Purse.io has become one of the most popular use cases for Bitcoin, as the web app allows users to save 15 percent or more on their Amazon purchases. Although this discount is obviously attractive to pretty much anyone who shops online, not many people understand what makes this discount possible.
Amazon Gift Cards Make Purse.io Possible
On the Purse.io platform, one user sends bitcoins to a second user, and that second user purchases something via Amazon on the first user’s behalf. Most of the time, the Amazon purchase in this setup is made with an Amazon gift card. Essentially, people are able to save 15 percent or more on products sold by Amazon because there is so much demand for exchanging out of Amazon credit and into bitcoin.
During his recent interview on the Bitcoin.com Podcast, Kent Liu explained this key point:
“The reason the discounts are so high, as we’ve discovered, is that there’s a huge pool of Amazon gift cards outstanding. There are a lot of people who essentially make a living by getting paid in Amazon gift cards.”
Later in the podcast, Liu claimed that the Amazon gift card market is in the tens of billions of dollars. This would mean the Amazon gift card marketcap is actually much higher than bitcoin’s own market cap (currently around $6.6 billion).
Who Earns a Living in Amazon Gift Cards?
In addition to the countless number of people who receive Amazon gift cards for Christmas every year, there are also a good number of individuals who earn Amazon credit as their main source of income. Kent Liu explained:
“These people may be mechanical turks, [where they earn] pennies for these minute tasks, and they maybe rack up $5 an hour. A lot of these mechanical turks are in countries like India where payment is a huge issue.”
Liu also explained that the default options for Amazon Mechanical Turk payouts are Amazon credit or physical checks. It can sometimes take an individual months to get paid by check (if it doesn’t get lost in the mail), and Amazon credit can be difficult to liquidate in some parts of the world.
Other Options Before Purse.io
Purse.io Co-Founder Kent Liu also discussed the process some Mechanical Turk users go through to get paid:
“Previous options may include something like racking up some credits, buying two iPads, getting them shipped to India, and selling them to a local pawn shop. That is a pretty expensive process. They’ll have to pay a huge shipping fee, it might get lost, [so the money from the pawn shop is not guaranteed].”
This gets to the main value proposition that Purse.io offers the “other side” of Amazon orders made on the platform. Liu summarized, “What we offer is a much quicker way to liquidate Amazon gift card balances. As a result, Bitcoin users . . . are able to save money on Amazon.”
Of course, every counterparty on Purse.io is not someone in India who makes a living off of Amazon Mechanical Turk. Kent Liu gave one other example of the type of user who is willing to purchase bitcoin at rates much higher than what’s found on exchanges:
Via Purse Instant, the company behind the platform can also act as a counterparty for Amazon purchases. This method offers an automatic 5 percent discount on Amazon orders and provides Amazon Prime shipping rates at no added cost.
Kyle Torpey is a freelance writer and researcher who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, NASDAQ, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.