{"id":237,"date":"2014-06-04T00:17:00","date_gmt":"2014-06-04T00:17:00","guid":{"rendered":"http:\/\/blog.holytransaction.com\/how-purseio-can-shave-25-off-bitcoin\/"},"modified":"2022-03-17T15:45:29","modified_gmt":"2022-03-17T13:45:29","slug":"how-purseio-can-shave-25-off-bitcoin","status":"publish","type":"post","link":"https:\/\/holytransaction.com\/blog\/2014\/06\/how-purseio-can-shave-25-off-bitcoin.html","title":{"rendered":"How Purse.io can shave 25% off Bitcoin buyers\u2019 Amazon bills!"},"content":{"rendered":"
A good startup, they say, should find a problem and solve it elegantly. Well, California-based company Purse.io solves two problems and ties the solutions together in one neat package.<\/b><\/i><\/div>\n
<\/div>\n
(CoinDesk<\/a>) The company is marketing its service at people who would like to purchase items at Amazon using bitcoin<\/a>, which the retail giant doesn\u2019t yet accept. But integral to its solution are those who want to obtain bitcoin using a credit card, perhaps in areas where exchanges are not available.<\/div>\n
By matching these two markets, Purse.io is able to able to offer bitcoin purchases on Amazon, powered by a kind of bitcoin exchange that uses a
\nbuyers\u2019 discount to incentivise bitcoin owners to \u2018sell\u2019 their digital currency.<\/div>\n
This process is similar to a peer-to-peer (P2P) marketplace, where Purse.io acts as an intermediary, offering users the platform, bitcoin wallet and escrow for transactions. Andrew Lee, co-founder of Purse.io<\/a>, told CoinDesk:<\/div>\n
\n

\u201cI think people that try it and realize they just saved 25% on Amazon are excited about that possibility. For the first time, they\u2019ve been able to do something useful with bitcoin [rather than just buy and hold].<\/em>\u201d<\/p><\/blockquote>\n<\/div>\n

How it works<\/h2>\n
Firstly, when someone \u2013 Alice, say \u2013 wants to use bitcoin to purchase items for a discount from Amazon, she deposits bitcoin in her Purse.io account.
\nThen, using a \u2018share\u2019 URL, she imports her Amazon \u2018wish list\u2019 into Purse.io and indicates what level of discount she would like for the items.<\/div>\n
<\/div>\n
When complete, the listing is posted on the Purse.io marketplace.<\/div>\n
<\/div>\n
Next, someone looking to obtain bitcoin for a similar amount, we\u2019ll call them Bob, accepts the transaction and purchases the items on Alice\u2019s wish
\nlist using a credit card. Soon after, the items are shipped to Alice. Once the items have been received, Alice notifies Purse.io, at which point her bitcoin is released from escrow and is sent to Bob (see the company\u2019s explanatory video below<\/i>).<\/div>\n
<\/div>\n
\u201cIt\u2019s kind of like an exchange, but with that Amazon layer,<\/em>\u201d explained Kent Liu, the second founder of the company.<\/div>\n
<\/div>\n
It is worth noting that while there is a recommended 25% \u2018maximum\u2019 discount, in fact, the user sets the amount and transactions have been accepted with discounts as high as 45%. However, Liu explained that there is a \u2018sweet spot\u2019 for item price compared to percentage discount that is likely to make the transaction quickly accepted:<\/div>\n
\n

\u201cAnything below 15% at $500 [total price], […] will get taken.<\/em>\u201d<\/p><\/blockquote>\n<\/div>\n

All about incentive<\/h2>\n
Liu said that he came up with the idea for Purse.io about a year ago, when\u00a0bitcoin\u2019s price<\/a> had risen to a level not previously seen before, and as a result there were a number of new BTC-related services appearing. \u201cPeople were excited to spend bitcoin,\u201d he said. The problem, at least from Liu\u2019s perspective, is that every service charged fees. Why not give people an incentive to unload bitcoin, allowing others improved access to the cryptocurrency?<\/div>\n
<\/div>\n
\u201cIt is difficult to buy bitcoin. It is really, really hard,\u201d said Liu. \u201cOur market is people who cannot overcome that difficulty. [And] the difficulty is not going to decrease that easily anytime soon.<\/em>\u201d Instead of charging bitcoin buyers on Purse.io, the company levies a 1% fee on those selling the bitcoin and getting an Amazon discount.<\/div>\n

Easing bitcoin\u2019s on-ramp<\/h2>\n
Globally, it is still not easy to buy bitcoin. While, in the US, users that have a checking account can easily convert dollars into bitcoin using exchanges like\u00a0Coinbase<\/a>, in many countries, there is no way to convert the local fiat currency into digital\u00a0currency\u00a0without jumping through a lot of hoops.<\/div>\n
\n

