Gift Cards and Bitcoin
In many ways gift cards are much like Bitcoin–they are “bearer assets” and offer a mechanism for financial inclusion to those who are unbanked.1 These similarities create an amazing synergy together!
The FDIC conducted a household survey in 2017 and found that approximately 8.4 million households in the United States were unbanked,2 a number that is likely to have increased during the novel coronavirus pandemic of 2020.3 Open loop prepaid cards are particularly important for e-commerce as most online retailers expect customers to use credit or debit cards. Instead of waiting to get approved for a credit card or bank account, unbanked households can grab a prepaid card off the rack and use it with minimal friction. Here we begin to see the similarities with Bitcoin, as the protocol was designed in part for this exact purpose– to create a permissionless online payments mechanism.
So how does one acquire Bitcoin if they are unbanked? Unfortunately, options were slim for many years. Traditional exchanges and brokerages in the cryptocurrency space require users to fund their accounts using bank services such as wires, ACH, or debit cards. So-called “peer-to-peer marketplaces” were a last resort for many– you might be convinced to send a Moneygram or Western Union transfer, meet someone in person for an “over the counter” trade or even send money in the mail, unless a Bitcoin ATM was operational and within reasonable distance.
This is where gift cards come in. The distribution of gift cards in the United States is massive. We estimate that there are nearly 100,000 retailers in the US which carry open loop cards. You can find nearly 60,000 of them on our map. Because the cards can be purchased with cash, the CardCoins team decided to leverage the wide distribution of open loop cards to build an extremely low friction on-ramp for cash-preferred customers who want to enter the Bitcoin economy. Just find a retailer near you, grab a card off the rack and bring it to CardCoins, no account needed.
We at CardCoins are passionate about financial empowerment with cryptocurrency and gift cards, so we hope to make your experience buying Bitcoin a great one!