New website lets you trade Starbucks gift cards for Bitcoin
digitaltrends.com
digitaltrends.com
However, I never released due to all the regulatory issues. Very unfortunately, FinCEN still considers this type of transaction to be an exchange of value, and thereby regulated. At the time, FinCEN still hadn't released their guidelines on digital currencies, but they were increasing their regulatory stance on gift cards. The situation is still not completely clear, even now, but I'm pretty sure that FinCEN will try to claim that this type of operation a money transmitter, with all the headaches that this brings.
Also, I wasn't sure if Starbucks would try to do something crazy like sue me to take down the site. But it was primarily my fear of FinCEN that caused me to drop the idea and put the code in storage. Regulation is taking a heavy toll on this country's innovation; this is just one very small example.
Interestingly, I had no problems getting a business bank account for the idea back then. I think it'd be much harder now.
Despite spending 6 weeks part-time on a project that I ended up scraping, I don't regret it since it was my first major Python project and eventually led me to learn lots of implementation details of the Bitcoin protocol itself (though that certainly wasn't necessary for my project).
Edit: clarity
http://www.fincen.gov/statutes_regs/rulings/
If you read through those rulings, you'll see that FinCEN takes a very broad view on exchanges of value falling into the category of money transmission.
Also, read through their new stringent guidelines for sellers of gift cards (sellers of prepaid access). Here's a good summary:
http://www.dorsey.com/EU_giftcard_121211/
In my case, I was planning on both buying and selling gift cards (digitally, for a mobile frontend to display barcode). My best hope was to be considered a seller of prepaid access, which brought some hope because the strict KYC guidelines didn't kick in until $1000, if I recall correctly. However, since I bought and sold, I was pretty sure that FinCEN would instead consider me a money transmitter, whose KYC requirements start at $0.
It's totally possible for these kinds of businesses to fly under the radar for years, and never be affected. But the moment some ambitious bureaucrat learns about a project like this and decides to made a federal case of it (literally), or some kid's arrested for possession of marijuana who moved money through this type of business, then it's misery for everyone on the receiving end.
It's pretty vague, but it's easy to interpret the latest guidance to say that exchanging one digital currency for another requires a license, customer identification, suspicious transaction reporting, etc. Even if you never touch dollars, euros, yen or any other "real" currency, are you still a "money transmitter", no matter how small the amount?
http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G...
"If the choice for regulators is to permit money laundering on the one hand, or to permit innovation on the other, we are always going to choose squelching the money laundering first."
http://www.bloomberg.com/news/2014-01-29/new-york-state-regu...
Good luck exchanging stored-value for digital currency in this environment.
And yes, these businesses will simply take place outside of the U.S., taking all those jobs with them.
These businesses employ/have employed dozens of people, and that could easily grow to hundreds.
Also, by shutting out any chance of an complying American exchange, we de facto sent jobs to Bitstamp in Slovenia, which is growing in to a very nice-sized business, I hear.
And I personally think gyft is skirting the line and may well find itself in some hot water. I love them as a company, though.
Apologies to gyft, they're a great company.
Or the Bitcoin and other virtual currency companies that stay in the US and actually make sure to comply with regulations will do better than the ones that start elsewhere or leave, because people will actually have some reason to consider trusting them.
I wouldn't put my money in a small bank that is outside the US because it finds banking regulations too stifling. Why would I not want to hold those who handle my virtual currency to the same standard?
Basically, the store should be required to exchange them for cash. Any associated fees for that should be built into the purchase price.
This obviates third party exchanges and only 'damages' what is really a crappy gift (in the sense that it isn't a whole lot more creative than cash but is worth less).
I phrased it in terms of sensible regulation because you proposed that the alternative to bad regulation was no regulation. If you cited a specific rule that was onerous and explained why it didn't actually accomplish anything, that would be different.
In the proper political environment, I'm actually not opposed to "good regulation". The problem is, the bureaucrats are taking the appetite of part of the public for "good regulations" and using that political capital to make more barrier regulations -- the bad type. Worst of all, they enforce these regulations with SWAT teams and long federal prison terms [1, just one example of many, since I know you'll ask].
So as long as the government is continuing to pass more barrier regulations meant to prop up the big corporations through regulatory capture, and as long as they continue to enforce those regulations at gunpoint instead of with some sort of civil court like a civilized country would, they get no pass from me for more "good regulations".
1. http://www.wired.com/threatlevel/2013/01/coder-charged-for-g...
I don't think it is a coincidence that the thief purchasing these cards. I'm not speaking for the creators, they could easily be caught in the crossfire. That being said, this is very obviously an exploitable method of transaction specifically for a thief. No matter the intention of the project. https://news.ycombinator.com/item?id=6175294
† http://www.ebay.com/sch/Gift-Cards-/172009/i.html?_from=R40&...
Why wouldn't you? At $4/visit you should be good for 4 months if you go nearly every day.
French bank today issued press release saying that intermediation of Bitcoin transactions requires "payment processor" license. Even if you are not touching fiat at all. http://acpr.banque-france.fr/fileadmin/user_upload/acp/Commu...
I can't imagine what else you'd do with so many Starbucks cards.
Keep saying that when your "Freedumb Über Alles" exchange takes your USD, gives you 0 BTC, and tells you "tough shit, sucker".
If I chose to spend my money on a business that you believe will rip me off, why does that make you want to post an insulting message on HN?
On the grounds that it's the law; those are pretty good grounds.
Something being a law doesn't make that something justified or moral. It just allows certain groups of people to benefit from it while lying to others that it's for their own good.
Strawman, I never said it did. Grounds != moral.
EDIT - I just read the article you referenced. That scam only applies to registered cards (cards attached to a Starbucks account). I don't accept registered cards, or have anything to do with that.
As a beginner, you'd be better off with a wallet like Electrum or Multibit that will show your transactions almost immediately.
You can also view them here on blockchain.info, by putting your public key (the one that starts with a 1) into the search bar. Your transactions should show up, assuming nothing is going wrong with this site:
blockchain.info
Otherwise, just contact the owner, I'm guessing he'll be eager to help.
1. https://electrum.org/download.html 2. https://multibit.org/
Tried doing a search for my public key 18fyCm3vkftJ9nNgZ4SwoJkCuGVZQ2kZcE and had no luck finding the transaction.
When I get home tonight I need to check out these other wallets and get in touch with the owner. If I'm only out 10 bucks though on a gift card that I got for xmas. No sweat off my back.
*Oh, and thanks for the help!
Check out electrum or multibit, they're both fairly easy to use. Be sure the password-protect your wallet with a long password (write it down somewhere!). If you do continue to use blockchain.info be sure to enable 2-factor authentication and use a strong password.
I'm going to check out electrum and multibit next. Thanks!
I need to make one correction to what I wrote above. In my haste, I accidentally called your Bitcoin address your "public key". Actually, your public key is a related but different concept. Properly said, the string that starts with "1" is just a Bitcoin address.
Anyway, just wanted to correct myself that those are two different but related concepts. This has no impact on your use of Bitcoins -- just use the one that starts with "1" to give out to receive Bitcoins. Most programs won't even show you the public key I'm talking about, so no need to worry about it.
If it was your intention to give people an easy way to break into the market, mission accomplished.