Bitcoin may be the future of digital money, but it has a big problem here in the United States: why use it to buy anything when millions of merchants already accept debit and credit cards?
Today, if you want to buy a bottle of lemonade with bitcoins, you need to scan a QR code with your phone or email a long bitcoin address to the seller. For most people, buying with bitcoins just isn’t as easy as Visa or MasterCard.
"You just have one card that you can use verywhere without restrictions."
But that’s set to change in the next two months. Xapo, a company that offers online bitcoin wallets, says it’s two months away from introducing the first debit card that will let you spend your bitcoins at any place that takes Visa or MasterCard.
It’s a sign of bitcoin’s growing maturity, and a look at how the digital currency is slowly integrating with the mainstream financial services industry, thanks to a raft of venture-backed bitcoin startups that are now coming online. There are a few other companies that offer prepaid bitcoin cards, but some of them have a fly-by-night feel. Xapo, it seems, is the first to really link your online bitcoin wallet to a card, and–backed by $20 million in VC funding–it’s on far firmer footing. Unlike others, it also operates out of the United States–though it’s incorporated in Hong Kong.
Here’s how it works. Xapo, a bitcoin wallet provider, is in the process of becoming a debit card issuer on one of the major credit card networks. That means that, like your bank, Xapo, can issue you a debit card number and expiration date. You get the card number for free. If you want them to send you some plastic so you can gas up or buy beer at a corner store with your bitcoins, then they’ll charge you $15.
When you use the Xapo card, the credit card number checks in with Xapo, which approves or declines the transaction, depending on how much bitcoin you have in your wallet. It then sells the bitcoin on the Bitstamp exchange and pays out the merchants just like any other card issuer.