Gnosis Pay: A Visa Debit Card with Direct Wallet Deductions
#573
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Recently, cryptocurrency prices have seen significant increases, both BTC and ETH have surged over 30% in the past 30 days. However, the most remarkable performance comes from SOL, which has skyrocketed over 150%. The trust fund GSOL, introduced by Grayscale, has even been snatched up by investors at a premium. The stock-like GSOL price has at times been more than 7 times higher than the value of SOL, indicating that even traditional financial market investors are getting curious.
If you removed your wallet and exchange apps during the past two years, it might be the time to reinstall them now.
However, those who have experienced a bear market know that wealth needs to be spent. This brings us to the topic of discussion: Gnosis Pay, your friend for cashing in on wealth! Let's start with a personal experience.
Internet Telephony
A few years ago, I moved to Beitou, where the environment is tranquil. However, the mobile phone reception was unstable, leading to call drops when ordering from restaurants or contacting bank customer service. The telecom provider suggested me to subscribe their paid VoIP service, and since then, I never encountered call drop issues. VoIP is quite amazing; it enables seamless communication between landline and internet calls. Even without a cell tower signal, as long as there is an internet connection, you can make calls. Besides, the call quality is even better than traditional ones.
Nowadays, most people's mobile phones come with VoIP functionality pre-enabled, and the three major telecom providers in Taiwan offer this service for free to ensure call quality. However, VoIP technology was initially not designed to address issues of insufficient base station coverage. In the early 2000s, VoIP was considered a new technology to replace traditional phone services, with Skype voice calls being one of its most well-known applications.
Many people may recall that our first internet calling wasn't through LINE but by installing Skype on our computers. That was when I first discovered that making a call didn't necessarily require a phone number; having a Skype account was enough. As Skype evolved, it expanded its capabilities beyond calls to other Skype users, allowing users to use prepaid credits for local or international calls.
The key was the integration of VoIP technology by telecom providers, enabling seamless communication between landline and internet calls. Telecom operators essentially added a backup line for calls. The base station signal was weak(near my home), I switched to internet telephony. For Skype users, this meant they could directly send and receive calls without having to obtain a number from a telecom provider, making it much more convenient.
The current development status of blockchain payments is quite similar to the situation of VoIP in its early days. There remains a distinct "boundary" between traditional bank transfers and blockchain transactions. However, as demonstrated by the case of VoIP, the boundaries between traditional and cryptocurrency finance are expected to become increasingly blurred in the future, benefiting both sides.
The availability of internet telephony can be attributed to Skype successfully "convincing" telecom operators to integrate VoIP technology. Gnosis Pay, the protagonist of this article, aspires to be the Skype of the payment sector. While Gnosis Pay's ultimate goal is to replace traditional financial transfers with cryptocurrencies, they have recently collaborated with Visa to issue a financial card – the Gnosis Card. Its standout feature is the ability to directly use cryptocurrencies from the individual's wallet to cover everyday expenses.
Gnosis Pay
The image below depicts the Gnosis Card.
The Gnosis Card shares similar functions with the Crypto.com Visa card. Once added money to this card, it can be used for transactions at any of the 80 million global outlets that accept Visa, such as cafes and gas stations. The key difference lies in the account linked to the card. While the Crypto.com card is linked to the exchange account, the Gnosis Card is linked to a cryptocurrency wallet managed by the individual.
In other words, in the future, individuals can link the Gnosis Card to their personal wallet, and each card transaction will automatically deduct money from the wallet. This is a significant innovation.
Many holders of Crypto.com cards, concerned about the financial stability of Crypto.com after the closure of FTX in 2022, emptied their money from their exchange accounts. The Crypto.com card has become a physical collectible. However, Gnosis Card does not face this issue. The money in the card are not stored in the exchange or a bank account but in the individual's wallet. Regardless of the financial situation of others, it does not affect the cardholder.
The mechanism that connects a personal wallet to the Visa payment network is called Gnosis Pay, with the Gnosis Card being its flagship product. Currently, Gnosis Card applications are limited to citizens of the European Economic Area, but it will gradually open to citizens of the United States, Hong Kong, and Singapore next year. Taiwan will have to wait a bit longer. The image below illustrates the operational principle of Gnosis Pay.
When applying for the Gnosis Card, individuals must undergo KYC (know your customer) and link it to a set of Safe multi-signature wallets. I will delve deeper into Safe multi-signature wallets recently. Here, its function is akin to a "bank account" linked to a Visa debit card. The distinction lies in the fact that the Safe multi-signature wallet is not managed by a specific centralized entity but by the individual user. Besides being linked to your Gnosis Card, the Safe multi-signature wallet also comes with an International Bank Account Number (IBAN).
The method for users to fund their "bank account" is quite straightforward. They can purchase EUR.e stablecoins from the blockchain and transfer them to the Safe multi-signature wallet or directly deposit Euros into the IBAN account via a traditional bank. Ultimately, the assets in the Safe wallet will exist in the form of EUR.e stablecoins. When people use the Gnosis Card for transactions at various establishments, the amount will be automatically deducted in EUR.e from the Safe wallet, while the establishment will receive the respective fiat currency of their country.
In the future, Gnosis Card will progressively support ETH and USD stablecoin transactions, and the card's design can be customized according to different brands, perhaps even featuring the Blocktrend logo (a daydream)! Back to reality, despite Taiwanese people's fondness for credit cards, high costs may deter them.
Innovation
Currently, applying for this card requires a one-time fee of 30.23 Euros (approximately 1,000 TWD), with no additional fees. Gnosis absorbs the on-chain transaction fees for each purchase, something not achievable in the bull market previously.
Gnosis Pay operates on the second layer of the Gnosis chain. For most players in the crypto sphere, the Gnosis chain is already relatively obscure, and its second-layer network is even more unpopular. However, the on-chain transaction fees are low enough to be ignored. If users want to transfer cryptocurrencies from a centralized exchange to the Gnosis chain's Safe wallet, it indeed involves a complex process, such as cross-chain bridge. In contrast, a simple bank transfer completes the process.
This aligns with the original intention of Gnosis Pay. It aims to bridge connection between two worlds, reducing the distance for people to enter the Web3 world. Traditionally, converting to cryptocurrency and depositing into a personal wallet often started with registering on an exchange. Now, Gnosis Pay provides another shortcut – as long as users can operate a bank transfer, they can fund their cryptocurrency wallet and spend through the Gnosis Card.
This is the most significant innovation of Gnosis Pay. It enables a cryptocurrency wallet to obtain an International Bank Account Number (IBAN), allowing communication with the traditional financial system. Visa deducts money from this account, and banks can deposit Euros. Other financial institutions may not even be aware that this IBAN is linked to a cryptocurrency wallet, similar to how Skype users used to receive a virtual phone number, and those dialing it may not know they're calling a Skype user, not a landline.
However, connecting this entire process is just the first step. Many people applied for Crypto.com cards in the past attracted by the full reimbursement for spending on Spotify and Netflix. Gnosis Card must also provide cardholder rewards to incentivize users to give it a try. It's like an upgraded version of the Crypto.com card, subtly elevating people's autonomy over their assets.
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