Cryptocurrency is Hard to Turn Into Money

Photo by Ibrahim Rifath

October 25, 2019

Hello reader! It’s been a busy start of a second year for me, and despite the constant nagging in my mind saying “hey, Chen, you should write a blog post,” I didn’t quite get around to it until now. Well, slow is better than unmoving!

In this blog post, I’ll discuss my brief experience as a first-time user of cryptocurrency. I had a very difficult time trying to convert cryptocurrency into “real money”, despite my experience with technology, and I believe that cryptocurrency will need some improved ease-of-use before the average internet user can use it as well as a credit card online.

I attended the hackathon Citizen Hacks a month or two ago, and the team I was a part of won a prize of one thousand dollars for our project (sounds impressive, right? Turns out we were the only submission in the category, though it was a difficult category to use). There was a small quirk: since the company sponsoring the prize was a cryptocurrency company, the money would be paid out in cryptocurrency.

Splendid victory! A thousand dollars split among the four of us would be two hundred and fifty each. The money was deposited into our Keybase (a chat client) accounts in Stellar cryptocurrency. But how would we turn numbers in our virtual wallets on an app into dollars in our bank accounts? The Keybase chat client had no instructions on how to do so. It was quite the stumping question.

Although our prize-winning project was cryptocurrency-focused, only one person on the team knew how to navigate cryptocurrency, and he had a different plan for his Stellar—re-investing it in other cryptocurrencies rather than turning it into fiat (legal tender). That left the other three of us to struggle through the world of crypto on our own.

One of the first things I did after receiving the award was to ask the person who distributed the prize how to convert cryptocurrency into fiat. He looked at me with a sort of incredulity—I was, after all, a member of the cryptocurrency award-winning team—then recommended a cryptocurrency website.

On the bus ride back to Waterloo from the hackathon, I began looking into the recommended website. I set up an account and transferred some Stellar from my Keybase account to the trading website. I now had some numbers in the trading website along with my numbers in Keybase. This process was relatively simple.

Problems arose when I tried to turn those numbers into fiat. The website required me to prove my identity. It asked for government identification, proof of residence, and photos of myself. Presumably, this was to prevent money laundering and to comply with financial regulations, but to give all this information to a website I had just learned about was something I was unwilling to do.

I turned to other trading sites, and was met with the same cold reception. Depositing money to the website from my Keybase account was easy. Getting it out was not. It was incredibly frustrating to send money to these services, then be blocked from taking it out. Luckily, the sums I sent to test the waters were small.

In the end, the sum of money wasn’t worth giving vital identity information, and I found a website which offered gift card codes if a person transferred them cryptocurrency. I turned most of my cryptocurrency into gift cards for online retailers through this method, and the gift cards turned out to be authentic.

After sinking several hours of time into research and experimentation, I was able to extract cryptocurrency into a consolation prize of gift cards. By the time I figured it out, the price of Stellar had changed, and I lost about twenty dollars due to the fluctuation.

My takeaway from this experience is that it takes a lot of effort to turn cryptocurrency into fiat, and it seems almost impossible to do so unless you’re willing to hand over massive amounts of identity information. Perhaps others have had a more streamlined experience, but for me, a software engineering student at the University of Waterloo, cryptocurrency was difficult to use.

Such concludes this blog post. It’s a little bit more technical than usual, but I have tried to keep it simple. As always, thanks for reading, dear reader!

< Previous All Blogs Next >