New website lets you trade Starbucks gift cards for Bitcoin

http://www.digitaltrends.com/cool-tech/card-for-coin-trade-starbucks-gift-cards-bitcoin/

by mhluongo • 12 years ago

51 56 12 years ago

snitko3• 12 years ago

This is a nice workaround. I've been long thinking about what could be used instead of dollars to trade for Bitcoin. Of course, starbucks cards are not as widespread and their amount is probably limited (in a sense that there's not enough of them to satisfy demand in the case this seriously takes off), but it's nevertheless great to see people finding ways to bypass the stupid regulatory system, because of which there are no real Bitcoin exchanges in the US.

oleganza• 12 years ago

NY will classify Bitcoin as money and your little card swapping business will go the same road as Charlie Shrem's.

French bank today issued press release saying that intermediation of Bitcoin transactions requires "payment processor" license. Even if you are not touching fiat at all. http://acpr.banque-france.fr/fileadmin/user_upload/acp/Commu...

mhluongo7• 12 years ago

Not sure this is quite the same thing. I'm just trying to buy gift cards for BTC.

al2o3cr• 12 years ago

"it's nevertheless great to see people finding ways to bypass the stupid regulatory system"

Keep saying that when your "Freedumb Über Alles" exchange takes your USD, gives you 0 BTC, and tells you "tough shit, sucker".

eric_bullington14• 12 years ago

I'm curious. What is it about the freedom to conduct commerce that so upsets some people?

If I chose to spend my money on a business that you believe will rip me off, why does that make you want to post an insulting message on HN?

snitko3• 12 years ago

But that's my choice. See, that's the problem with advocates of any regulation. Regulating != informing. If all government did was saying "This business is not reliable" I'd be perfectly fine with it. But then they actually prevent businesses from operating without licences. This creates a lot of opportunities for corruption. On what grounds do governments think they have the right to tell every person what to do with their money?

eplumlee• 12 years ago

Starbucks gift cards strike me as an odd choice. I can't help but think this choice was made to assist in a certain type of scam: https://news.ycombinator.com/item?id=6175294

sktrdie2• 12 years ago

It's also because there are no chargebacks when trading gift cards.

mhluongo7• 12 years ago

Nah, the Starbucks choice is explained in the article. It's a remnant from the original project to help indie coffee shops accept Starbucks cards.

EDIT - I just read the article you referenced. That scam only applies to registered cards (cards attached to a Starbucks account). I don't accept registered cards, or have anything to do with that.

eric_bullington14• 12 years ago

I don't think this project was created with that in mind. Everything about this just points to an entrepreneur trying to meet the market's demand.

mrfusion• 12 years ago

Would Amazon giftcards work?

lispsil2• 12 years ago

They would but easy to fraud, because you could use stolen cards to buy them online. Then the guy who trades you for Bitcoins screwed when amazon cancells all the cards. If you can also buy starbucks cards online with visa/mc too then this whole venture is doomed as well.

mhluongo7• 12 years ago

Yeah I'd like to try Amazon but the more liquid cards seem to be more fraudulent.

sktrdie2• 12 years ago

How do they make money? They buy lots of coffee for themselves?

2drew3• 12 years ago

They can sell the SBUX gift cards on a gift card exchange (Cardpool) or eBay for ~25% discount and make the spread.

minimax2• 12 years ago

It looks like Starbucks gift cards sell for a roughly 20% discount on eBay†. The discount seems to be proportionally higher for higher value cards (who really wants a $400 Starbucks card?). So I guess you get a better deal buying cards on Card for Coin at a 30-40% discount to face value but you get a better deal selling them on eBay...

† http://www.ebay.com/sch/Gift-Cards-/172009/i.html?_from=R40&...

bluedino• 12 years ago

who really wants a $400 Starbucks card?

Why wouldn't you? At $4/visit you should be good for 4 months if you go nearly every day.

mhluongo7• 12 years ago

Yep, and if you buy them at a discount on eg eBay so much the better.

minimax2• 12 years ago

Something something time value of money something. I'm not really sure. I was just pointing out a feature of the sale prices. I was only eyeballing at that...

eric_bullington14• 12 years ago

I actually built a very comprehensive site that did this exact thing back in 2011, even hiring a very good designer to help me with the graphics (paid with Bitcoins -- about 60 BTC for his work if I recall). The mobile web frontend for the Bitcoins->Card side worked well enough that I would load it up and use it to buy coffee at my local Starbucks via the PDF417-code that Starbucks uses.

However, I never released due to all the regulatory issues. Very unfortunately, FinCEN still considers this type of transaction to be an exchange of value, and thereby regulated. At the time, FinCEN still hadn't released their guidelines on digital currencies, but they were increasing their regulatory stance on gift cards. The situation is still not completely clear, even now, but I'm pretty sure that FinCEN will try to claim that this type of operation a money transmitter, with all the headaches that this brings.

Also, I wasn't sure if Starbucks would try to do something crazy like sue me to take down the site. But it was primarily my fear of FinCEN that caused me to drop the idea and put the code in storage. Regulation is taking a heavy toll on this country's innovation; this is just one very small example.

Interestingly, I had no problems getting a business bank account for the idea back then. I think it'd be much harder now.

Despite spending 6 weeks part-time on a project that I ended up scraping, I don't regret it since it was my first major Python project and eventually led me to learn lots of implementation details of the Bitcoin protocol itself (though that certainly wasn't necessary for my project).

Edit: clarity

mhluongo7• 12 years ago

Any citations on the FinCen fears?

eric_bullington14• 12 years ago

Read through the administrative rulings here to get a feel for the general approach FinCEN takes on these issues:

http://www.fincen.gov/statutes_regs/rulings/

If you read through those rulings, you'll see that FinCEN takes a very broad view on exchanges of value falling into the category of money transmission.

