Coinbits - Pro's and Con's of the new "Spare change to Bitcoin" platform

By connecteconomy | Conscious Crypto | 17 Jun 2019

$4.34 tipped


Coinbits is a new service launched by Bitcoin wunderkind Erik Finman (he bought Bitcoin when he was 12, which made him a teen-millionaire)

In an interview with MarketWatch, he said, 

“The goal of the application is to make cryptocurrency not just more accessible… but to make cryptos and blockchain technology tangible and more tactile,...”

Coinbits works like this:

Everytime you spend money "in the real world", your purchase will be rounded up to the nearest Dollar, and the different is invested in Bitcoin for you. 

So if you buy a Latte at Starbucks for, say, $3.80 - the app would round it up to $4 and invest $0.20 for you. All you have to do is register your credit or debit card with Coinbits. 

Not a bad idea! Not a new one, either - apps like this have been around in the fiat world for quite a bit - but I haven't been aware of a crypto version that aims to make things so easy and convenient. 

Since I'm always on the lookout for "easy and simple" solutions, especially for crypto beginners, I took a closer look at Coinbits.

Here are some of my findings:

Pro's

  • You get to invest in cryptocurrencies without even noticing. Especially for new investors or people who don't want to deal with money or trading/investing every day, that probably sounds very attractive. And even for seasoned investors, this could be a nice additional way to Dollar-Cost-Average your investments - even though in tiny amounts.
  • They have a strong partner: Coinbits works with Coinbase, for offline storage of the funds
  • You can earn $5 in Bitcoin for referring your friends - and they will also receive $5 as a welcome gift. Since the platform only just launched, there's a big potential to be one of the first affiliates and make a nice little passive income.

Con's

  • Heavy KYC: Of course - any fiat gateway comes with KYC requirements, plus you're going to have to link all your cards or bank accounts from which you regularly make payments. Be conscious of how much info you're giving away about yourself. 
  • Only available in the U.S. at the moment, but global roll-out is planned, and you can actually contact support to get on the waiting list for "early global adopters".
  • You can only invest in Bitcoin at the moment, but other currencies are planned for the future.
  • The costs! I'm not sure if I'm misunderstanding this, but "a flat $1 same-day processing fee incurred during any transaction made on CoinBits" sounds like a LOT to me. It sounds like - if that Starbucks Latte is all you buy on any given day, and you end up investing only $0.20 - you're gonna have to pay $1 in fees??? I hope I'm wrong.  
  • You can't cash out your Bitcoins. You will have to convert them to USD in order to withdraw your funds. Hm... 

That last part puzzles me, and is the main "con" for me (besides the KYC requirements). 

How exactly is this going to make Bitcoin circulate more and get into the hands of more people? How is this teaching people to deal with actual cryptocurrency? 

On BitcoinNews Erik Finman is quoted as saying: 

I agree, but how exactly is this app going to change that, if the users never even get to hold their Bitcoin in their own hands?

The word "private key" is not even mentioned anywhere in the FAQ's.

The only goal of this apps seems to be to accumulate more Fiat money for its users. That's not a bad thing, but it’s the exact opposite of that orange quote up there. 

My conclusion: 

I’m happy for people to have an easy way of investing, but this app does not serve the crypto spirit at all and basically functions like a bank. At least in this current first version.

If that changes in future releases, and users actually get to withdraw their Bitcoin and take ownership of it, then this app could make a real difference.

 

***  

Anja Schuetz  helps absolute beginners to become confident crypto investors. She also consults as a Customer Communication & Operations Manager for blockchain start-ups.  

Follow Anja @connecteconomy on Twitter  | Youtube  | Publish0x       


connecteconomy
connecteconomy

Cryptocurrency mentor for absolute beginners, with specific focus on non-digital natives. Customer Communication & Operations Management Consultant for blockchain start-ups.


Conscious Crypto
Conscious Crypto

Exploring the crypto space for new tools and services that will change the world and our lives.

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