Coinbase, the Bitcoin startup that aims to make Bitcoin as easy to use as PayPal, just took a big step closer to reaching their goal.
Just launched is Coinbase’s “linked bank account” feature which provides an easy way for those in the U.S. to buy bitcoins and have the funds come directly from a linked bank account. Additionally, proceeds from cashing out bitcoins are paid out directly as an ACH/direct deposit bank transfer.
This is not the first link between the ACH banking network used in the U.S. and bitcoin exchanges, but this is the first to provide buying power instantly without having to wait for the funds to first transfer. The coins that are purchased cannot be withdrawn until the bank transfer completes but the price paid is locked in at the time of purchase.
There are two methods for linking a bank account:
- The “instant verification” method requires that the bank account’s username, password and other login credentials (e.g., login PIN) are provided
- Alternatively the “deposit verification” method causes two small deposits to be sent. This is the same method that PayPal provides when verifying a linked bank account with that service.
Coinbase does charge a fee of 1% plus a $0.15 per-transaction fee however there are few methods for buying bitcoins that come with a lower cost and the convenience from not having to spend more than a minute of time to purchase bitcoins adds value in itself.
The service is limited for now to $100 per purchase, but Coinbase expects to increase this once they confirm they are sufficiently preventing abuse (read fraudulent ACH transfers) — something that has either dogged or killed every other exchange that has tried, resulting in inconvenient hurdles and verification requirements for the remaining few who still offer ties to the ACH banking network.
Additionally, “down the road” Coinbase would like to expand the service to its customers outside the U.S. as well.
A Bitcoin-related service must protect the customers funds it holds from theft or other loss. The level of security necessary to ensure this is very expensive but Coinbase is well funded, allowing them to invest the resources necessary to provide this protection.
This new feature is Coinbase’s response to the call for an easier way to buy and sell bitcoins. With a continously growing number of offerings where bitcoins are used for payment, this improved method for getting coins will allow Bitcoin’s reach to widen significantly.
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