
Show HN: 10% off at Starbucks when you buy with Bitcoin - mhluongo
https://coinforcoffee.com/hn
======
beedogs
At this point with btc volatility being what it is today, you could save or
lose 10% just by standing in line.

------
PhrosTT
There's a Starbucks Gold Card (earned from 30 drinks in 12 months).
[https://www.starbucks.com/card/rewards](https://www.starbucks.com/card/rewards)

This gives you every 13th drink free (1 per 12 = 8.3% discount). I think this
just crowdsources 1 mega gold card.

I guess if you average out the drink prices... I could use the free drink on
the $6 soy latte and use the $2 tall coffee as 1 of 12 drinks to earn that. So
I could squeeze out some extra % points that way.

If they're really creative maybe it does geographical hedging as well, using
the cheap drinks in Florida to earn free drinks in Manhattan (no idea if
Starbucks prices fluctuate geographically.

~~~
mmanfrin
If they are using the same card, they are opening themselves up to a giant
world of hurt from cheaters.

~~~
mhluongo
We aren't.

EDIT: details

Every users gets their own card to prevent tampering and crazy double-spend
stuff.

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mhluongo
Hey guys! You might remember our last app, Card for Coin, where we were buying
Starbucks for bitcoin. Well, here's the other side- we're looking forward to
your feedback.

The websocket stuff is a little touch and go, so please let me know if you
have issues. Let me know if anyone has an issue loading a card or getting a
refund, and I'll work it out.

~~~
hrayr
Did you, and if so, how did you address the legal issues brought up in your
previous post?
[https://news.ycombinator.com/item?id=7157180](https://news.ycombinator.com/item?id=7157180)

~~~
molsongolden
Is it still money laundering now that the IRS has said that Bitcoin is
property and not currency?

~~~
dragonwriter
> Is it still money laundering now that the IRS has said that Bitcoin is
> property and not currency?

Since that was an interpretation of categories in tax law, which are
completely different than those applicable to money laundering, the IRS
determination on how bitcoin is taxes probably has no bearing on any analysis
of how money laundering laws apply.

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robbiet480
How does this work? Where/how are you generating the barcode? Is there some
hidden Starbucks API?

~~~
Joeboy
I don't know anything about this app or Starbucks, but barcodes are basically
just graphical encodings of numbers, and there is free barcode generation code
out there (eg. in python's Reportlab package). The numbers are purchased in
bulk from the retailer.

~~~
sebastianavina
I hope they aren't serialized

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joosters
What exchange rate do you get for your bitcoin? Does a user even see the
potential exchange rate before the transfer? What margin (if any) are you
taking on the currency exchange? Why is the site so lacking in details?

~~~
mhluongo
We use the current Coinbase exchange rate. No margin on the exchange. We're
trying to keep it simple / focused on newer bitcoin users, but I can
definitely flesh out the FAQ.

The refund math is also in the user's favor- more about that in other
comments.

~~~
martindale
You should use BitPay's BBB (Bitcoin Best Bid) instead, it's looking at all a
number of exchange order books and giving your the best price:
[https://bitpay.com/api/rates/usd](https://bitpay.com/api/rates/usd)

Disclaimer: I work at BitPay.

~~~
mhluongo
Hey! Are you in the Atlanta office?

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Xdes
Also about the service: is the website compliant with AML and KYC regulation?
You might be acting as a money transmitter under FinCEN rules. Might want to
consult a lawyer.

~~~
mhluongo
This time, I definitely consulted a lawyer.

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JshWright
If I use the Starbucks app, I get credit towards a free item (it works out to
an 8.3% discount if you always buy the same thing).

A 1.7% savings really isn't enough to interest me...

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jsun
I'd like to hear a real economist's take on this but from my personal opinion
Bitcoin will never take off as a transactional currency because of it's
inherently limited nature, and here's the reasons contributing to it:

1\. There's a finite amount of them that can ever be mined

2\. There's no central governing body control the rate of inflation/deflation
through monetary policy.

By definition this creates a deflationary currency. Meaning as a currency it
gains value the more goods and services it can be redeemed for, and the more
valuable it is the less likely it is that people will redeem it for goods or
services.

Meaning if all of a sudden more merchants started accepting bitcoin then
bitcoins will appreciate as it's underlying "value" grows, but people will
stop spending bitcoin because that coffee you bought for 3 bucks today might
be 30 bucks next year. In turn merchants will spend less money building
infrastructure for bitcoins since no one uses it.

Does that make any sense?

