Binance's Cryptocurrency Debit Card could dramatically increase the popularity of digital assets around the world and make them mo...
Binance's Cryptocurrency Debit Card could dramatically increase the popularity of digital assets around the world and make them more usable. Nevertheless, the card will be tied to the personal account of the crypto trader, and you can spend coins in almost any store with a banking terminal. However, not everything is so simple - the Binance Card also has its own problems that can harm the entire industry. We will tell you what it is about.
What is Bitcoin for?
More than eleven years ago, the man, whom everyone now knows under the pseudonym Satoshi Nakamoto, contemplated a completely independent ecosystem outside the control of the participants in the global economy. Its development changed the concept of finance and founded an entire industry. As a result, Bitcoin has become the hub of the digital asset ecosystem .
It is worth noting that Satoshi designated Bitcoin as an “electronic means of payment,” which is why his ultimate goal was the widespread use of BTC as money. However, the cryptocurrency inherently turned out to be not very suitable for the role of a substitute for ordinary bills: the price of Bitcoin changes too quickly, and transactions in its network take too long .
These same disadvantages apply to many other cryptocurrencies. Even Ethereum, with its block time of 13 seconds, has too expensive transactions today. To overcome the downsides and open digital assets to a wider range of users around the world, cryptocurrency exchange Binance introduced its own debit card this year. With its help, it will be possible to pay in crypto for purchases in almost any payment terminal in the world.
It would seem that everything is fine - Binance is a very popular resource in the industry, even those who have not been interested in crypto at all will definitely buy its product with good advertising. But behind the growing popularity of Bitcoin in this scenario, there are many pitfalls. From large commissions to high centralization of the entire industry .
How does cryptocurrency payments work?
There are currently two of the most popular ways to convert cryptocurrencies to fiat. First, the intermediary accepts the digital asset and sends the required amount of money to his client, taking into account the market rate.
It is very easy to buy cryptocurrency with fiat on Binance
The second method is to convert crypto to fiat directly on the exchange or other services with the subsequent withdrawal of money. By the way, in this case, Binance has also succeeded, providing traders with the ability to quickly exchange cryptocurrencies for fiat.
Crypto enthusiasts and ordinary consumers who would like to pay for goods and services with cryptocurrency value the security of the blockchain, where there are no hidden administrative fees or any other obscure payments along with the absence of a central authority. It is also important for people to feel that they are in control of their own money, and not the numbers in the bank account.
Decentralization and privacy are the "spirit" of cryptocurrencies - and banks cannot yet offer something similar. Unfortunately, with the proliferation of the Binance Card and similar payment solutions, the ideals of the crypto industry may be undermined.
Here's a recent tweet from Binance founder Changpeng Zhao.
I have heard that banks get involved with cryptocurrencies.
The point is that when using a card, a consumer does not actually spend cryptocurrency, that is, his transaction cannot be considered a purchase directly for coins. The money is simply withdrawn from his cash account, where it is received after converting cryptocurrencies into regular currencies .
What's the problem with the Binance card?
First, the process of converting a cryptocurrency to a cash account is beyond the user's control. In addition, several intermediaries are automatically added to it at once: Binance, Swipe and Visa. It turns out that, in essence, the work of the Binance Card is not much different from a regular bank card .
Secondly, the consumer's payment goes along the "traditional rails" of payment processing, that is, he loses all the benefits of blockchain protection and privacy. In this case, Binance turns into a kind of analogue of a bank that can afford to work with cryptocurrencies . But centralization is still present, there are intermediaries in the payment process and the transaction itself is no different from a transfer in a regular payment system.
For a true "crypto revolution" to really take place, buyers and sellers must work directly with digital assets. The Binance Card is an illusion of real-world use of crypto, although in general it can benefit the industry in terms of popularizing Bitcoin. True, it is already clear that some avid fans of decentralization and anonymity are unlikely to use a debit card precisely because of these considerations.
Again, we are back to the problems of Bitcoin - too high volatility and long transactions. There is another option for solving them - the development of the Lightning Network. This is a second level project for the BTC network, which allows almost instant coin transfers. That is, both the buyer and the seller in this case are protected from the rapid rise or fall of the Bitcoin exchange rate.
The Lightning Network is still evolving, so far, the second layer solution for cryptocurrency is not suitable for mass use. We can only hope that the future of LN will see the same leap in popularity as the sphere of decentralized finance these days.
Conclusion: Binance Card will make crypto more popular among ordinary consumers, however, it is almost the same bank card, only in profile. Yes, it is more convenient to spend coins on everyday purchases with it, but there are too many middlemen and centralization in this whole process. However, the most ideal scenario for Bitcoin is the massive use of the Lightning Network. Only in this case you can spend the cryptocurrency "for real". Otherwise, you can turn to other cryptocurrencies for help and wait for their popularization.
