Part 2 of 2: Crypto Debit Card Payments and the HiveNet Debit Card

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HiveNet debit card and the three C’s (Currencies, Comfort, Cost)

Currencies

As we strive for mass-adoption, we plan the HiveNet debit card to support as many local fiat currencies as financially viable. Therefore, we plan to initially integrate all major fiat currencies (e.g. USD, EUR, RMB) and consecutively integrate further currencies depending on the community’s demand.

The HiveNet debit card will primarily support one cryptocurrency, which will be the HiveCoin. Though, we might also expand the support to other cryptocurrencies at a later point of time, if there is the demand within our community.

Comfort

We believe that mass-adoption of cryptocurrencies requires good user experience, driven by convenience and comfort. The users of the HiveNet debit card won’t have to exchange their HiveCoins into their local fiat currency before making payments. The HiveNet debit card will support seamless real-time currency conversion and payment. The associated monetary risks will be managed by the HiveNet GmbH through different means:

First, the HiveNet debit card will primarily support the HiveCoin. As the HiveCoin will be the inherent payment system of the HiveNet, we expect a constant demand to buy HiveCoins, which reduces the risk of negative volatility and especially reduces the risk for value crashes.

Second, we connect debit card payments with the HiveNet’s Provider Reward Application and thereby the customer payments for computing power. HiveNet’s customer payments, if performed in fiat, are in general exchanged for HiveCoins on third-party exchange platforms. Debit card payments on the other hand require the currency exchange in the exact opposite direction. Linking these two processes with each other through our finance software backend will drastically reduce the number of performed exchanges on third-party exchange platforms. This way, we can extremely speed up the process of currency exchanges and therefore minimize volatility risks. Also, this provides the advantage of significantly reducing exchange costs for third-party exchange platforms.

Cost

Although the HiveNet debit card will partially have comparable costs like other crypto debit cards, simply because some costs are inevitable,the HiveNet debit card will still be able to decrease costs a lot thanks to above described connection between HiveNet’s cloud customers and debit card payments. This connection of the two oppositely directed processes allows that most of currency exchanges are handled within a closed, zero-fee circuit. Currency exchanges with third-party exchange platforms will only be needed for surplus demand in either exchange direction.

What does this mean financially? We performed calculation to evaluate the actual financial effect. Depending on the number of HiveNet users and HiveNet debit card users, we found out that the linkage can lower the operational costs by about 30–50 %. This means that the cost, which has to be charged to card users would be considerably reduced.

As another measure, it must be considered that the HiveCoins are powered by the HiveNet’s Proof-of-Stake blockchain. This means that HiveCoins which are kept on a user’s debit card balance can be temporarily used for staking. For low amounts of HiveCoins the resulting rewards of newly minted HiveCoins might be considered negligible, but if a significant number of HiveNet users are using the debit card, this will allow a further reduction of the costs. This benefit can be forwarded to the user through reduced fees.

Furthermore, in contrast to most other cryptocurrencies, HiveCoin transactions on the HiveNet blockchain will be free of transaction costs, which eliminates another important cost-driver.

We often emphasize that we aim for HiveNet’s mass adoption. Therefore, it’s probably no surprise that we have the target to deliver the HiveNet debit card with as little fees as possible. Our focus on the HiveCoin will allow us to keep costs on very low level and maximize the benefit of the HiveNet’s users.

Technical backend of the payment process

Generally, each time the debit card is used, these four parties will be involved:

• the card owner
• the shop and its card terminal
• the HiveNet finance software backend
• HiveNet’s banking partner

The process works like this (simplified):

Each time a HiveNet debit card is swiped in a shop, a payment request is sent. This request is sent to HiveNet’s banking partner, who is managing the cards. The banking partner forwards the request to HiveNet’s finance software backend, which is checking whether the card owner has enough HiveCoins in his balance to perform the payment. This check applies the current exchange rate of the HiveCoin with the legal fiat currency at the card terminal’s location. If the card owner’s HiveCoin balance is sufficiently covered, a payment approval is sent to HiveNet’s banking partner. The banking partner then confirms the payment and transfers the paid amount of fiat money to the bank account connected with the shop’s card terminal. In the HiveNet’s finance software backend, the respective amount of HiveCoins is then deducted from the card owner’s account balance and exchanged for fiat currency to cover the expense of HiveNet’s banking partner.

This process will be fully automated and extremely fast. For the user, it is very comfortable, because the payment happens in real-time and doesn’t require a beforehand exchange of currencies.

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