Coinbase

What cryptocurrencies can you spend using the Coinbase Visa debit card, and does it make sense to spend them?

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Launched in April, the Coinbase debit card allows European users to spend their crypto anywhere by swiping a card. Recently, they’ve been adding more and more crypto assets to pay with, and today, they listed the first stablecoin.

Crypto assets compatible with the Coinbase debit card

Bitcoin, the asset that everyone complains about not being able to spend, but probably shouldn’t be spending. Spending Bitcoin is like spending gold, it’s meant to be a store of value more than a medium of exchange.

Augur, also known as REP. This is a utility coin for a site that where you can gamble on things like ‘Will Trudeau still win the next election?” as if it were a derivative product. It’s been around for a while and claims to be “decentralized.”

Ethereum, the coin with the second highest market cap. Potentially analogous to Amazon in the dot com bubble, Ethereum is also subjectively likely to perform well. I wouldn’t buy coffee with it, but I do use it to pay for gas when wandering about the DeFi ecosystem.

Litecoin, one of the best possible names to help market an asset that is faster than Bitcoin. People with a limited understanding of the blockchain world know that Bitcoin is the O.G., Ethereum is supposed to be better than Bitcoin and Litecoin is fast. Ironically, Litecoin being fast is supposed to make people want to spend it without needing a central intermediary (like Coinbase).

Bitcoin Cash, or BCH. Again, aren’t you supposed to supposed to be able to spend this stuff without an intermediary? lol.

XRP, built by Ripple. Tons of huge corporations use Ripple for things like inventory management, but the price of XRP just never seems to go up. I guess this is one that you would want to spend?

ZRX, or 0x is a liquidity tool for Ethereum’s DeFi ecosystem. Developers admitted that their business model hasn’t worked out in the past, but they hope to change things with new updates. Right now it’s worth 20 cents, but with the hype around DeFi and how much decentralized exchanges need a liquidity solution, its future looks promising.

XLM, Stellar’s utility token, is required for every transaction in the network. Stellar is a cross border payment solution whose performance isn’t reflected by its price, much like XRP.

BAT, who hopes to replace the current advertisement business model for websites and content creators. This is actually kind of cool because you can earn it from viewing ads on the Brave Browser. Just a couple hundred minutes of Depends commercials and you can treat yourself to some nice Starbucks.

DAI, last but not least, is a stablecoin that is backed by mostly Ethereum and balanced by an algorithm of incentives. On Maker’s site, you can lock your Ethereum position up in exchange for a DAI loan that is paid back with interest. The Coinbase card is logical for this process. If you are going to spend your DAI loan, this is probably the most efficient way to do it.

Does using the Coinbase debit card make sense? 

If you read the snarky commentary on all of the listed crypto, you’ll have an idea of why spending some crypto might make more sense than spending others. But in reality, spending crypto might not even be the point of this card.

Watching mainstream media cover Bitcoin, you’ll often come across people who ask, “but can you spend it?” Coinbase’s card allows people to answer which is good for the market, and in turn good for Coinbase.

So yes, coins like BAT and DAI actually make sense to spend in certain situations, but the rest are supposed to be investments. If they weren’t supposed to be investments, Coinbase wouldn’t name the place you manage coins, your “portfolio.”

 

Coinbase adds Maker governance before important Dai vote

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Coinbase announced on their blog today that Maker holders will be able to help govern products like Dai through voting on their website. In order to do so, users must hold MKR in their Coinbase Custody account.

Maker has had a respectably straightforward voting system for a while now. Compared how Ethereum is governed by dev’s judging “community consensus,” Maker at least puts a poll right on their website. 

Added right before Dai vote

Even though Multi-Collateral Dai (MCD) has been in the news as a feature that is coming soon, Maker holders still need to vote for it to come to fruition.

Maker is allowing only 3 days to vote. Polls become active on November 15th for a planned release on November 18th.

