Gift card provider Gyft is partnering with blockchain API startup Chain in an effort to revolutionize the way gift cards are issued, tracked and spent.
Chain helps developers build apps by providing streamlined access to Bitcoin’s blockchain via its Chain Nodes and API. The startup has secured $13.7 million in funding to date.
In offering the ability to access blockchain data in real-time, a variety of practical applications can be made possible, including the administration of gift cards.
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One of the key benefits envisioned for the project is the reduction of costs related to issuance, particularly those arising due to fraud. In a blog post, Chain founder Adam Ludwin explains, “In this new model, a typical gift card will only cost a few cents over its lifetime, an order-of-magnitude cheaper than traditional gift cards.”
Conventionally, gift card information (number & PIN, if applicable) is transmitted through a number channel, considered insecure relative to those used by credit and debit cards. Through the initiative, it is hoped that these costs will be replaced by the trivial satoshis paid to use the blockchain network.
Other envisioned benefits include new marketing opportunities for brands and merchants, and the ability for customers to scan a merchant terminal with a smartphone to view all the available gift cards, coupons, points, and credits accepted. They can then tap their device, at Clover point-of-sale terminals, to spend credit as desired.
Gyft already accepts bitcoin for its cards offerings, last year announcing a set of incentives to encourage adoption. The post notes, however, that in this case Bitcoin’s technology functions merely as the rails for the offering. “The fact that bitcoin is being used as the enabling technology under the hood will be invisible to end users,” noted Ludwin.