Coinbase, Please Set up Multicurrency Debit Card Accounts
How difficult it is to explain bitcoin to the uninitiated. My father, with whom I have given multiple bitcoin lectures, whose own son produces a goodly amount of content on the subject on this very website, still refers to it as bitcom. “How’s the bitcom, David?”, he often says. In truth, when failing to impart even the name, how can one hope to explain why and how bitcoin might disrupt, for instance, banking?
In answer to my hypothetical, I offer this anecdote. My father was complaining about the cost of visiting me abroad, the difficulty and expense in exchanging his dollars to pounds, the cost of withdrawing from his account at cash stations when he invariably runs out of the money exchanged upfront, and the general feeling of being taken advantage of. “You know,” I responded, “I betcha you’ll be able to do this relatively soon for a total cost of about 0.4%, and you can make the exchanges instantly and as needed”. Well he was quite excited at the prospect, and when I proceeded to explain how Coinbase charges 0.2% for exchanging fiat into bitcoin and back again, it seemed as if a lightbulb lit up. Our conversation drifted into related topics (dad, if you opened a bitcoin account, we could transfer each other money for free from wallet to wallet), and suddenly it seemed as if he understood the potential.
There are two points to make. First, forget about imparting your wisdom on how bitcoin works to newbies. It is too complicated, and they are likely to lose interest. Focus instead on real world and simple applications, and once the interest is piqued, let the horse go ahead and drink from the water him/herself. But more importantly, I would like to beg coinbase to disrupt the international travel market already.
Coinbase has established multiple, liquid exchanges to and from bitcoin, with dollar, euro, pounds and canadian dollars, with fiat wallets available in the major currencies. It seems a very short step to allow users multiple currency wallets.
It would look something like this. Users sign up for an international travel account. This opens an two-way trade order – one to get the home currency into bitcoin, the other to exchange the bitcoin into the foreign currency. If Coinbase is unable to sort this on their end, one could easily imagine bots or apps popping up to accommodate the trades, executing market orders on the exchange as required. Easy peasy – a simple, quick and cheap way to convert money on the fly.
Perhaps more difficult, though I don’t really see why, is to load a debit card when the round-trade completes. Debit cards have been integrated by lesser companies, without the benefit of massive banking investors live BBVA behind them – I’m sure Coinbase could sort it out. (UPDATE: On November 20th, Coinbase introduced Shift, the first US bitcoin debit card. Transactions, in which bitcoin are used to purchase USD-denominated goods, carries no charge.)
There are a number of things to like about the concept. First, the benefit is apparent for anyone regardless of their familiarity with bitcoin. As a matter of fact, don’t even mention bitcoin. The message could simply be: “Never go to a currency exchange again. 0.4% conversion fees instantly from your mobile app.” Boom, you just opened up a new demographic for your product.
Second, the travel market provides a proof of concept to expand the model further. Take, for instance, this riveting true story. I love TransferWise, but despite the much reduced conversion costs, I still get hit with international wire fees, it takes up to two days to convert the cash, and an additional few days for the wire to hit on the other side. And of course, they don’t offer a wallet meaning every time I want to use the service, I have to transfer them the money.
I invested with a really big international real estate company, who provides capital from local investors in different international property ventures. When I told them about transferwise, they were extremely enthusiastic about using it themselves and for their clients – despite all the negatives described above. Why would they not be more excited about something that does the same things, but eliminates the negatives?
So you can see how Coinbase could really provide a new benchmark here, and the model would most likely expand and uncover new use cases over time. And despite the fact that bitcoin is not actually being held, greater use of such an application would most likely have a considerable halo effect on its price. As an added bonus it aids in the spread of the gospel – we would anticipate a learning-by-doing effect as well, where people start to understand the benefits of bitcoin. At some point, well down the road, people might begin to say – hey, why must I continuously convert my USD to EUR? Can I not simply hold the bitcom itself?
We call on Coinbase to disrupt the unjust and archaic international market of trade and travel.
“Let, therefore, your illustrious house take up this charge with that courage and hope with which all just enterprises are undertaken, so that under its standard [we can pay less for international travel, and much faster at that, and]…be ennobled.”
Coinbase now offers shift debit cards which debit funds directly from your bitcoin account.