~~~
mvleming
From my point of view, this is not too unlike what we have without Bitcoin.
With USD or CAD, consumers still have to make a decision whether it is worth
exchanging a number of dollars a point in time for something else when instead
they can use that money to make more money and eventually have "30 bucks next
year".

I can see how making more money with Bitcoin is different than with USD or CAD
though, if I were to consider only what you've laid out. With the latter two
currencies, I would have to learn about different investment strategies and
figure out what would actually make me more money, things as a consumer I
don't even know about. But with Bitcoin, I could just hold onto them and
except to have more money in the future.

What I am trying to say is I don't think what you've laid out is something
new, this incentive–to hold onto money so I can more the future–already exists
with our currencies today, but Bitcoin happens to give a little spin to that
incentivize–which is it'll easier to have more money in the future.

I would love to hear from a real economist too but I don't think it hurts to
take our brains out on a little walk.

~~~
jsun
See point #2. Central monetary bodies specifically change monetary policy to
prevent deflation, worse case they can just print more money to cause
artificial inflating to combat deflation.

Bitcoin doesn't have this defense mechanism.

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mmmmax
You need to send an email with the barcode and 25 minutes after that sweep the
funds back...I've tried to use this twice and not seen my code.

Update: refreshing the page seems to help

Update 2: I just used my code and it worked great! Nice work guys!

~~~
mhluongo
Sorry for the trouble, and thanks for sticking with it!

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nicolethenerd
The big question... is this actually useable at Starbucks? If I show a barista
a 3rd-party, non-Starbucks affiliated app, and ask them to scan it, will they
do it? Or just look at me like I've grown 3 heads? Even if it is a valid
barcode (and still not clear on where that's coming from either - I don't
understand the 'crowdsourcing a gold card' thing - can someone explain?)

~~~
mmmmax
I just did it...it was amazing! I'd prefer to keep a balance alive for longer.

~~~
mhluongo
How long would work, you think? I think today people are loading the BTC at
the office, but I'm not sure that'll be the most common case. Maybe a "more
time" button would help?

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FredEE
[https://coinforcoffee.com/#how-it-works](https://coinforcoffee.com/#how-it-
works)

This design looks strangely familiar... :)

~~~
mhluongo
Ha, we tweaked it a bit since last time you guys saw it, but not much.

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it_learnses
I'm wondering what you have to gain out of promoting bitcoin so much. are you
heavily invested in it?

~~~
mhluongo
If by "heavily" you mean "bought a tiny bit after the January crash" then..
yes!

People should be able to spend their money however they want. That's what
we're excited about.

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amwelles
The linked page says it takes 25 minutes to get your money back, but the FAQ
says it takes only 15 minutes.

~~~
mhluongo
Thanks! Those are both wrong. The barcode expires in 25 minutes, but you can
hit "I'm done" for a quick refund. I'll fix that.

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callesgg
I assume one has to wait something like 10 minutes to stop double spending.

I want coffee now not in 10 minutes.

~~~
mhluongo
To be clear, you don't have to wait 10 minutes- we've just had issues with the
websocket stuff. Refreshing the page works if that doesn't. Unless something
broke, you can pay and get a card in under 3 minutes.

------
stevewilhelm
The volatility of Bitcoin's exchange rate far out ways the ten percent
discount.

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smallegan
Does Starbucks have an API for creating gift cards and transferring balances?

~~~
emillon
It would be a big opportunity for money laundering, so I doubt it.

~~~
mike_hearn
Oh please. You cannot "launder money" with Starbucks gift cards unless you use
a completely ridiculous definition of the term (which occasionally you find
over-enthusiastic regulators doing, but that is no excuse).

~~~
fsckin
If someone buys Starbucks gift cards with dirty money, by selling the gift
card at a discount, you get laundered money back.

It's could be even more advantageous if you sell the gift cards for bitcoins,
which can be sent anywhere in the world and anonymously exchanged for cash in
nearly any currency/country through localbitcoins.

~~~
mike_hearn
That's not how money laundering works.

Let's say you start out with drug money. You would like to get this money into
the banking system so you can use it to buy a house. This is a standard money
laundering problem.

If you turn up at the bank with bags full of cash, the bank will ask where you
got that money from, and lots of proof that it was legitimate. They will also
file paperwork with the government stating that you made suspicious
transactions, or they might just deny you entirely. Obviously, you can't say
"I got this money selling drugs" so you need a plausible explanation - this is
what money launderers do.