Also, read through their new stringent guidelines for sellers of gift cards (sellers of prepaid access). Here's a good summary:

http://www.dorsey.com/EU_giftcard_121211/

In my case, I was planning on both buying and selling gift cards (digitally, for a mobile frontend to display barcode). My best hope was to be considered a seller of prepaid access, which brought some hope because the strict KYC guidelines didn't kick in until $1000, if I recall correctly. However, since I bought and sold, I was pretty sure that FinCEN would instead consider me a money transmitter, whose KYC requirements start at $0.

It's totally possible for these kinds of businesses to fly under the radar for years, and never be affected. But the moment some ambitious bureaucrat learns about a project like this and decides to made a federal case of it (literally), or some kid's arrested for possession of marijuana who moved money through this type of business, then it's misery for everyone on the receiving end.

panarky• 12 years ago

It's a shame FinCEN regs are so onerous, they're really stifling startups and ensuring that innovation will happen outside the US.

It's pretty vague, but it's easy to interpret the latest guidance to say that exchanging one digital currency for another requires a license, customer identification, suspicious transaction reporting, etc. Even if you never touch dollars, euros, yen or any other "real" currency, are you still a "money transmitter", no matter how small the amount?

http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G...

"If the choice for regulators is to permit money laundering on the one hand, or to permit innovation on the other, we are always going to choose squelching the money laundering first."

http://www.bloomberg.com/news/2014-01-29/new-york-state-regu...

Good luck exchanging stored-value for digital currency in this environment.

eric_bullington14• 12 years ago

A business that buys/sells gift cards for Bitcoin is a bit of a grey area I think, but I'm absolutely sure that FinCEN considers exchanging Bitcoin for alts to be money transmission, regardless of the amount involved, and once they catch up with the technology, they'll start looking to make a precedent.

And yes, these businesses will simply take place outside of the U.S., taking all those jobs with them.

tzs• 12 years ago

It's a shame FinCEN regs are so onerous, they're really stifling startups and ensuring that innovation will happen outside the US.

Or the Bitcoin and other virtual currency companies that stay in the US and actually make sure to comply with regulations will do better than the ones that start elsewhere or leave, because people will actually have some reason to consider trusting them.

I wouldn't put my money in a small bank that is outside the US because it finds banking regulations too stifling. Why would I not want to hold those who handle my virtual currency to the same standard?

maxerickson3• 12 years ago

This is actually a case where we just need better regulation of gift cards.

Basically, the store should be required to exchange them for cash. Any associated fees for that should be built into the purchase price.

This obviates third party exchanges and only 'damages' what is really a crappy gift (in the sense that it isn't a whole lot more creative than cash but is worth less).

eric_bullington14• 12 years ago

Yeah, this isn't that kind of regulation. This is purely about transfer of money to prevent money laundering, in FinCEN's eyes. These regulations aren't about the customer.

Clickclock• 12 years ago

My mom was one of the few unfortunate buyers from target that had her card number stolen. The thief has purchased $500 worth of Starbucks gift cards in the last two weeks.

I don't think it is a coincidence that the thief purchasing these cards. I'm not speaking for the creators, they could easily be caught in the crossfire. That being said, this is very obviously an exploitable method of transaction specifically for a thief. No matter the intention of the project. https://news.ycombinator.com/item?id=6175294

bendoernberg• 12 years ago

This service goes in the opposite direction, but if you're looking to cash out dogecoins into Starbucks, Visa or Amazon giftcards, check out https://treats.io/.

herbig• 12 years ago

Very clever. I just forked over a $10 card for $6 in bitcoins. I've been reading about bitcoin since its inception and finally have my own slice of the pie...

EddieB• 12 years ago

Whats stopping people selling their gift cards and using them before the buyers? Or am I missing something?

cartothemax4• 12 years ago

tried out the site (had a card with 10 bucks) and tried creating a bitcoin wallet. no luck having the bitcoins show up in my wallet yet. I have a feeling I did something wrong...

eric_bullington14• 12 years ago

What wallet are you using? If you're using a full wallet (Bitcoin-qt), then it could take up to 12+ hours to download the full blockchain and your transactions show.

As a beginner, you'd be better off with a wallet like Electrum or Multibit that will show your transactions almost immediately.

You can also view them here on blockchain.info, by putting your public key (the one that starts with a 1) into the search bar. Your transactions should show up, assuming nothing is going wrong with this site:

blockchain.info

Otherwise, just contact the owner, I'm guessing he'll be eager to help.

1. https://electrum.org/download.html 2. https://multibit.org/

cartothemax4• 12 years ago

I was just using an online based wallet through blockchain.info.

Tried doing a search for my public key 18fyCm3vkftJ9nNgZ4SwoJkCuGVZQ2kZcE and had no luck finding the transaction.

When I get home tonight I need to check out these other wallets and get in touch with the owner. If I'm only out 10 bucks though on a gift card that I got for xmas. No sweat off my back.

*Oh, and thanks for the help!

yahelc2• 12 years ago

I tried it out with a $20 card this morning (I've had it for 3 years and never remember to use it on the rare occasion that I'm at Starbucks). I just received my 0.014916 bitcoin via Coinbase. It took 2 hours between when I submitted it and when I received the bitcoin.

mhluongo7• 12 years ago

Sorry it took so long- I'm hand-verifying transactions to be safe. Very much a human error I plan to remedy.

domdip• 12 years ago

Considering buying Starbucks gift cards with stolen credit cards is already an activity of scammers, this seems a bit dangerous. Let alone the FinCEN issues.

New website lets you trade Starbucks gift cards for Bitcoin

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