Now You Can Buy Your Bitcoin Gift Cards Online

Published February 27th, 2019 - 08:19 GMT
The traditional process of buying cryptocurrency like bitcoin can be cumbersome and intimidating to the average U.S. consumer. (Shutterstock)
The traditional process of buying cryptocurrency like bitcoin can be cumbersome and intimidating to the average U.S. consumer. (Shutterstock)

Some analysts think 2019 will be the year cryptocurrencies become part of the mainstream, and a few companies -- including market giant Fidelity -- have moved to get more Americans involved in the new way to buy.

The traditional process of buying cryptocurrency like bitcoin can be cumbersome and intimidating to the average U.S. consumer. There's no standard -- it's traded on a dozen exchanges and the price can vary by 10 percent from one to another. Also, there's the mystery of how cryptocurrency works that confuses many people; only about 7 percent of consumers have purchased any bitcoin, the most popular cryptocurrency.

"Connecting your bank account to an unknown exchange to buy bitcoin can be frightening and risky," Ed Grieske, CEO of Bitcoin Solutions in Philadelphia, told UPI.

Edmonton, Canada-based Bitcoin Solutions has developed what it hopes is a new solution -- by allowing people to buy bitcoin gift cards online, which can be loaded into digital wallets and spent anywhere bitcoin is accepted. Or investors can hold on to the bitcoin as an investment.

Cryptocurrencies like bitcoin, ethereum and others use a decentralized blockchain rather than a bank. The same blockchain can be used for micro payments, smart contracts and a host of other services that could disrupt traditional ways of doing business. The value of the currencies, particularly bitcoin, have often reached the stratosphere. The value of one bitcoin is currently close to $4,000. A year ago, it reached an all-time high of nearly $11,500.

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Most cryptocurrency transactions are focused on investment, speculation and trading, especially in places around the world where people have lost faith in government currency. Transactions rely on "miners" who use computers to validate and add time-stamp transactions to a "blockchain" -- a continually growing digital ledger secured with cryptography. Only a limited number of cryptocurrencies are produced, unlike government-backed notes, to ensure sufficient values.

In the future, Grieske says bitcoin gift cards will be available at traditional retailers like stores, restaurants and Amazon. Online retailers like mega travel site Expedia, and Newegg already accept bitcoin. 

The goal, Grieske said, is to make bitcoin simple and painless for those who want to dabble in cryptocurrency without having to fully understand how it works.

"They're familiar with how [the gift card industry] operates. It's a comfort level," he said. "This was a perfect way to segue bitcoin into the standard retail environment."

"It's not designed for the big investor," he added. "We're looking at the 90-plus percent that wants a little bit -- $50, $100 or $200." 

Bitcoin Solutions has partnered with Chain Bytes, Inc., a bitcoin wallet provider, and Ireland-based gift card processor Savvy to launch the gift card business in December. Once someone buys a card, the process to get a wallet through Chain Bytes takes two or three minutes. Bitcoin can then be loaded into the system if they buy more.

"We're a medium to help people get on bitcoin quickly and seamlessly," Grieske said.

Bitcoin Solutions makes a profit by buying the cryptocurrency on exchanges, where the price fluctuates. There's also a small transaction fee.

"We're dealing with cash on cash so it's a very small amount," he said. "It's a volume business."

For more experienced cryptocurrency investors, there's a new market coming.

In January, Fidelity launched a cryptocurrency trading and storage platform for select individuals. The platform, called Fidelity Digital Assets, will see a wider launch later this year. Last week, J.P. Morgan Chase became the first major U.S. bank to jump into the crypto arena.

"Our initial clients are an important part of our final testing and process refinement periods, which will eventually enable us to provide these services to a broader set of eligible institutions," Fidelity said in a statement last month. "It's been a challenging and rewarding time here, from critical decisions on product direction to the intensive work of our development teams."

Fidelity warns, however, that because digital assets are speculative and still volatile it's recommended only for experienced investors with a high risk tolerance.

Jeff Ramson, CEO and founder of strategic advisory firm PCG Advisory, said he believes 2019 will be the year cryptocurrencies arrive in the mainstream. A secondary market like the one being developed by Fidelity, he said, is key.

"That's what's coming next. The average person will never know the difference," Ramson told UPI. "It should be seamless to use as a user. That's when you get mass adoption and it becomes just another app. But behind the scenes is a whole other story."

Another potential use in the future will be fragmented ownership in the real estate industry, he added.

"People could own a piece of the Empire State Building or other buildings in Manhattan," Ramson said. "Or they could short certain buildings. It allows people to get involved in real estate."

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