So you take your drug money and buy lots of gift cards. Then you resell them
at a discount. What you get back is .... cash (or bitcoins which are
essentially digital cash). So the bank asks you the same questions. Your
explanation is, "I got this money selling gift cards at a loss". This does not
hold water, will not be accepted by the bank and thus does not solve your
problem, or even take a step towards solving your problem.

~~~
Cravatosaur
Lets say instead that you start out with stolen credit card numbers. The story
is the same except now you at least end up with the cash.

~~~
mike_hearn
A legitimate business being abused by carders is not money laundering either.
If that was the case every single online store in existence would be guilty of
money laundering. I've heard stories of some businesses that have seen 30-40%
fraud rates on card transactions at times.

------
bcohen5055
Any plans for branching this out on the retailer side? I can imagine any
business that already has a gift card program in place and wants to impliment
bitcoin payments would be interested in this.

~~~
mhluongo
Yes. Many, many plans.

------
source99
This is great. Why is there any limit to the amount of time I have to keep the
"bitcoin/dollars" on the barcode? I'd rather load it up and use it when
convinient.

~~~
mhluongo
Mostly, I'm worried about trust. The thought was people might be worried that
they paid their BTC for nothing. I'll chat with the guys about this, we
definitely need to look into a better time solution.

The other thing is- gift cards are all about vendor lock-in, and that's
bullshit. Thus the focus on getting your money back in your pocket.

~~~
rch
It might be interesting to approximate how remainders work in Google Now: set
a time _or place_ to trigger a notification on a pending refund, and permit
rescheduling within reason.

------
blackjack48
California (and some other states) allow you to cash out gift cards under $10.
I've cashed out eCards at Starbucks before, so it may be possible to exchange
residual BTC for cash.

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burritofanatic
Wait a second. Is this the same business that was suspended while they were
figuring out legal issues? Anyone know what I'm talking about?

~~~
mhluongo
Yep, check out the other comments.

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elwell
6MB bg image is _too big_

Edit: _was_ too big (they fixed it)

~~~
mhluongo
Haha, thanks! @chris-martin was like "I don't know images!" but then
immediately took care of it.

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josu
Can you use this service in Mexico or Canada? It doesn't seem to be covered
anywhere, or maybe I haven't looked hard enough.

~~~
clp16
Unfortunately we are US only at the moment, but we hope to be able to serve
outside the states soon.

~~~
xrjn
Is this a concept that can be eventually used with other outlets, such as
supermarket chains, or any other reasonably popular services that uses gift
cards? Or am I missing something that is specific to Starbucks?

~~~
clp16
Those are some really good ideas.

Starbucks was good for us for a bunch of reasons, and also hopefully there are
people in the bitcoin community who like their daily Starbucks.

Edit - sentence structure

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c23gooey
Im interested in exactly how you are handling refunds. Can you describe it for
us?

~~~
mhluongo
Sure. @chris-martin explained the math in another comment, so I imagine you're
wondering how we do refunds in bitcoin? The only easy / customer-friendly way
we could see to do that was to request an email address, and send that email
bitcoin via Coinbase. We didn't think BIPS-70 or any other solutions would
work for this, since most people aren't familiar, and the whole purpose of the
refund is to cement trust.

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crousto
I'm sorry to digress, but...

...what's with the 6.3 MiB background image?!?!

~~~
mhluongo
Haha sorry that landing page was a little hasty. Optimizing.

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ForHackernews
10% off in what denomination USD or BTC?

~~~
chris-martin
Yes! (Both.)

You'll end up spending an amount of BTC that is equivalent to 90% of the cost
of your coffee. So, an example: If you choose the $10 option, and $10 is worth
10mBTC (exchange rate made up to simplify the math), then you'd pay 9mBTC and
have $10 available to spend at Starbucks. If you then spend $5 of that at
Starbucks, you'll end up receiving a refund of 4.5mBTC (the equivalent of the
remaining $5).

~~~
mike_hearn
How is that discount funded though? I mean, who is paying the other 10%?

~~~
mhluongo
Right now? Us.

~~~
pbhjpbhj
So you put USD on Starbucks gift cards, sell the code to be used for a drink
and receive the money in BTC. You're amassing BTC from disparate sources but
it seems you'd be paying a slight premium, however you wouldn't need to
register with any exchange.

