That special time of year is coming up — the time when individuals trade in their unwanted or unusable gift cards for bitcoin. And with the price of bitcoin dropping, peer-to-peer (P2P) bitcoin marketplace Paxful is making it possible to use these gift cards to “buy the dip.”
Ray Youssef, Paxful’s CEO and co-founder, explained that, over the past few years, the busiest week for Paxful is the one right after Black Friday; in fact, as time has gone by, the rate of exchange between gift cards and bitcoin has gotten higher and higher.
“We calculated the rate of increase in total gift card volume from one year to the next,” he told 123Cryptocurrency. “At that same rate, this year’s volume would be $15.3 million. This rate is approximately 271 percent. Given our current weekly gift card volumes, it seems well within the realm of possibility.”
At the time of writing, bitcoin’s price has sunk to just under $4,560. Though panic has ensued in some corners of the crypto arena, Youssef isn’t worried about the price drop and feels it’s not likely to affect business on Paxful, even if the price remains as it is or falls lower.
“The price doesn’t matter so long as there are people who use bitcoin to translate money,” he comments. “To those in developing countries and countries with declining currencies, bitcoin has been their alternative currency. It’s also good to note that since January 2018, the price of bitcoin has been declining, but Paxful’s volume is continuously rising. Bitcoin will always be the best financial alternative.”
Youssef also says that, while gift cards remain popular items amongst gift givers during the holidays, they are not always the best items for receivers, which is what makes the peer-to-peer system so important.
“Many people in developing countries have no use for these gift card credits,” he says. “There are also users who have a website or a business as an affiliate for Amazon that maybe makes 10 percent in referring. People in the developing world don’t have Amazon in their areas, but they earn all these credits. Thus, they sell their credits for BTC and then turn the BTC into whatever currency they want. This is how P2P finance and bitcoin fills the voids. We really want to spread the word on P2P finance.”
According to Paxful’s internal data, gift cards have been used to purchase over $880 million worth of bitcoin since Paxful first launched its peer-to-peer marketplace in 2015. This accounts for just shy of 64 percent of the platform’s trades. All other methods — including credit cards, debit cards, Apple Pay and Square Cash — only account for about 36 percent of bitcoin purchases (roughly $499 million worth). In total, about $1.38 billion worth of BTC has been garnered via Paxful.
The most popular gift cards used to purchase bitcoin are those issued by iTunes. These gift cards have been swapped for over $482 million worth of BTC for their owners. In second place are Amazon gift cards at $303 million, while eBay ($15.7 million), Target ($15 million) and Steam Wallet ($14 million) gift cards hold third, fourth and fifth place respectively. Other popular gift cards include Walmart ($12 million), Google Play ($5.3 million) and the PlayStation Network ($5 million).