Singapore Startup Takes Bitcoin Into Real World With Visa
Singapore Startup Takes Bitcoin Into Real World With Visa
TenX’s Visa prepaid card converts digital currencies to
cash
The company has raised $80 million through a token sale
By Krystal Chia
and Sterling Wong July 23, 2017, 2:00 PM PDT July 23, 2017, 8:46 PM PDT
A recurring challenge for bitcoin and other
cryptocurrencies is how to make them work in the real world. A Singapore-based
startup says the answer is its Visa card.
TenX is pitching its debit card as an instant converter
of multiple digital currencies into fiat money: the dollars, yen and euros that
power most everyday commerce. The company said it takes a 2 percent cut from
each transaction and has received orders for more than 10,000 cards. While
transactions are capped at $2,000 a year, users can apply to increase the limit
if they undergo identify verification procedures.
Tenx’s bid to make digital currencies easier to spend
comes amid massive volatility and infighting within the cryptocurrency
community. Bitcoin, the most popular, slumped after reaching a record in June
amid concerns about a split in two, only to recover as fears faded. The company
has built an app that serves as a digital wallet connected to the Visa card so
that when it’s swiped at a cafe or restaurant, the merchant is paid in local
currency and the users’ crypto account is debited.
“You’re mixing two worlds that are night and day,”
co-founder Julian Hosp said in an interview. “When the user spends the
cryptocurrency, we have to instantly switch these currencies to fiat and pay to
Visa straight away. It’s a lot of pathways."
Hosp said transactions are processed immediately and it
doesn’t impose any charges on top of the conversion fee that is set by
cryptocurrency exchanges, which typically is 0.15 to 0.2 percent. The card now
supports eight digital currencies, including the lesser-known dash and augur,
and aims to offer about 11 of them by the end of the year.
TenX currently processes about $100,000 of transactions a
month. By the end of 2018, it’s targeting $100 million in monthly transactions
and a million users.
TenX has an advantage in moving early, but the startup
can expect competition in the future from major financial institutions and
venture capitalists with deeper pockets and direct access to clients and
databases, said Mati Greenspan, a Tel Aviv, Israel-based analyst at social
trading platform eToro.
“It’s an incredible concept,” said Greenspan. “At the end
of the day, it’s going to depend a lot on customer relations. Are they meeting
the customers’ expectations? Can somebody else do it better?”
TenX’s efforts to make digital currencies spendable come
as it joined the many blockchain-based startups taking advantage of initial
coin offerings. ICOs are a cross between crowdfunding and an initial public
offering that firms use to raise funds by issuing digital tokens rather than
stock.
In its token sale last month, TenX raised $80 million
with about half to be used to expand operations while the rest will provide
liquidity for a cryptocurrency exchange in the works, said Hosp.
The company had previously raised $120,000 from angel
investors and $1 million in a seed round led by venture capital firm Fenbushi
Capital, which lists Ethereum’s co-founder, Vitalik Buterin, as a general
partner. TenX isn’t expecting to become profitable in the next two years as it
focuses on expanding services.
“One thing we want to offer in the end, is that you can
switch cryptocurrencies within the app,” said Hosp. “If we do this, we can
become the market maker, which can bring in a lot of revenue.”
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