You do get a pre-loading bonus of bitcoins to play with and you can use those
to generate profits - like 1000 people put $10 worth of BTC on the app, spend
$5 on a coffee then you have $5000 in BTC to "play" with, eg to sell on.

This does all look pretty suspect.

~~~
mhluongo
We do _not_ trade on any reserves from customers like that. We're not the Gox
of gift cards.

------
Xdes
Really excited about the new sidechains concept. Can't wait for the first
attempt.

~~~
untilHellbanned
what's that?

~~~
Xdes
The ability to denominate cryptocurrencies in other cryptocurrencies. It's
similar to having the dollar back by gold.

[http://www.cryptocoinsnews.com/news/adam-back-sidechains-
can...](http://www.cryptocoinsnews.com/news/adam-back-sidechains-can-replace-
altcoins-bitcoin-2-0-platforms/2014/04/10)

------
facepalm
US only I assume?

~~~
mhluongo
It might work outside the States? But the question really is "will US gift
cards work" wherever you are. We've got someone testing in Japan who says
he'll report back.

------
pearjuice
Major plus for your website to feature a Nexus instead of an iPhone. It
instantly gives me a comfortable feeling of professionalism. I like the idea
of the app and its well-executed. However, even if I would get a 100% discount
I wouldn't take it.

Starbucks equals common denominator hyped hipster coffee charged for at
premium rates due to its viral-branding and A-locations. I would rather drink
water from a sprinkler at a toilet-venue nearby than mix myself in the crowd
which is hanging out at Starbucks and let the you-are-our-special-customer
indoctrinated employees serve me a coffee.

[http://bad.coffee](http://bad.coffee)

~~~
mbillie1
I couldn't agree more. Not to mention, in virtually any reasonably sized
metropolitan area there are generally plenty of places that simply make better
tasting coffee.

~~~
mhluongo
Definitely. We're still figuring out how to address the smaller shops, since
they have a variety of payment systems.

------
myrandomcomment
Could we please bring this to a coffee chain that makes good coffee? Peets or
Philz?

~~~
mhluongo
Yes we can- and we are. We started with Starbucks for a number of reasons, but
I can't wait to get Peets in there. Hell, I'd really love to get some good
indie shops- but we've gotta start somewhere.

~~~
myrandomcomment
Great to hear. Thank you!

I love how my real question which received and answer from the company was
voted down. Sorry but Starbucks is not really good coffee. I am writing this
from the Philz in Palo Alto :)

~~~
JshWright
Because you're wrong. Starbucks certainly makes 'good' coffee. Can you make
better coffee? Absolutely. I'm enough of a coffee snob that I rarely get
coffee while I'm out, preferring to make it at home where I can control all
the variables.

That being said... claiming that Starbucks isn't 'good' coffee is just hipster
silliness... Yes, I realize it's mainstream now, and your fedora fits in
better at Philz, but Starbucks coffee is certainly 'good' enough for millions
of people every day, and it seems like an obvious first choice for an
application like this.

~~~
myrandomcomment
42, not a hipster, no Fedora (well I have a VM running it). I like my coffee
in the morning, french press at home (Peet's Garuda). Peet's if I am out and
about and once in a great while when I get a chance I love to make it to
Philz. I have disliked Starbucks coffee before it was cool thank you very much
:)

The comment about Starbuck was a bit tongue-in-cheek, but I guess I can see it
being taken as Hipster fashion.

~~~
listic
Hey, can I have some of that nice coffee you're having? I live in Russia. I
can send you some of Art. Lebedev's (don't know if it's any good, but they
roast their own mix, so you can compare) I can PayPal you the money and you'll
ship me the coffee. You can ship to my US-based P.O. box.

I run Ubuntu on my laptop and CentOS on KVM CentOS VM on a server.

Please drop me a line via email (in profile) or any other means (Facebook et
el.) [http://about.com/nleschov](http://about.com/nleschov)

~~~
jrockway
If you're going to have someone from the US mail you coffee, at least ask for
something good, like Intelligentsia or Toby's Estate :)

Peets is a huge chain that's merely less successful than Starbucks. (I like
both Starbucks and Peets, FWIW, but I wouldn't pay for someone to ship those
to me overseas :)

~~~
listic
Ah thanks. I'm not that into coffee, just wanted to try something new that
someone else likes, at random. Thanks for the suggestion!

