Xapo Launches Bitcoin Debit Card Accepted at All MasterCard Locations

Pete Rizzo (@pete_rizzo_) | Published on April 24, 2014 at 16:00 BST | News, Wallets

California-based bitcoin wallet provider Xapo has announced the launch of a bitcoin debit card – a new product it is lauding as the first to allow bitcoin users similar spending freedoms to traditional debit cards.
The Xapo Debit Card debits BTC directly from users’ hot wallets, and can be used anywhere MasterCard is accepted, both online and at physical locations, though it does not represent a partnership between the companies.
Xapo founder Wences Casares explained that the card is designed to appeal to Xapo users frustrated by the inability to spend their bitcoins at most locations, telling CoinDesk:

“You can use it anywhere you would pay with MasterCard, you can use it online, you can use physically at any place you can pay with MasterCard. It makes it very, very easy for you to access your coins.”

The offering is immediately available in both a digital and physical version to existing Xapo customers. The digital version of the card is free, while the physical version comes with a $15 one-time fee that the company indicates covers shipping and handling.
New Xapo customers can also sign up to take advantage of the release. Shipping for all physical cards is expected to begin in two months, the company said.

Customer demand

As of its launch, the Xapo Debit Card is limited to one card per wallet account.

Casares explained that Xapo added the product due to demand from current customers who have wanted a way to spend the roughly 10% of their funds (on average) they keep in the company’s hot wallets. The remainder is stored securely in cold storage.
Said Casares:

“I think that this product is for existing customers who are asking for it. I expect a lot of the current customers to be using it.”

Casares indicated that the ability for users to connect multiple cards to accounts may be added in the future, should customers request the feature.

How it works

Casares said that Xapo receives all transactions when they are initiated by card users at the point of sale.
From there, the company analyzes the account to determine whether there are enough funds to support the transaction. If so, the company authorizes the purchase immediately and sells the requisite amount of BTC via bitcoin exchange Bitstamp.

Merchants receive their payment in local currency and, to MasterCard, Casares said, the transaction appears just like any other local transaction.
Casares went on to explain that the offering is different than the available prepaid options from Coincard and Cryptex, which need to be preloaded with bitcoins and that, he said, require users to manually convert bitcoins to local currency before purchase.
Explained Casares:

“This one is just like a debit card, because it debits from the wallet directly. You don’t have to be thinking about funding it and how much and when the conversion happens.”

Xapo users, by comparison, only need to move bitcoin from their cold storage vaults to their company-issued hot wallets when more funds are required.

Consumer focus

Though best known for its secure bitcoin vault storage product, Casares told CoinDesk that the Xapo Debit Card is consistent with his company’s mission of becoming a viable, consumer-focused bitcoin bank.
Said Casares:

“We’re not a wallet company or a payment company. We are a bitcoin wallet, we are a bitcoin bank. Consumers need convenience and that’s why we provide our MasterCard debit card and why we will keep adding products based on our customers want.”

Casares went on to stress Xapo’s commitment to consumers, stating that the company will never have merchant customers or offer merchant services.
The launch follows Xapo’s 13th March announcement that it raised $20m in funding from Benchmark, Fortress Investment Group and Ribbit Capital.
Images via Joshua Alvarez of The Hatch Agency

Bitcoin Offers Monetising Solutions for Online Publishers

Nick Chowdrey (@nickchef88) | Published on April 19, 2014 at 10:57 BST | Analysis

Nick Chowdrey is a business and technology writer and proud digital native. Currently based in Brighton, UK, he is a technical writer at Crunch Accounting and co-founder of Brighton-based bitcoin community Bitcoin Brighton. Here, he explores how bitcoin can play a part in the business of online content.

Making money from online content is hard work. A variety of different models and tactics have been tried down the years, but a solid solution is yet to be found. Could bitcoin be the answer everyone is looking for?

Before the internet age it cost a lot of money and resources to publish content. Newspaper publishers, for example, have to pay for the paper, the printing press and the distribution. In contrast, the web provides publishers with a relatively inexpensive – if not free – platform, with very low production costs.
The result is lots and lots of free content, which is great for consumers but bad news for content professionals because it makes it difficult to make any money.

Monetising online content

Advertising is one of the ways that digital publishers have tried to make money from their product, but it requires the site to get a viral amount of hits before the option becomes a viable one. Not only does this stifle competition, it clutters up sites with unwanted and often intrusive commercials.
Another option is the content wall. This allows users to access free content for a limited amount of time before requiring a paid subscription. Sites that do this currently are the Daily Telegraph, the New York Times and the Sun – each with varying success. The Sun lost 62% of its traffic after adopting its paywall. On the other hand, the New York Times reports that its own rakes in $150 million a year.
The paywall model is increasingly popular, but there are still serious limitations. It clearly doesn’t work for every audience, which limits the amount of content publishers that can use it. The main issue with this model is that web users consume content in a very disjointed way – more likely to flit between all kinds of sites than loyally stick to just one or two. To many web users, a blanket subscription to a whole site may seem like a waste of money, especially when so much content is available for free elsewhere.

