Thursday, September 21, 2023
HomeTECHGnosis has introduced a Visa card that enables use of self-custody cryptocurrency...

Gnosis has introduced a Visa card that enables use of self-custody cryptocurrency across Europe and, shortly, the US and Hong Kong.

The bitcoin industry has frequently been criticized for being exclusive and favoring speculators and tech-savvy individuals.

Despite this, many proponents think the decentralized technology at its core has the potential to be advantageous to society as a whole.

By bridging the gap between self-custodial cryptocurrency wallets and conventional payment systems like Visa, Gnosis, a well-known blockchain project in the developer community, aims to show the wider application of web3.

The company’s newest item, the Gnosis Card, is a Visa card that enables users to utilize money from their own wallets everywhere that payment method is accepted.

According to Dr. Friederike Ernst, a co-founder of Gnosis, the company’s goal is to reach a larger audience outside of the cryptocurrency community, even if Gnosis Pay is making its debut at the significant Ethereum community conference EthCC in Paris.

A seismic shift in the cryptocurrency market has been taking place as consumers move their assets away from centralized exchanges and into self-custodial wallets like MetaMask and Ledger since the FTX implosion revealed the misuse of customer monies.

However, there hasn’t been a practical way to use self-custodial assets in the real world for a very long time. Ernst acknowledged that “all these tokens that kind of don’t work anywhere else” presently rule the crypto market.

“We’ve always drawn a fairly clear distinction between the real world and crypto. We’re working to gradually remove this so people can use crypto to pay for goods in the real world and their real-world money in crypto, she said.

With aspirations to spread to Brazil, Mexico, Singapore, and Hong Kong, the Gnosis Card is originally being introduced in the UK and the EU. By the end of Q3, Gnosis Pay hopes to make its U.S. debut.

MakerDAO will help Gnosis Pay provide its USD-denominated stablecoin Dai as a credit card alternative.

The card’s unit economics have already been calculated by Gnosis. The physical Gnosis Card will cost 10 euros to produce and distribute, and the remaining 30 euros will be used to build up the infrastructure for engineering and compliance.

The adoption of the card will increase demand for Gnosis’s GMO token, ultimately increasing its blockchain ecosystem. Transaction fees will produce revenue.

spending cryptocurrency like cash

Ernst responded in support of a more promising future where crypto can enable real peer-to-peer transfers, but the technology requires time to mature, when asked why the financial system needs crypto at all.

“You need to be patient with individuals like us because we truly work to develop these things. In theory, the user experience provided by true peer-to-peer trust is far greater to what we now have, and I believe we need to reach a stage where the user can actually sense this.

Naturally, a project like Gnosis Card calls for a lot of heavy lifting in terms of technology development, banking system integration, and regulatory compliance.

“On the legacy side, making a payment appears to be so simple, but it actually passes through several hands.

For the transaction to actually take place, contracts with each of these parties are required. You must join Visa, which we have done, and we’re also signing up for MasterCard, according to Ernst.

The firm that provides the EURe, the only stablecoin governed by the European Union and denominated in euros, Monerium, is one of the primary partners powering Gnosis Card.

Users of Monerium can link their wallets to an International Bank Account Number (IBAN), a commonly used standard in Europe for identifying bank accounts across borders.

Payments are issued as EURes on blockchains like Ethereum and Gnosis and appear in users’ wallets when they move money from a bank account to an IBAN that is linked to their wallet.

On the other hand, EURes are burned and transmitted as a euro to users’ bank accounts when they approve payments from their wallets.

scaling bitcoin technology

In addition, Gnosis is introducing Gnosis Pay, a set of developer tools that enable cryptocurrency wallets to offer consumers a Gnosis Card without having to go through the hassle of developing an online payment system.

For instance, MetaMask might create a MetaMask card by only employing the APIs and tools of Gnosis Pay.

The offering gives Gnosis an additional source of income. It also gets a part of the revenue when it permits other wallets to issue their own internal cards.

According to Julian Leitloff, co-founder and CEO of decentralized identity company Fractal, one of Gnosis Pay’s technical partners, starting a fintech business has become exceedingly expensive. But he added that a solution like Gnosis Pay will eventually assist in lowering the barrier to entry.

“Fintech is supposed to be global, but all those companies launch in Germany, then in France, then in Portugal, so it’s kind of like a piecemeal approach until they are kind of global,” he said. Additionally, you are required to use the licensed bank’s resources, which are primarily its own goods.

However, he continued, “with the stack, which consists of accounts from Monerium, credit cards from Gnosis, KYC from Fractal, and saving accounts from Aave, you’ve got a whole fintech solution at a tiny fraction of the cost and allow others to connect to it, because it’s open source and permissionless. “Consider how much lower our costs will be and how many more fintech businesses there will be.”

Achieving DeFi compliance

Gnosis Pay receives assistance from Fractal with its know-your-customer procedure. There is a technology provided by Fractal that enables users to have an on-chain message signing and communicate their verified identity with Gnosis when they set up a Monerium bank account and want to register for a Gnosis Card.

Leitloff claims that the difficulty is in complying with data privacy laws, which is why it has been working on a system that distributes data across a private yet permissionless federation of nodes. This means that no one entity controls the blockchain.

In contrast to the widely used distributed file storage technology IPFS, this enables Fractal to “ensure data overrides and thus complies with the right to be forgotten.”

In other words, the solution gives users control over their own data while granting time-locked access to the relevant entity as per legal requirements. The financial regulator is looking over an obliged entity and may request details like the party behind an IBAN number.

In addition to detecting fraudulent activity, Gnosis Pay can do so with the help of its partners. The payments system is based on Safe, a well-known smart contract wallet architecture that last year spun off from Gnosis and raised $100 million from investors, including Tiger Global. According to Ernst, each user has a Safe account on the Layer 1 chain

Gnosis and another on zkEVM, the Layer 2 scaling solution for Ethereum created by Polygon. This is similar to having a savings and a spending account.

Through compliance partners, funds that are transferred to the L2 account are checked for anti-money laundering (AML) and combating the financing of terrorism (CFT) activity. It follows that everything that reaches the L2 is authorized and can be quickly spent over the Visa network.

Users have complete control over both Safes and are always able to switch back from L2 to L1. That is to say, the L2, which is essentially the goal of L2 solutions, works to both assure compliance and enable the network to process a high volume of payments.

The objective is to offer a seamless experience that feels exactly like using a conventional credit card, so of course all of these technical complexity are “abstracted away from the user,” according to Ernst.

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