basic Attention Token, 0x and Augur, and the new coins would join the already-accepted cryptocurrencies Bitcoin, Ethereum, Litecoin, and XRP. The in-depth review claimed that the newly-added cryptocurrencies do have real-world applications and all with large market shares. However, as Augur is still in an early stage and 0x appears to not having wide user adaptability effective by April 2020, all being associated with unforeseeable technological problems, the expanded coin feature could encounter potential issues. Although no information regarding how the unexpected problems would affect actually using the new coin functionalities has been released to the public, the reviewed stressed that it would be interesting to see if they may affect Coinbase Card owners in the future – and of course, developments in new cryptocurrencies could mean that the available coin choices could be even wider in future. Also, the newly-added cryptos could offer new potential replacements for the already-established coins – according to the review. With technological advancements and alternative coins’ development, improved and new cryptocurrencies could eventually replace existing ones as societal norms. This thinking emphasizes another layer of disruption that might be caused by the updated features of Coinbase Cards – the increasing dynamism of the cryptos that are associated with this Visa-accepted cryptocurrency card.
4.3 Potential Challenges and Solutions
Many cryptocurrency companies have found it difficult to produce a mass-market product that performs a specific function in an easy and intuitive way. The primary challenges in this area are two-fold: understanding the needs of potential users and working with the existing financial infrastructure. Right now, cryptocurrencies generally struggle with building trust amongst a more diverse and less tech-savvy user base, which is required for such a product to succeed on a larger scale. Another challenge is the need for universally integrated solutions with more traditional financial products. Alternative projects that aim to create a real-world spending solution, like the now-defunct Wavecrest partnership that saw hundreds of thousands of cards effectively shut down in early 2018, have struggled to maintain their card’s relevance as a blockchain project when only issued in one pre-paid form in small regional areas. However, as head of product development at London Block Exchange, Iqbal Gandham, points out, many of these challenges are already being tackled. He highlights the continued practice of user-centric design in the crypto space, arguing that a greater understanding of what users want from a cryptocurrency product will help drive mass adoption for such projects. In addition, recent technological developments and the currency of legacy systems means that improvements are constantly being made in the potential for establishing more integrated solutions. For example, certain cryptocurrencies have invested heavily in creating a platform that works across the world instead of relying on dedicated local methods. This includes options like being able to load fiat currency onto a wallet through SEPA payments in Europe or Swift for the United States, expanding the potential for real-world spending. He also highlights the introduction of new crypto debit card services, such as the Coinbase now and other products in development. This increased rate of competition helps drive innovation.
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