UPDATED 15:41 EDT / APRIL 28 2015

Purse.io: Bitcoins for Amazon products outfit plans next move to airline miles

aircraft-window-engine-photopinccBitcoin is a born-digital currency, a method for exchanging value without ever leaving a computer or a mobile device. This puts bitcoins into an interesting position when it comes to other currencies, such as gift cards and corporate “rewards points.” Purse.io puts this to the test by providing people the ability to exchange bitcoins for Amazon.com, Inc. products using credit cards, gift cards, and Amazon payments balances.

The model is simple: Someone who has money tied up in an Amazon gift card or an Amazon payments balance wants to turn that money into bitcoins and someone else would like to exchange bitcoins for a product on Amazon. Purse.io puts the buyer and seller together, acts as escrow for the bitcoins, follows the purchase and shipping process from Amazon, and then transfers the bitcoins once the process is complete.

“So many gift cards are sold today at face value,” says Andrew Lee, CEO and co-founder of Purse.io, ”but intrinsically due to the illiquidity a $100 Amazon card is not really worth that full $100.”

Lee adds that bitcoins are great for this because they’re transferable and not-refundable (it’s a permanent transfer.) The idea for Purse.io rose out of a frustration that BTC could not be used in a meaningful way by many consumers, exchanging BTC for funds locked up in gift cards is a practical application, and it also provides a ready way to liberate stored value.

Using Purse.io also means that customers can take advantage of lower prices in other countries and other discounts provided from using gift cards. As a result customers using Purse.io see discounts ranging between 8 to 35 percent with the average discount around 20 percent.

Purse.io has global reach and potentially steep discounts. Image via Purse.io's blog.

Purse.io has global reach and potentially steep discounts. Image via Purse.io’s blog.

Purse.io started about a year ago in 2014 going through an incubator called Plug & Play in Sunnyvale, CA. The mission was to build useful applications on Bitcoin that weren’t mostly for cryptographers and extremely technical individuals. Lee felt at the time that there were not too many mainstream use cases for Bitcoin, and he argues this is still true today.

Close to 30,000 users visit and use the Purse.io site right now and that translates into over a quarter million dollars a month.

Plans to move onto other corporate currencies

 

Our mission is to connect people who shop on Amazon with BTC to people who have excess gift cards who want bitcoin,” says Lee.

But Purse.io is prepared to move to other forms of corporate currency. One example: Airline miles.

“Airline miles are also illiquid,” says Lee. The reason for this is because airline miles may be transferable, but the fees to do a transfer can be extremely high. With Purse.io’s innovative concept customers could book a last-minute flight for someone else, in exchange for bitcoins, and not worry about those high fees.

According to One Mile at a Time, airline mile dollar worth can range between 0.8 and 2.0 cents a mile. And according to the American Airlines/US Airways award chart it’s possible to rack up 85,000 miles flying from the continental U.S. to parts of Asia. While most frequent fliers may want to use those miles to save on future flying costs, those miles could add up to a lot of potential bitcoin.

Amazon is not alone in providing gift cards or incentive services that lock value into the company. The concept of “corporate currency” is extremely common in the modern day from credit card reward points to the now-defunct Microsoft Points, and mobile games that exchange in tokens. All of these act as stores of value that, while useful if you want to buy something from the corporation that holds it, is difficult to free up for use elsewhere.

This means there is still a lot of the market that Purse.io could move into after refining the concept with Amazon and airlines.

photo credit: Mt. Fuji via photopin (license)

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