Community response to the idea of MCD has been generally positive. Maker themselves seem to be a huge proponent of MCD and releasing the option to vote on a platform like Coinbase shows their confidence in the tech. 

Do people hold Maker on Coinbase?

Right now, you can’t purchase MKR on Coinbase, so this change will fit the small niche of those who prefer to hold their tokens in a Coinbase Custody account.

Applying for an account in Coinbase Custody requires you to fill out information on your business. The feature is advertised as “institutional” so they aren’t making it any easier for the average person who uses Dai to vote on Dai.

 

 

 

 

Coinbase Earn might acquire Omni rentals staff

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Omni rentals business isn’t doing so great as Techcrunch reported today. Sources told the website that Omni laid off seven operations team members and might sell their engineering team to Coinbase. 

One of the most notable things Omni has accomplished was raising $25 million from Ripple investors in 2018. Apparently they had been planning to expand their website but Techcrunch said that they were afraid expansions wouldn’t do well.

Engineers from Omni would work on the Coinbase earn feature, but nothing is set in stone yet. Coinbase earn allows users to earn cryptocurrency from learning about it and getting friends to complete lessons. The feature has flooded the r/coinbase subreddit with reference links as nobody has friends that want to work for $100 of EOS.

 

How can Coinbase pay you interest and is it worth it?

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Today, Coinbase announced that some U.S. holders of USD Coin will earn 1.25% APR per coin on their platform. Earning interest isn’t new in the crypto space. Plenty of other websites offer more interest for holding the same USDC, but it is a debut feature for Coinbase. 

Why am I able to earn interest on USDC? 

Circle, who created the UDSC product claims on their website that U.S. dollars backing USDC are held in reserve by regulated financial institutions. This, along with there being no records of Coinbase being in the business of lending implies that the financial institutions holding the backing for USDC are paying Coinbase higher than 1.25% interest. 

According to Coindesk, a Coinbase representative said that 1.25% interest is higher than most will receive from a savings account. 

“Speaking to the inspiration behind the USDC Rewards program, Branzburg noted that a 1.25 percent interest rate on holdings of U.S. dollars is “15 times more than the national average or what people might get through a [traditional] savings account.”

So unless those regulated financial institutions are giving Coinbase a generous savings account, the money backing USDC is likely in a CD account. According to smartasset.com, there is only one online bank offering 6 month CD rates over 1.25%. There are zero big banks offering 6 month CD rates over 1.25%. 

What this means is that the money backing up USDC is likely going to be tied up for more than six months to make paying interest profitable. 

What is the benefit of using Coinbase rather than higher paying sites? 

DYDX interest rates

Most decentralized exchanges will pay more than double what Coinbase will pay you, but moving the money around takes longer. There are no decentralized exchanges where you can convert directly to USD like you can on coinbase. 

A decentralized exchange is intended to be a forum to facilitate transactions between wallets.This can potentially make your transactions a bit slower and more time consuming. 

The only way to get USDC onto DYDX, a popular lending and borrowing platform is to use the MetaMask wallet. MetaMask app doesn’t let you deposit USDC by default, so you have to find USDC and enable it. 

From there, you deposit it into DYDX, but you will need to have some Ethereum in MetaMask to pay the gas fee. Once you would like to take the USDC out of DYDX, you need some more Eth for the gas fee. It will then be sent back to your MetaMask address, then you will pay another gas fee to transfer it to Coinbase. From there you can exchange it for fiat USD. 

On Coinbase, you will only have to purchase USDC with cash and then they will pay you interest.

To summarize 

There are many people who won’t go to the trouble of learning how a decentralized exchange or even a crypto wallet works. For those people, they are still going to earn more interest holding USDC on Coinbase than they would keeping USD in their savings account. 

As long as you can trust that the USDC product is in good hands, there doesn’t seem to be much to worry about. If something happened to where Coinbase needed to take out USDC backing and it was locked in a CD account, they would either have to dip into their personal bags or take out loans.

 

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