Gyft Unveils Blockchain-Powered Gift Cards

The announcement marks a major step forward for a project that Gyft CEO Vinny Lingham originally announced in March. The gift card company has historically been one of the most active bitcoin accepting merchants, serving as a portal for bitcoiners to real-world goods. This is the first time the company will be launching a product that uses the technology behind bitcoin.

Gyft Block is hoping to solve large problems in the $100 billion gift card industry, including fraud and a lack of standardization. Lingham is an advisor to Bitcoin 2.0 startups Koinify and Trustatom, and says that by using the blockchain Gyft Block will be an open platform – that is more secure and cheaper than existing infrastructure.

"Consumers can redeem different forms of digital value in a single transaction: for example, a consumer can buy a cup of coffee by combining a gift card, branded reward point, and coupon, since all blockchain-based digital assets operate on the same open standards.”
— – Vinny Lingham, Gyft CEO

Blockchain Technology

The possible benefits of Gyft Block, according to the projects lead Guillaume Lebleu, are broad and varied. Lebleu wrote a whitepaper which describes the new project and how it could be used for issuing loyalty points, that then could be traded on a secondary market.

“Ultimately, intelligent wallets will be able to connect to marketplaces, identify arbitrage opportunities and perform in the background complex chains of trade that maximizes the consumer’s purchasing power without compromising their privacy or control.”
— – Guillaume Lebleu, Head of Gyft Block

The main, and most practical, benefits that Gyft Block is designed to deliver are lower costs, more security along distribution channels, and an universal platform for all gift cards.

Powering all of this is Bitcoin API developer Chain.com and the open assets porotcol, which will be used for issuing and transfering gift cards on the bitcoin blockchain. Chain.com is providing the underlying tech for the project and will act as one of the private key custodians.

“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. This cost savings is partly because multi-signature private keys secure the digital asset itself (as opposed to plain text codes which can easily be stolen), dramatically reducing fraud.”
— – Adam Ludwin, Chain.com CEO

“And since blockchain issued gift cards will, over time, interoperate with other digital assets like points and coupons, consumers will experience something new at checkout: their wallets will automatically detect which digital assets they can use to pay and then construct a single transaction with multiple inputs,” he continued. “For example, you could scan a merchant terminal with your smart phone and see all the available gift cards, coupons, points, and credits that the merchant accepts. Simply select the ones you want to spend and pay in a single tap.

Regulatory issues

The whitepaper also touched on some regulatory problems the platform may encounter. The biggest seems to be gift card holders being able to spend over $2,000 or $1,000, depending on the jurisdictions. That could qualify the gift card companies as Money Service Businesses (MSB) and require them to comply with expensive Anti-Money Laundering (AML) regulations. By default these cards would not have a fixed amount and could be reloaded frequently, unlike normal gift cards, since they are effectively bitcoin wallets.

One possible solution for this could be multi-signature wallets that allows gift card companies to limit the amount of spending:

“A practical way to achieve this is to issue cards as multi-signature open asset wallets where the co-signer is the asset issuer or a third party trusted by both the issuer and the cardholder, called the program manager. In the Bitcoin community, this model is sometimes called third-party oracle.”
— – Lebleu

With gift card regulatory requirements varying between jurisdictions, including different countries and US states, Gyft Block has built a feature into the platform that would have cards automatically conform to the regulations, depending on the recipient’s geographic location.

The product was demoed during the startups’ joint announcement at Money Conf 2016, but no exact dates for the launch of the product was given.