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.
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.
> 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.
Yes. The IRS and FinCEN are sister agencies, so the pronouncements of one agency have little effect on the other. In this case, for IRS (i.e., tax) purposes, bitcoin is property. For FinCEN purposes, bitcoin is a "virtual currency" which results in many but not all of the same rules that apply to persons dealing in real currencies.
The short answer is a combination of all those things, plus some help from our partners. The economics is also pretty interesting. Happy to go into more detail over email :)
I think you would gain more by sharing and collaborating on the methodology than you would lose on potential copy-cats (or whatever your concerns are).
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.
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?
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.
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
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.
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.
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.
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.
Not an economist, but my understanding is that that is why central banks adjust interest rates - to encourage people to spend their cash now or even borrow more (decreasing rates) or to hang on to it (increasing rates).
I'm not an economist, but economists are not good at speculating either, looking at the results: As a a team, economists failed to preview every single financial crisis. Only after the shit hits the fan, media goes back to the few who were able to predict the crisis. There are always solitary birds singing out of the chorus. The chorus never get it right though.
To your statements now:
1) That's true, but doesn't mean anything if you put it out of context and the context might very well change in a couple of years. Crypto-currencies are evolving now, new ones are created trying to tackle bitcoin's flaws. Now seems unlikely but in the future some might be more successful than bitcoin. It's a new sector.
2) There no central governing body, but an investor with a big amount of bitcoin (say 2% of the total) might easily drive the price up, down or side-ways. It's like a financial (assets) market really, a little bit of miss-information and a massive dump of bitcoins will turn the price down at once.
It doesn't make any sense for a merchant to accept bitcoin if:
1) He is not the guy holding a huge bitcoin portofolio or plants too. Say Starbucks as a corporation starts accepting bitcoin today, in 6 month does a massive investment in the bitcoin market. If the investment is big enough the price will go up (supposedly).
2) If they have some inside information which allows them to predict with an acceptable risk the future price of bitcoin.
Other than that - and I'd go for that theory - it doesn't make sense. It's just a marketing trick. They are not expecting big amounts, just very small amounts because as you said bitcoiners are basically short or long term hoarders. But I'm sure they are ready to absorb any bitcoin drop up to a point, but not further. So I'm positive they wouldn't accept 20% of their turn-over being on bitcoin (if they are not feeling suicidal).
Your point #2 doesn't really work. You can manipulate the market in the short-term but you can't control the inherent value of the currency. Fiat currencies issued by governments can do that because they can literally just print or destroy money through monetary policy.
And I'm talking purely about bitcoin. I'm a lot more bullish on the future of crypto-currencies in general, but bitcoin has a lot of flaws that are probably deal breakers at this point.
Not really. If A. Shamir's paper is correct, that 98% of BTC belong to 2% of portfolios, then sure as damn they can manipulate the market short-long-for ever term...
> As a a team, economists failed to preview every single financial crisis.
That's a bit of a fallacy, because economists are not just passive observers of the economy. If there is broad agreement that something is wrong, they can recommend policies to fix or mitigate it.
It's like saying your system administrators failed to warn about every single unscheduled service outage. It's probably true, but that says nothing about how many outages they anticipated and prevented.
> It's like saying your system administrators failed to warn about every single unscheduled service outage.
What you're saying is that 1933 and 2008 was an unscheduled service outage to you. I don't really think so.
Let's take another outage that happened this year to the Nobel Committee: This year's Nobel Prize for the economics went to three economists, Eugene Fama and Lars Peter Hansen from Chicago (I hope Friedman rings a bell) and a third guy called Robert Shiller from Yale.
The thing is that the first two are renowned neo-liberals. They took the Nobel prize for their theory called EHM[1], which states that the markets always now better and to make a long story short "all you have to know about a product, it's written on the price tag". Which is of course is not true. Fama was the guy who made the 2008 wall-street meltdown possible. A meltdown that tax-payers still pay and will pay for the years to come. So does really this guy who had a prominent role in loosing financial restrictions which led to the 2008 crisis really deserves a Nobel? Are his theories real? I believe the result is there for all of us to see: Hardly, if the state has to intervene to save the financial market then apparently, is not as efficient as Fama thought it would. It does not auto-adjust.