Bitcoin vs fiat paywalls

This is where bitcoin comes in. Micropayments offer an option much better suited to the way content is consumed in the online world, giving users the option to pay a very small amount for individual items, rather than a large amount for a whole box of content.
Micropayments have previously not been an option for online publishers for many reasons. Paying by debit or credit card requires the user to enter all their payment information to verify their identity, creating a barrier to entry that easily dissuades the fickle internet user. Payment networks dealing in traditional currency also charge substantial transaction fees, making multiple, small payments an impractical option.
Conversely, bitcoin allows users to make instant, virtually fee-less, international micropayments with a single click of the mouse. Some companies are already coming up with solutions for online publishers. Using BitWall, for example, you can implement a bitcoin paywall on your site with just a few simple lines of code. This option was recently trialled by the Chicago Sun-Times, proving that big media companies are already showing interest, if not thinking about it.

Tipping and the bitcoin community

The question is: will users change their behaviour to engage with this idea? If you think of the process more like tipping, there’s no reason why not. People are happy to tip in person using actual cash, so why would they not do the same online using bitcoin, which is comparable to digital cash – especially when the process is as easy as clicking a ‘like’ button?
Indeed, there’s already evidence of the cryptocurrency community being very generous with micropayments and donations. The culture of tipping on the bitcoin subreddit has led to startup ChangeTip‘s developing platform for bitcoin tipping on Twitter, Github and soon, even Facebook – lest we forget the infamous Jamaican bobsleigh team fundraiser by the dogecoin community.
If publishers can find a source of revenue better than advertising, there could be a shift away from producing content solely for hits and shares, and back towards a focus on quality. It would perhaps reduce the amount of intrusive banner ads as well.
Whether or not the idea catches on relies on a number of factors, including how much more widely adopted bitcoin becomes, how bitcoin paywalls affect site traffic and how much investment goes into startups like BitWall. The foundations, at least, are laid – and as an online content professional myself, I’m certainly counting on a shakeup.
Payments image via Shutterstock

New Colorado Marijuana Vending Machines Will Accept Bitcoin

Stan Higgins | Published on April 16, 2014 at 19:11 BST | Startups, Technology, US & Canada

Marijuana vending machines have long been rumored to debut en masse in certain US states, but on 12th April the first machine that can be accessed directly by consumers was finally unveiled at an invite-only event in Colorado.
Billed as the first marijuana vending machine in America, ZaZZZ units are perhaps more accurately the first ones that will not be placed behind sales counters. The machines offer a number of novel compliance features, including a driver’s license reader and a camera that captures video of users.
ZaZZZ machines also have another notable feature: They accept only a limited number of payment options including the ZaZZZ Card, cash, and perhaps most notably, bitcoin.
Stephen Shearin, COO of American Green – the makers of ZaZZZ – spoke to CoinDesk about why bitcoin is the right fit for his brand. He said:

“It’s quick, it’s efficient, it’s trackable.”

How the machines work

ZaZZZ indicates that its machines will serve as an ancillary service for dispensaries, appealing to those who want to make purchases quickly or who otherwise might be shy about buying marijuana.
Shearin explained that customers paying with bitcoins will find a transaction system nearly identical to the ones they would use at a merchant that accepts bitcoin:

“It’s exactly like [using your] bitcoin wallet to pay anywhere else.”

When the customers have selected their product and move to the payment stage, they can then opt to pay in bitcoins. The vending machine produces a QR code which the customer can then scan with their smartphone.
Once the machine accepts the bitcoins, the customer takes their product and the transaction is completed.

Two growing markets meet

Medical marijuana has been legal in Colorado since Amendment 20 passed in 2000. The policy was followed in 2012 by Amendment 64, which allows for the personal use of marijuana by all adults at least 21 years old in the state.
However, while the policy is not new, the retail infrastructure to support the change has been slow to roll out. For instance, the first marijuana stores opened on 1st January of this year. The relationship between bitcoin and marijuana in Colorado began with the use of the digital currency by dispensaries who, at the time, were unable to find financial partners.
Some observers see the legal obstacles facing marijuana as similar to those experienced by bitcoin.
According to Shearin, the use of bitcoins allows businesses in the cannabis industry a way to improve margins that are already tight after taxes and the cost of regulatory compliance. He explained:

“Providing a payment facility that has a super-low cost to it, like bitcoin, is an effective way to provide these guys – dispensaries and dispensary owners – with a means of doing their business that is more efficient than other facilities that charge a higher fee.”

Shearin went on to say that the grassroots nature of the digital currency movement, as well as its value-oriented benefits for customers like low transaction fees, made implementing bitcoin a clear choice.
Image via Zazz