The top liquid markets for bitcoin are in USD, EUR, HKD and CNY. Source: Bitcoincharts<\/a><\/i><\/p>\n<\/div>\n

Doing so might mean exchanging one fiat currency into USD, then wiring it to a company such as\u00a0Bitstamp<\/a>, which will exchange it into bitcoin. At every step of the way a fee is charged. However, someone with an international credit card can purchase items on Amazon from pretty much anywhere.<\/div>\n

Spending credits<\/h2>\n
So, essentially, anyone living in a country that does not have a viable bitcoin exchange could be a potential customer for Purse.io. It\u2019s a better value proposition to for many, and furthermore, the fact that affiliates of Amazon receive a certain amount of credits that must be spent on the website may boost take-up of the service. Someone in India, for example, may want to convert those credits into bitcoin rather than Amazon items, or even rupees.<\/div>\n
<\/div>\n
\n
\"Purse.io

Purse.io founders Andrew Lee (left) and Kent Liu (right).<\/p><\/div>\n<\/div>\n

\nRelying on Amazon<\/strong><\/div>\n
So what would Purse.io do if Amazon shut them down? The founders have thought about that, but believe that for the time being they are
\nproviding a service that is in demand. \u201cWe think we\u2019re helping [Amazon],<\/em>\u201d said Lee. \u201cThey don\u2019t want to take bitcoin now. They\u2019re not ready for it.<\/em>\u201d<\/div>\n
In April, an Amazon executive said that the company decided against accepting bitcoin\u00a0due to weak customer demand<\/a>.
\nFurthermore, there is added complexity for the company compared with other retailers that currently accept the digital currency.<\/div>\n
According to Purse.io, Amazon\u2019s marketplace strategy is problematic: having so many third-party sellers, a good portion of products on the retailer\u2019s
\nwebsite are not sourced from Amazon itself, creating complexity that the likes of TigerDirect and Overstock don\u2019t have to deal with.<\/div>\n
\u201cI don\u2019t think we\u2019ve seen a real big retailer accept bitcoin that has a marketplace,<\/em>\u201d Lee explained.<\/div>\n
<\/div>\n

Trustless escrow<\/h2>\n
Although Purse.io provides a wallet for users to store the bitcoin they have acquired, Liu said the company would prefer to not store substantial customer funds:<\/div>\n
\n

\u201cRight now, we are holding people\u2019s money. But we don\u2019t want to do that.<\/em>\u201d<\/p><\/blockquote>\n<\/div>\n

However, by holding funds until the Amazon items are delivered, Purse.io has positioned itself in the digital currency escrow business, which could be a promising strategy. A recent FinCEN ruling indicated digital currency escrow is not a money transmission business<\/a>, which is likely to mean less regulatory scrutiny for the company as more authorities issue guidance. In the future, the company plans to offer multi-signature transactions that have three keys: one for the buyer, one for the seller and one for Purse.io, creating a trustless form of escrow.<\/div>\n
<\/div>\n
\u201cNone of us hold enough keys [in this model],<\/em>\u201d said Liu. \u201cNobody has control over [the funds], unless two people agree.<\/em>\u201d<\/div>\n

Building a footprint<\/h2>\n
For several months, Purse.io has been working on its product at the Plug and Play Technology Center<\/a> in Sunnyvale, California, since being accepted as one of several bitcoin startups in its accelerator scheme.<\/div>\n
At a recent bitcoin meetup at the centre, which provides assistance to new tech startups, the company talked to Patrick Murck, General Counsel of the Bitcoin Foundation.<\/div>\n
<\/div>\n
\u201cHe told us we\u2019re pretty good from a regulatory standpoint,<\/em>\u201d Liu said.<\/div>\n
\n

Lee and Liu have now brought in some extra hands as far as development goes and they hope to raise more funding, in addition to the seeding that Plug and Play provided.<\/p>\n<\/div>\n

The plan is to focus on product and building out the multi-signature escrow, with the possibility of adding further retailers and building Purse.io\u2019s own marketplace with the userbase it is developing. Amazon will likely, at some point, accept bitcoin. Until then, though, Purse.io is going to take advantage of its growing following, said Lee:<\/div>\n
\n

\u201cWe\u2019re generating that userbase as long as this Amazon window is open. At the same time, we\u2019re continuing to develop new services we can offer to these users.<\/em>\u201d<\/p><\/blockquote>\n<\/div>\n

Open your free digital wallet here<\/a> to store your cryptocurrencies in a safe place.<\/p>\n","protected":false},"excerpt":{"rendered":"

A good startup, they say, should find a problem and solve it elegantly. Well, California-based company Purse.io solves two problems and ties the solutions together in one neat package. (CoinDesk) The company is marketing its service at people who would like to purchase items at Amazon using bitcoin, which the retail giant doesn\u2019t yet accept. 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