The third guy though is famous for stating the exact OPPOSITE from the first two! Which is that the market doesn't regulate NOTHING (otherwise moody's, S&P and many others would be out of business today, giving triple A's to Lehman's products till Lehman crashed). Robert Shiller has become famous in economic circles by consistently disproving professor's Fama's theory!!! It's insane!
So why did they gave a nobel to two guys who say something and a guy who became famous by disproving the first two??? I mean it must one or the other right?
Welcome to the beautiful world of economists (and not economics).
PS: I studied economics in Milan (Bocconi) from 1999 to 2003 but had to go home (change country) due to a health problems. Didn't like it much though...
I'm saying that it's invalid to measure mainstream economics by looking at major crises and asking "how many of these did they foresee". A meaningful analysis would have to consider whether they foresaw and prevented any crises.
I don't see how the Nobel Memorial Prize is relevant to that point. If I had to guess, I'd say they got it jointly because developing the theory and giving it a formal definition was an import precursor to testing it empirically, and that seeing whether or not it holds in a given market is useful for analysis. Remember that this is a prize for science.
My gut feeling is that, bitcoin usage will take off in other use cases, maybe like digital transactions or restricting the use of money for certain things (like color coins).
this is an example of where I'd love to see the new HN mods close off-topic threads. No offense the parent, but your general musing on the feasibility of Bitcoin - amount to thread jacking given the original topic above
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?)
I work at a Starbucks. The scanners are usually customer facing and all the barista needs to know is that you are going to pay with an app on your phone. As long as there are no complications I doubt the average barista will know or care exactly how you paid. As for the crowd sourced gold card, Starbucks' loyalty program gives you a special card after 30 transactions (Gold Card), once you hit that level, you get a free drink or food item. Every subsequent 12 transactions earns another free drink or food item. These would obviously be earned very quickly if multiple people are using the same account. However, I feel that if this is the way this app works, that it opens itself up to both Starbucks shutting it down quickly and user exploits. You could just generate your own image of this accounts barcode and use it whenever you'd like. The worst that would happen is that the barista would inform you that there wasn't enough money on the card, or that it was an invalid account, something that happens often. So I doubt this is the case with this app, I am interested in how they are running this though.
Edit: Up above it is mentioned that each customer gets their own account. So this isn't an issue.
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?
As long as it scans, they're happy. I saw someone pay with an image of their barcode on a smartwatch and the baristas were going nuts over how cool it was.
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.
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).
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.
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.
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.
I am involved with a company that deals with micro rewards. I am trying to get more info from my co founder who actually deals with it. I am guessing you are based in ATL. Email or tweet me. I am following you.
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.
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.
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.
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.
Actually, I think this model is a step forward for btc transactions in general. Getting the details worked out 'in the wild' like this should net them a compelling platform to build from down the road too.
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.
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?
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.
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).
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.
Hm... not sure how long we'll keep it up. The discount is a promotion, but I imagine we'll keep it in some form as marketing for the product. 10% is a nice number, but we'll test it. As pointed out in other comments, it beats Starbucks's own program, which I like.
We can afford the discount by saving money elsewhere. No credit card fees, etc.
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.
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.
LOL. I'm not a Starbucks drinker either- I love the imagery.
I definitely want to work with indie shops. It's a numbers game, though- I'll need shops that are interested to step forward and put in some extra effort for this to happen, because we do a lot better / get more people using bitcoin with larger merchants.
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.
Just look at that picture. Solid lines. Tight interface. Smoking black. No bloatware, glossy stuff, extremely rounded corners or thick bezels. Pure business.
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.
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 :)
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.
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.
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
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 :)
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.