You have to wonder if even super sleuth Sherlock Holmes would have been stymied by the mysteries of cryptocurrency – and the role Gift Cards play within it. To be sure, the whole subject of crypto remains rather cryptic to many of us. Yet oddly enough, a burgeoning number of companies are starting to fearlessly welcome it. Furthermore, the Gift Card industry is proving to be no exception, embracing the concept as more crypto wallets and programs that want your gift card are being rolled out.
If you’re feeling somewhat clueless on the matter, you’re not alone. I sat down with Holly Glowaty at K+H Connection to demystify what exactly cryptocurrency is, and how Gift Cards are becoming involved. Let’s investigate…
What the devil is Cryptocurrency anyway?
As we all know, “currency” – in its very basic definition, according to the New Oxford American Dictionary, is “a system of money in general use in a particular country.” Cryptocurrency is also a system of money designed to work as a medium of exchange. But…in this case, it’s digital. Or virtual. And operates independently of a central bank. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency (Dom and Tom). According to Forbes, there are 2,530 different types cryptocurrencies, and growing every day, with a market valuation of $123 billion! Doubtless you’ve heard of Bitcoin. That’s by far the most well-known cryptocurrency, followed by Ethereum and Litecoin (YouGov).
Who Owns It?
No mystery here, Watson: Those who are purchasing cryptocurrency are typically types who possess a penchant for all things technological. There are only about 8% of Americans who own cryptocurrency with a mean amount of $8,400 (Forbes). Specifically speaking…
- Majority owners are men who consist mainly of older millennials and Gen Xers.
- They make more than $100K per year and…
- 37% of crypto owners have a Master’s degree or higher.
- Nearly 1 in 5 do not have money in an investment or brokerage account but have about $1,200 in cryptocurrencies!
How do Gift Cards fit into this puzzle? It’s elementary.
Many programs are starting to materialize where gift cards and cryptocurrency are becoming interchangeable. How does that work, you may ask? There are a few different ways in which we are seeing cryptocurrency and gift card programs interact:
- As a payment option. There are programs like Gyft, eGifter, and Swych that gives you the option to use cryptocurrency as another form of method at point of purchase. When you go to checkout, you will see it listed along with card type and methods like PayPal.
- A Bitcoin Gift Card. This gift card brings in the gifting aspect of cryptocurrency. The Bitcoin Gift Card allows consumers to give other people the gift of bitcoin without the fear and risk. These gift cards can act as an access point for the average consumer making buying bitcoin simple and painless (Loyalty360).
- Cryptocurrency Apps and Wallets. Flexa is an app that allows cryptocurrency to be spent in stores where the exchange of cryptocurrency into a stored value account and is done on the back-end making it easy for the consumer to use in-store. Coinbase allows users to store and spend cryptocurrency via a mobile wallet. WeGift provides gift cards to Coinbase users where Coinbase users can cash out the dollar amount for gift cards. Bitrefill lets you use bitcoins and altcoins to buy from a selection of vouchers or gift cards on their app.
What are the risks?
- Fraud. Unfortunately, it’s a fact of life in these cyber times. Yes, there is a risk of miscreants breaking in and stealing cryptocurrency, so you must rely on the strength of your cyber security program. However, this is nothing new, it being a risk we face every day in the Gift Card world – and go to extreme measures to combat.
- Growth Stage. Cryptocurrency is still it the early adopting and growth stage so a lot of it is being purchased and retained. Unfortunately, there is no real data tied to exactly how much cryptocurrency is being cashed out or used for gift cards. Programs are seeing consistent cash out’s, it just may not be as much as typical gift card programs see today.
- New Target Audience: By making crypto become a more mainstream way to purchase Gift Cards, you’ll be reaching out to an entirely new audience of consumers.
- Multiple Currencies with No Interchange Fee: Having the option to use crypto to buy Gift Cards means that the Gift Card can work in multiple currencies around the world, quite possibly attracting more customers by the millions! This also means zero interchange fees.
- More Secure Transaction. Credit cards, PayPal and other payment methods used online have reversible transactions while most cryptocurrencies have irreversible ones. Once the transaction is confirmed on the network, not even a major network attack can roll them back making the online purchase of gift cards for cryptocurrency a much more secure transaction (DashNews).
Cryptocurrency is indeed a topic that is new and exciting, yet at the same time, can be somewhat scary and controversial. There is so much to unravel about this newfangled form of monetary exchange as it continues to pop up in our Gift Card universe. But! We’ve discovered a perfect opportunity for you to learn more: Grab your cloak and head to the Flourish Conference in Chicago. There you can attend one of their cryptocurrency sessions…and solve this most baffling of mysteries once and for all!