Can Binance’s Newly Introduced Crypto VISA Change The Tables?
A lot of crypto enthusiasts, including myself are paying our monthly bills using cryptocurrencies such as Bitcoin and Ethereum, but the process is not as simple as it sounds for newcomers.
In most scenarios, you should find a broker, or transfer your funds to Kraken, Coinbase, or something analogous before you can withdraw them to your physical bank account as fiat currency. This process can be extremely time-consuming, especially if you need your funds immediately, while the fees associated with each transaction (from wallet to exchange, from exchange to the bank, etc.) can devaluate your holding by a considerable amount.
Of course, there are some vendors who would directly accept cryptocurrencies as a means of payment, making the transaction speed and fees practically unnoticeable, yet crypto adoption is not anywhere near the adoption VISA credit and debit cards enjoy on the global payments network.
So what’s missing from cryptos in order to become a global payment standard?
I won’t get into much detail, but the idea here is to make cryptocurrency usage as simple and as practically efficient as possible. In fact, it should be so easy, that my mother should be able to send, receive and pay with crypto with no sweat.
Read More: What Can Bitcoin Learn from PayPal?
Quite the contrary, the situation now requires you to create and carefully own a digital crypto wallet, that’s not even a standard, but there are a plethora of different wallets for different use-cases.
This wallet is not interoperable with the traditional monetary system but is relying its operations on the blockchain. Meaning that any chance of directly translating your crypto into fiat would require third-party services registered as financial instruments with relevant authorities and a good stash of both crypto and fiat in order to offer a seamless pipeline of transactions in and out of the crypto realm.
Essentially that contradicts blockchain’s initial vision, which was to get rid of third-party authoritarian gloves who want a piece of your personal assets every time you try to utilize them in any way, including simply moving them inside the network.
The only way cryptocurrencies could become a global standard is either by convincing all vendors they should directly accept cryptos or by creating a custom-made VISA contract, where you could offer fiat analogies, pegged by cryptocurrencies users store with your service.
No questions asked that if anyone could engage in such a concept, that would be the world’s leading cryptocurrency exchange market Binance, which already has several lending and banking licenses, making the process even easier for financial authorities to comprehend and therefore regulate.
Binance’s Crypto Debit Card Is Not Your Typical VISA
Binance recently announced a Crypto Debit Card in association with VISA, which from what I understand will work similarly to a traditional banking account.
Unlike previous attempts to bring VISA into the crypto realm, who wanted to directly spend users’ cryptos as they pay, Binance plans to introduce a relevant app from where users could top up their debit cards using their cryptos as collateral, which will be degraded as you pay.
Even if you have more funds with your Binance account, the card will only capitalize on the crypto assets used to top up the card.
For you and me, this is a good scenario, where we can actually spend our cryptos directly with physical vendors who might not even be aware of what cryptos are or how they work.
As for Binance, this is a win-win scenario as it will initially bring more users to the already popular platform, while at the same time, it will create a domain of banking in the Binance ecosystem, one that will use ‘frozen’ funds in x scenarios, as long as users are not spending everything they transferred to their card immediately.
Binance says that only cryptos spent would be subtracted from the card balance, while users could regularly hold their remaining funds as they would in their regular Binance wallet.
Furthermore, the landing page reveals that users would be able to top up their cards using BNB or BTC, while the service will be initially launched in Malaysia and Vietnam as a beta.
The Binance Card App will be available to more regions soon, and physical cards will be also available to future users who are ready to party $15 worth of crypto.
It is true that there are already a lot of online banking services that offer custom-made VISAs, but Binance is not just any fintech company. Bring crypto into the mainstream in a seamless way could be exactly what’s missing from mass adoption.
Finally, I’ve been talking with this concept for some time, and I concluded that the only way to achieve such a payments network, is by staking a sum in fiat currencies with a central bank, that would act as collateral to VISA who makes sure crypto users get what they want when they want.
Now, similar to a banking scenario, if people suddenly try to pull out all of their money at the same time, VISA would not be able to compensate all of them as there are probably not as many fiats backing Binance’s contract as cryptos used to top-up the card.
Just food for thought, let me know your take on Binance’s new venture. Are you going to get involved with the beta? Hit me using the comments section below or dm me on Twitter.