The Zap wallet is a Lightning Network client that enables instant and low fee Bitcoin (BTC) transactions. On Sept. 19, Zap announced a new service called Olympus where users could instantly buy Bitcoin (BTC) with fiat inside the Zap wallet.
You can watch a video of this process here.
Notably, the Bitcoin (BTC) is delivered instantly via the Lightning Network and can then be sent across the Lightning Network instantly with practically no fees. This is more efficient and streamlined than having to obtain the Bitcoin (BTC) at an exchange or somewhere else and then waiting for confirmations as the Bitcoin (BTC) is transferred to a Lightning wallet.
However, Crypto.IQ tested how well this new fiat to Lightning onramp worked and downloaded the Zap wallet.
The Zap wallet downloads and synchronizes quickly, but does not have a buy Bitcoin (BTC) option inside of it. Apparently, in order to enable the fiat to Lightning onramp inside the Zap wallet, users must sign up for the beta at this link with an email address.
Crypto.IQ waited more than 48 hours and did not receive an email, so there is no way for us to determine how well the fiat to Lightning onramp within the Zap wallet works. The only thing that is clear is that it is a slow process to enable fiat functionality within Zap, perhaps so slow that it would stifle new users from ever using it.
This seems to defeat the entire purpose of creating this fiat-to-Lightning onramp, the purpose being to help people move from wanting to use Lightning to actually using Lightning.
To be fair, the Zap wallet and the Olympus fiat onramp are still in beta testing and will not be ready to go public for months. However, there is no indication on the website that it takes a period of time to enter the beta, let alone days with no response.
Further, the developer of Zap and Olympus says that know your customer (KYC) and anti-money laundering (AML) regulations must be followed for those buying Bitcoin (BTC) with fiat inside of the Zap wallet.
This is easier said than done and may require a money transmitter license in every state it operates in, which is a highly expensive and legally intensive ordeal that is probably out of reach for the Zap developer.
Also, the videos in the announcement indicate that users can buy Bitcoin (BTC) with debit cards, and this opens the door for fraud even if the most rigorous KYC/AML policy is enacted. The Zap developer may not realize how chargebacks when selling digital goods have caused most veteran cryptocurrency dealers not to offer reversible fiat payment methods like debit cards. For example, if someone purchased $20 of Bitcoin (BTC) in Zap and then claimed it was not delivered or that their card was stolen, then Zap would lose the $20 in addition to a $35 chargeback fee.
Perhaps the Zap wallet having an integrated fiat to Bitcoin (BTC) onramp is a groundbreaking idea, but it is clearly not fully functional yet, and may take months or years to go public, if it ever does, due to regulations and debit card fraud.
Additionally, the Zap wallet is apparently anonymous to use when not using the fiat onramp but that anonymity is sacrificed in order to enable the fiat functionality. For anonymity oriented users this is akin to making a deal with the devil.
One final note. The Olympus website has the tagline “Ditch Fiat. Use Lightning”, when in reality the whole premise of Olympus is using fiat in order to use Lightning. This is just another example of the inexorable link between fiat and Bitcoin (BTC), a shackle that Bitcoin (BTC) cannot seem to shake off.