Satoshi Nakamoto years ago envisioned an ecosystem that would be independent of the centralized financial system that dominates the global economy today. His creation sparked a global community of enthusiasts and an entire industry surrounding blockchain — the solution enabling individuals to turn their money away from centralized legacy institutions and toward transacting on a decentralized, distributed ledger. The ultimate goal was a world in which people could pay for goods and services with these novel financial instruments.
Many payment companies and exchanges already claim to offer services that enable crypto users to buy goods and services with cryptocurrency. Upon further analysis, however — like with Binance’s new debit card offer — it’s clear their crypto payment solutions don’t deliver on the blockchain, adding more intermediaries and opening users to the same harm that could befall them digitally using traditional payment methods.
How the crypto payment process works
Currently, there are two mainstream methods of processing a cryptocurrency-fiat transaction. One method involves the intermediary accepting cryptocurrency and converting it into fiat at a locked-in, instantaneous exchange rate and then delivering fiat to the merchant or vice versa. The second method involves first liquidating the user’s crypto into fiat in the user’s account before it reaches the intermediary and then sending the fiat payment to the intermediary to complete the transaction. The first method takes place on the blockchain, while the second does not.
Numerous payment platforms offer one of the two aforementioned types of transactions. Even the giants are mulling over jumping into the game. PayPal has weighed the idea lately of offering crypto payments to consumers, which could lead the way to increased stabilization of the volatility often associated with Bitcoin (BTC) and other cryptocurrencies. But it remains to be seen exactly how these payment providers plan to process the transactions — whether they would technically allow consumers to pay in crypto or in fiat on or off the blockchain. That’s an important difference to crypto users.
What crypto users want, and what Binance’s card offers
Crypto enthusiasts, as well as regular consumers who like to pay in crypto, value the secure nature of blockchain, which, on top of the clear security benefits, doesn’t include the hidden administrative feeds that credit cards do, such as chargebacks or non-purchase credit card fees.
There are also personal reasons consumers choose to purchase with crypto: the advantage of having full control of their money on a blockchain, an element that is arguably missing from non-blockchain means of storing or transferring financial assets where banks have control. This is the foundation and spirit of cryptocurrency ownership for many crypto users. Some crypto payment solutions available to crypto users, however, have diminished this foundation by the way in…