6 ms·

New website lets you trade Starbucks gift cards for Bitcoin

51 points by mhluongo 13y ago

snitko 13y 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 13y 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/Communication/Communiques%20de%20presse/20140129-Communique-ACPR-position-bitcoin.pdf http://acpr.banque-france.fr/fileadmin/user_upload/acp/Commu...
  - mhluongo 13y ago
    Not sure this is quite the same thing. I'm just trying to buy gift cards for BTC.
    - eric_bullington 13y ago
      It's not clear from the article; are you selling them, too? I can't imagine what else you'd do with so many Starbucks cards.
- al2o3cr 13y 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_bullington 13y 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?
  - snitko 13y 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?
    - gnaritas 13y ago
      > On what grounds do governments think they have the right to tell every person what to do with their money? On the grounds that it's the law; those are pretty good grounds.
      - snitko 13y ago
        Slavery was also legal not so long ago. Being gay was illegal not so long time ago. Alcohol was illegal at some point. Weed is still illegal in most places these days. Something being a law doesn't make that something justified or moral. It just allows certain groups of people to benefit from it while lying to others that it's for their own good.
        gnaritas 13y ago
        > Something being a law doesn't make that something justified or moral. Strawman, I never said it did. Grounds != moral.
eplumlee 13y 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 https://news.ycombinator.com/item?id=6175294
- sktrdie 13y ago
  It's also because there are no chargebacks when trading gift cards.
- mhluongo 13y 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_bullington 13y 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 13y ago
Would Amazon giftcards work?
- lispsil 13y 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.
  - mhluongo 13y ago
    Yeah I'd like to try Amazon but the more liquid cards seem to be more fraudulent.
    - lispsil 13y ago
      Create vouchers in 711 you can instantly redeem for bit/altcoins. Bitinstant did this but was badly implemented. Unsure if msb required. Some millionaire prince could make it happen. Probably issues with it being able to use for online gambling too considering paysafecard is forced to sell a crippled version in the US
sktrdie 13y ago
How do they make money? They buy lots of coffee for themselves?
- 2drew3 13y ago
  They can sell the SBUX gift cards on a gift card exchange (Cardpool) or eBay for ~25% discount and make the spread.
minimax 13y 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&_nkw=starbucks+gift+card&LH_Complete=1&LH_Sold=1&rt=nc http://www.ebay.com/sch/Gift-Cards-/172009/i.html?_from=R40&...
- bluedino 13y 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.
  - mhluongo 13y ago
    Yep, and if you buy them at a discount on eg eBay so much the better.
  - minimax 13y 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_bullington 13y 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
- mhluongo 13y ago
  Any citations on the FinCen fears?
  - eric_bullington 13y 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/ 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/ 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.
Clickclock 13y 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 https://news.ycombinator.com/item?id=6175294
bendoernberg 13y 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/ https://treats.io/.
herbig 13y 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 13y ago
Whats stopping people selling their gift cards and using them before the buyers? Or am I missing something?
cartothemax 13y 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_bullington 13y 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 https://electrum.org/download.html 2. https://multibit.org/ https://multibit.org/
  - cartothemax 13y 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!
    - eric_bullington 13y ago
      No problem. Just in case you don't get those BTC, I just sent you some to that address to play around with or buy a little something with. But hopefully, you'll end up receiving both transactions. Check out electrum or multibit, they're both fairly easy to use. Be sure the password-protect your wallet with a long password (write it down somewhere!). If you do continue to use blockchain.info be sure to enable 2-factor authentication and use a strong password.
domdip 13y 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.

51 points by mhluongo 13y 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 13y 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/Communication/Communiques%20de%20presse/20140129-Communique-ACPR-position-bitcoin.pdf http://acpr.banque-france.fr/fileadmin/user_upload/acp/Commu...
- mhluongo 13y ago
  Not sure this is quite the same thing. I'm just trying to buy gift cards for BTC.
  - eric_bullington 13y ago
    It's not clear from the article; are you selling them, too? I can't imagine what else you'd do with so many Starbucks cards.
al2o3cr 13y 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_bullington 13y 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?
- snitko 13y 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?
  - gnaritas 13y ago
    > On what grounds do governments think they have the right to tell every person what to do with their money? On the grounds that it's the law; those are pretty good grounds.
    - snitko 13y ago
      Slavery was also legal not so long ago. Being gay was illegal not so long time ago. Alcohol was illegal at some point. Weed is still illegal in most places these days. Something being a law doesn't make that something justified or moral. It just allows certain groups of people to benefit from it while lying to others that it's for their own good.
      - gnaritas 13y ago
        > Something being a law doesn't make that something justified or moral. Strawman, I never said it did. Grounds != moral.

eplumlee 13y 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 https://news.ycombinator.com/item?id=6175294

sktrdie 13y ago
It's also because there are no chargebacks when trading gift cards.
mhluongo 13y 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_bullington 13y 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 13y ago

Would Amazon giftcards work?

lispsil 13y 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.
- mhluongo 13y ago
  Yeah I'd like to try Amazon but the more liquid cards seem to be more fraudulent.
  - lispsil 13y ago
    Create vouchers in 711 you can instantly redeem for bit/altcoins. Bitinstant did this but was badly implemented. Unsure if msb required. Some millionaire prince could make it happen. Probably issues with it being able to use for online gambling too considering paysafecard is forced to sell a crippled version in the US

sktrdie 13y ago

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

2drew3 13y ago
They can sell the SBUX gift cards on a gift card exchange (Cardpool) or eBay for ~25% discount and make the spread.

minimax 13y 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&_nkw=starbucks+gift+card&LH_Complete=1&LH_Sold=1&rt=nc http://www.ebay.com/sch/Gift-Cards-/172009/i.html?_from=R40&...

bluedino 13y 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.
- mhluongo 13y ago
  Yep, and if you buy them at a discount on eg eBay so much the better.
- minimax 13y 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_bullington 13y 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

mhluongo 13y ago
Any citations on the FinCen fears?
- eric_bullington 13y 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/ 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/ 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.

Clickclock 13y 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 https://news.ycombinator.com/item?id=6175294

bendoernberg 13y 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/ https://treats.io/.

herbig 13y 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 13y ago

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

cartothemax 13y 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_bullington 13y 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 https://electrum.org/download.html 2. https://multibit.org/ https://multibit.org/
- cartothemax 13y 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!
  - eric_bullington 13y ago
    No problem. Just in case you don't get those BTC, I just sent you some to that address to play around with or buy a little something with. But hopefully, you'll end up receiving both transactions. Check out electrum or multibit, they're both fairly easy to use. Be sure the password-protect your wallet with a long password (write it down somewhere!). If you do continue to use blockchain.info be sure to enable 2-factor authentication and use a strong password.

domdip 13y 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.