Gemini and Flexa have partnered to provide a solution for cryptocurrency retail purchases, providing a custodial workaround to simulate real adoption.
According to a post released this week, cryptocurrency exchange Gemini has partnered with startup Flexa to facilitate cryptocurrency payments. According to the post by Gemini go-founder Tyler Winklevoss, this partnership was launched to create use cases beyond speculation:
“The Flexa cryptocurrency payments network has the potential to transform the payments industry, providing everyday use cases for spending your crypto, which hasn’t been a practical reality until now. The majority of cryptocurrency activity to date has been comprised of the “buy,” “sell,” and “store use case — investors looking to purchase a piece of the networks and protocols of the future. This has helped bootstrap crypto networks and create liquidity and price discovery (i.e., helping foster efficient and healthy markets), however, tangible use cases are the next step in the story of crypto’s promise.”
Winklevoss outlined the ability of the Flexa app to spend cryptocurrency at retailers, including its support for a stablecoin to insulate against price dips:
“Flexa’s payment solution provides users the ability to engage in the “spend” use case and benefit from the freedom, privacy, and security provided by cryptocurrency. Additionally, the Gemini dollar allows you to spend your dollars on the blockchain without worrying about price volatility.”
Flexa enables users to deposit Gemini-supported cryptocurrencies, and then choose from a wide variety of major retailers, which brings up a QR code. The code is then scanned, which completes the purchase and debits the corresponding value in cryptocurrency from the user’s account.
A custodial, indirect facilitator for retail payments
The Flexa solution, while facilitating a large scale of additional cryptocurrency payments, acts more like a bank in that it requires customers to release control over their funds and personally identify themselves. According to Flexa’s terms and conditions, all funds on the platform are held in custody by a third party:
“When you deposit your cryptocurrency into the App, your funds are held and insured with a licensed third party custodian.”
Additionally, the terms state that users must have their identities verified, and that their access to their account may be limited if personal identification is unsuccessful, a requirement which stands against the ethos of autonomy and pseudonymity/privacy held by many early cryptocurrency adopters:
“You authorize us, directly or through third parties, to make any inquiries we consider necessary to verify your identity. We reserve the right to close, suspend, or limit access to your Flexa account and/or the Flexa services in the event that, after reasonable inquiries, we are unable to obtain information about you required to verify your identity.”
Hello, we exist! We sell hundreds of gift card and mobile refill products in 170 countries at https://t.co/UiNWCUsnFv
— Bitrefill (@bitrefill) May 13, 2019
Flexa also represents a payment workaround rather than a way for retailers to accept payments directly in cryptocurrency, or directly to instant conversion to fiat currency. The cashier must be prompted to use the Flexa option, which completes the payment on the Flexa side, rather than the point-of-sale system itself accepting cryptocurrency. This is similar to gift code scanners for when a customer users a gift card service such as eGifter to buy a gift card, sometimes immediately before making a purchase.
Direct payments and gift card workarounds accomplish much the same while keeping control of your funds
While developments such as Flexa increase awareness of cryptocurrency and a part of its use for commercial purposes, other avenues, such as direct payments and gift card purchases, allow similar (or better) experiences while users are able to maintain control over their own private keys, and therefore their funds. Apps such as Bitrefill allow customers to instantly buy gift codes, sometimes in precise amounts, to the same retailers as supported by Flexa, and with InstantSend enabled these can be quickly purchased immediately before using them for a purchase. Codes are then scanned or entered by the cashier through much the same way was with Flexa. The key difference with this experience is that Flexa requires identification and holds control over customer funds, while gift cards do not require either custody or identification.
Finally, direct cryptocurrency purchases, where available, provide the best solution, sending real cryptocurrency transactions from the customer to the final recipient, which can choose to either keep the cryptocurrency or convert to fiat currency. At present, nearly 5,000 merchants are listed accepting Dash at Discover Dash worldwide, which also claims an Android mobile app for convenient location of merchants. Some major retailers, including Overstock, accept Dash payments directly, while some supporting services such as Crypto Emporium only accept cryptocurrencies for payments. In Venezuela, several major chains accept Dash payments directly, including major department store chain Traki and regional Church’s Chicken franchises.