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Gyft CEO Wants to ‘Tokenize’ Gift Cards on Bitcoin Blockchain as Colored Coins

By Kyle Torpey Mar 20, 2015 8:05 AM EDT

Real Estate Smart Property

Earlier this week, CoinDesk’s Pete Rizzo reported on Gyft CEO Vinny Lingham‘s appearance at this year’s SXSW conference. Lingham was featured on a bitcoin-related panel with Boost VC Founder Adam Draper, Chain Founder Adam Ludwin, and Changetip Founder Nick Sullivan. It was during this panel that the Gyft CEO announced his companies intentions to “tokenize” gift cards and issue them as colored coins on top of the bitcoin blockchain.

[Read More: TREZOR Now Colored Coins Compatible]

Issuing gift cards as colored coins

Colored coins are a way to tokenize bitcoins for other uses. For example, you could say that a particular bitcoin represents $1000 in a vault somewhere, a deed to a house, or in this case a gift card. Once you tokenize a bitcoin, the value that it represents can then be transmitted across the world in the same instant and secure manner as a normal bitcoin. Lingham noted, “We can use this technology to make sure that consumer gift cards are protected, that counterparty risk is managed, and that it’s compliant.”

How will this work?

At this point in time, it’s unclear how Gyft will be implementing their colored coins-based solution. Coinprism and Chromawallet are two platforms that can be used to issue colored coins on top of the bitcoin blockchain right now, but it seems that Gyft may be creating their own solution. Lingham has let it be known that he’s filed patents related to this new technology, which is currently in the research and development phase.

In reality, any company who wanted to issue a gift card on top of the bitcoin blockchain right now could do it with one of the currently available colored coins wallets. It should be noted that Lingham is an advisor to Chromawallet, so it wouldn’t be surprising to see that particular colored coins project work closely with Gyft on this new concept; however, there is no indication that such a partnership has been created at this time.

A non-monetary use case for bitcoin

An interesting side note to this story is that colored coins are one of the main non-monetary functions of bitcoin that provide bitcoins with a bit of fundamental or “intrinsic value.” One must own some bitcoins if they wish to issue colored coins via the blockchain, and transaction fees still need to be paid to bitcoin miners every time those coins change hands. There are many economists and financial pundits who believe that bitcoins are nothing more than digits on a computer screen, but these sorts of use cases show that the technology can be used for more than just moving bitcoins from one address to another.

[Read More: Some Non-Monetary Functions of Bitcoin]

Having said that, it’s unclear if gift cards are the type of virtual good that need to be issued on a decentralized ledger. The distributed trust model offered by bitcoin is extremely valuable in certain situations, but that decentralization also comes at an added cost. On the other hand, outsourcing the security of the ledger is one of a few possibly overlooked advantages that Chromawallet’s Alex Mizrahi (also known as killerstorm) has pointed to in the past. It seems that Lingham believes there are certain advantages to issuing gift cards on top of the bitcoin blockchain, so perhaps we’ll have to wait and see what they come up with before jumping to any conclusions.

You can follow @kyletorpey on Twitter.

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  • Agreed. I prefer the term fundamental value, which is why I had intrinsic value in quotes. There are a few uses of bitcoin (such as colored coins, proof of existence, etc.) that provide it with fundamental value. The rest of the current valuation comes from the view that it is money or could become money.

  • GoodNPlenty333

    You have described an intrinsic *property* of Bitcoin, one that many humans will *probably* find useful, but there is no law of physics that states that humans must assign *value* to a particular property or feature. We do so arbitrarily according to our own whims and desires.

    I agree that Bitcoin has fantastic intrinsic properties, which is why I own some, but “intrinsic value” is an oxymoron because value is assigned by the psychology of the human mind, and as such it is subjective, and destined to change, which is the literal opposite of the word “intrinsic”.

  • Milly Bitcoin

    That is not intrinsic value.

  • Betty Blue

    Color coin is a concept to use the bitcoin blockchain as a store of value…to transfer ownership from ne person to another much like the US dollars. At one point US dollars were backed by gold, now they are not. The above is much more than attaching value to Bitcoins, it is immediate liquidation of any asset with minimal transaction costs. If that does not have intrinsic value then I am not sure what does

  • Guest

    Color coin is a concept to use the bitcoin blockchain as a store of value… much like the US dollars. At one point US dollars were backed by gold, now they are not. The above is much more than attaching value to Bitcoins, it is immediate liquidation of any asset with minimal transaction costs. Perhaps a basic course in economics might help

  • Betty Blue

    Color coin is a concept to use the bitcoin blockchain as a store of value… much like the US dollars. At one point US dollars were backed by gold, now they are not. The above is much more than attaching value to Bitcoins, it is immediate liquidation of any asset with minimal transaction costs.
    Just curious…what is a certified bitcoin professional? Did not know they were handing those out

  • GoodNPlenty333

    >Almost nobody uses such a definition

    The truth is the truth, regardless of how many people acknowledge it. Bitcoin, like everything else, has intrinsic properties, but not intrinsic value. These unique properties are what drive some people to value Bitcoin. There is no other scarce commodity that can be securely transferred to anybody else in the world without a third party via the internet. This is an intrinsic attribute of Bitcoin, and its no different than the intrinsic properties of Gold, which make it non-corrosive, malleable, shiny, etc. Attributes are attributes, and humans arbitrarily decide which attributes are valuable, and which are not.

  • Milly Bitcoin

    Almost nobody uses such a definition. All this nonsense being spouted by pro and anti-Bitcoin people is why many people shun Bitcoin before they understand it.

  • GoodNPlenty333

    >Anyone with basic education in finance knows Bitcoin has no intrinsic value by design and it never will have intrinsic value.

    Anyone with basic education in finance knows that there is no such thing as “intrinsic value”, as the phrase is an oxymoron. Value is a creation of the human mind, and as such, couldn’t be further from the definition of “intrinsic”.

    The value of all things varies based upon whatever the hell us humans arbitrarily decide to value, and nothing is immune from the potential of having zero or near zero value.

  • Milly Bitcoin

    I am Russ Smith. I have a master’s in physics and a double major in Physics and Computer science from Rutgers. I worked on research for explosives detection systems and I worked on systems engineering/Information security for large scale air traffic control system. I also have had a CISSP certification for about 13 years. I also am a certified Bitcoin professional.

    I support Bitcoin but that does not mean I agree with many of the ignorant and uneducated Bitcoin cultists that misrepresent what Bitcoin is because they are linking some fantasy political agenda or engaged in crazy conspiracy theories. Anyone with basic education in finance knows Bitcoin has no intrinsic value by design and it never will have intrinsic value. That is a feature and not a bug as it is necessary for a decentralized system.

    “Troll” is a term used by teenagers to complain about people who don’t agree with them. Obviously nobody is paying me to post and that is the kind of crazy things you get from ignorant cultists.

  • Todd Bethell

    Pay no attention to the troll ‘Milly Bitcoin’, a long time paid drone.

    Definition of ‘intrinsic value’ http://en.wikipedia.org/wiki/Intrinsic_theory_of_value

    Continuing the religious analogy: ‘Milly Bitcoin’ is self identifying as a drone of the state controlled religion who is incentivized to attack bitcoiners freedom of religion.

    Tell us who you really are ‘Milly Bitcoin’.

    Todd Bethell, CFM, MBA
    toddbethell@fastscanning.com

  • Milly Bitcoin

    Bitcoin do not have “intrinsic value” and they never will since it is that way by design. Only cultists who misrepresent Bitcoin make that claim.

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