Headline: What is Moonpay and what do they have to do with cryptocurrency?

Body:  So, there are a few options on getting a wallet for use of your cryptocurrency.   You can get a hardware (cold) wallet  that you keep at home, get a wallet from Coinbase, or use some other wallet provider.   There really are a great many options.  Now, I heard about MoonPay as yet another option.  I had no idea who they were or why I would use THEM.   So, I did some research.

The Basics

Founded in 2018, Miami-based MoonPay’s software lets users buy and sell cryptocurrencies using conventional payment methods like credit cards, bank transfers, or mobile wallets like Apple Pay and Google Pay. It also sells its technology to other businesses including crypto website Bitcoin.com and non-fungible token marketplace OpenSea, a model CEO Ivan Soto-Wright calls “crypto-as-a-service.”  In short, MoonPay sees itself as an easier on-ramp to cryptocurrencies.

For now, it seems that their business model is to find as many celebrities as possible to act as brand ambassadors.  There are many, including Justin Bieber.  (Can Bieber Bucks be far behind?)  Per the CEO, MoonPay intends to have an IPO and be a public company in the future.

So who are they and what do they do?

MoonPay appears to be a service aimed at businesses who accept cryptocurrency and match them up with consumers who only want to pay cash.  Apparently, there are over 5,000,000 customers over 150+ countries using the service.  This service allows you to conveniently trade from ctypto to fiat currency, or in reverse.    Currently, transferring from one cryptocurrency to another is not supported.

There are Pros and Cons with everything.

Convenient purchases within a chaotic marketplace.Fees can be high.   Usually the HIGHER of $3.99 or 4.5%
MoonPay would open up a whole new market by catering to people who do not want to use cryptocurrency to use for NFTs.You have to link MoonPay to a credit or debit card, and some of them don’t play well with cryptocurrency.
MoonPay has 40 available cryptocurrencies.MoonPay will only integrate with a handful of different cryptocurrencies.  Currently, 40 cryptocurrencies can be purchased.
MoonPay can be used to more easily purchase NFTs.Finding customer support for the MoonPay system can be difficult.
 Apparently, there are only a few stablecoins that can be sold thru MoonPay.

OK, so how does MoonPay work?

First thing is that MoonPay is NOT a decentralized exchange, so provision of some rudimentary identification (e.g. name, e-mail address, DoB etc.) is required.  In fact, if you provide only the required identifying information, you will get a rather low balance that you can trade with.   But, as you provide more identification information, your freedom to trade larger amounts increases.

Is MoonPay Safe?

It appears to be fairly safe.   The last successful hack (that management will cop to) was back in 2020.  Currently, they use a Bank-level encryption standard for data transmission, and they have a “bug bounty” program to incentivize their users to monitor the site too.   For each programming weakness they find, they will receive an amount of cryptocurrency for their work.

The Verdict

I think the idea of MoonPay is very good.  Essentially, it is trying to capture the majority of benefits of a decentralized exchange while keeping the majority of benefits of a centralized exchange.  But, I think this execution is clunky.   (Remember the TV with the VCR as one unit?   Remember what a GREAT idea THAT was???)  I think in a similar way, they are trying too hard to get the benefits of both, and they forgot that you also get the disadvantages of both.  Maybe MoonPay will pave the way for something truly revolutionary, but, for now, I think it has shortened to being revolting.





Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice.   Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.

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