When you are involved in crypto for more then a year, you know it is a bumpy ride and it is certainly not yet a mainstream way of doing payments. ATM machines where you can buy / sell bitcoins or a few exotic crypto currencies are are very occasionally appearing. But I have yet to see the first bakery where I can buy a croissant, flash a credit card that looks normal and is accepted by the shopkeeper without raising an eyebrow, but under the hood I am paying from a range of crypto’s loaded on the card.
The credit card standards
After all, we are often talking about borderless, frictionless, instant and secure payments as one of the major applications of cryptocurrencies. If you do international fiat payments or see the transaction fees charged by the classic credit card companies (as a consumer you may not be aware of this, but the shopkeeper knows exactly how he is ripped), you quickly realise there is room for improvement. In a market dominated by just 6 companies with over 50 M users each (Visa, Mastercard, Chase, American Express, Discover), this is a tantalising field to enter with a brand new technology.
No wonder there are quite a number of crypto credit cards sprinting to get into the game. This is more complex then a run-of-the-mill ICO as you need to be compliant with a number of international legal requirements. The timing of market entrance looks more related to the level of banking expertise the new fintechs have onboard as advisors, but overall the market entry is roughly in the same timeframe. They have either just released their card or about to come on the market in the coming months or quarters. Examples are TenX, Monaco, TokenCard, WorldCore, CoinMetro, Savedroid, Crypterium, or check out this list for a dozen more. They differ in aspects such as geographic coverage, monthly fees (usually from free to around 1 $ / month), type (anonymous, virtual or plastic), coins to load, currency conversion options, reward structure or one-of-a-kind features. In general, the new cards will partner with one of the big brands to get universal acceptance from the start.
Different functionalities of the Crypterium app.
I invested small amounts in a number of them, more to keep track of their development then as an investment opportunity. Whenever a beta is released (desktop or mobile) I load the app and play around with it to get a feeling of the quality, design, ease of use, security and applicability in the real world. One of the best I have seen so far is Crypterium. This is a mobile only bank (iOS and Android) and the app is very carefully designed, operates intuitively, does in & out transfers to fiat (IBAN numbers required), loads and sends BTC, ETH, LTC or CRPT (list will expand), tops up on your mobile number directly and has an easy KYC on-boarding procedure. Once the credit cards are issued, payments are instantly converted from your crypto holdings to whatever currency you are paying at that moment. Payments can also be done via NFC or QR-code scanning.
Still, these are all pretty standard features that you would expect of a mobile banking app and associated card, but whatever you load on your card or whatever funds that you make accessible via your card, you want to be sure it is safely locked up. What caught my attention recently is that Crypterium tested their safety procedures by a truly massive DDoS attack they launched themselves; 250,000 requests per second were fired on their servers as a stress test! The Crypterium main IP address is on Amazon servers who have very advanced protection technology, but when the attack mimicks ordinary transactions and penetrates a level deeper, the banking application has to deal with malicious code and the app must survive without Amazon’s help. The software architecture involves orchestrated containerisations. These are very flexible micro chunks of the application which can be instantly scaled up and down depending on the load. It prevented any delay in execution and weeded out all illegal transactions even when flooded with instructions. But it was also a very cost effective defence. Traditional banks spend millions to fence off DDoS attacks but this took only 10 US$ in additional resources to neutralize the 250k/s DDoS. The additional resources where scaled down immediately after the attack which stopped the meter running. I think other financial institutes will zoom in closely to see how they pulled this off.
You can bet that especially new fintech companies will be prime targets for hackers as new code always has new vulnarabilities and the hunt is on in those circles. Crypterium will not be an easy target, that’s for sure.