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Crypto Currency

How Does a Crypto to Gift Card Exchange Work?

Peer to peer crypto to gift card exchanges like Redeeem.com are becoming very popular! The emergence of cryptocurrencies has expanded the already large gift card economy by providing consumers with the choice to exchange gift cards for crypto.

In the US, gift cards were the most-requested holiday gifts in 2019 according to data from the National Retail Federation Survey. The global market of gift cards is $585 Billion. This could mean that a lot of people were holding and using gift cards at the end of 2019. However, some people could still be holding unused or unwanted gift cards in 2020 while others have not used up all the balance in their cards. This is where crypto to gift card exchanges come in.

What is a Crypto to Gift Card Exchange?

A crypto to gift card exchange is a peer-to-peer marketplace where people can sell gift cards to buyers in exchange for cryptocurrencies, namely bitcoin.

Such exchanges are ideal for people that want to sell their unwanted, unused, or partially used gift cards for bitcoin. Moreover, these exchanges are suitable for people that are wondering how to spend the cryptocurrencies they own.

As you may already know, paying for your rent, mortgage, groceries, phone bills, and electricity in crypto is not easy since these currencies are not yet mainstream modes of payment. And while some companies like Burger King, KFC, Microsoft, Namecheap, and Virgin Galactic accept Bitcoin payments in 2020, complete adoption by retailers could be several years away.

That said, crypto to gift card exchanges like Redeeem are at the forefront of facilitating complete adoption because, with Bitcoin, Ether, or Litecoin, you can buy a gift card from retailers like Macy’s, Walmart, and Amazon and spend it.

How it Works

A crypto to gift card exchange acts as a middle entity that connects buyers to sellers. The exchange could charge a fee for allowing users to trade if it so chooses. However, Redeeem does not charge any fees on gift card trading.

Also, exchanges provide a place where buyers can browse for gift cards from sellers and complete transactions on the platform. While most exchanges make an effort to provide safety to users, buyers and sellers have the greater role of ensuring that they are entering into a trade with an honest person.

Redeeem allows you to start trading without verifying identity. You can fund your account with any of the supported cryptocurrencies. It is worth noting that some exchanges will ask you to convert the crypto to the platform’s credit or token before initiating trade with the gift card seller of your choice.

The exchange creates a list of its sellers and includes their rates and the gift cards they are selling. For instance, when person A registers as a seller, they need to reveal the gift card they are selling, the price, and the cryptocurrency they want as payment. When a buyer chooses to buy from person A, their choice will have been influenced by the aforementioned details.

Some exchanges might include additional seller information like reputation score, whether the gift card is used or not, speed of delivery, escrow duration, and the number of trades.

The exchange will hold the payment in escrow while the seller sends you the gift card code. Once you verify that the card is valid, the seller will receive their payment and the trade will close. That means that you can now spend the gift card on the retailer’s website.

Pros and Cons

A crypto to gift card exchange offers the following benefits:

  • It is an alternative way to buy crypto
  • It promotes crypto adoption in the world
  • You can save upwards of 25% on gift cards
  • It enables crypto holders to spend their coins on something useful
  • It provides an option to dispose of unwanted, unused, or forgotten gift cards
  • Such exchanges facilitate remittances flow. For example, a man working in the US can send his sister in India a gift card which she can then sell on an exchange for crypto. Once she receives the crypto, she then sells it in exchange for her local currency.

It is not uncommon to find dishonest buyers and sellers on crypto to gift card exchanges.

Most peer to peer gift card exchanges use chat to exchange information, however Redeeem collects the data from the gift card and users so the company can prevent fraud better than anyone else in the industry, under 1.3% fraud rates, compared with 31% at Paxful.

While some exchanges offer dispute resolution, ensure that you avoid getting into a dispute in the first place. One of the ways to do this is by using reputable exchanges.

Final Thoughts

Cryptocurrencies and gift cards are creating an economy that could render fiat money obsolete. What’s more, the two tools are propelling financial inclusion and remittances flow giving consumers a glimpse into a future of increased freedom and flexibility.

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