We’ve written about the huge discounts that are coming for Bitcoin users in the future, but this one sounds a bit too good to be true. A new tech startup named Brawker is looking to match Bitcoin buyers with people who are looking to purchase items online with their bitcoins. The way it works is that a person with a credit card will essentially order a product for someone else over the Internet. Once the product arrives at the other person’s home, that individuals bitcoins are then sent to the person who bought the item in the first place. This seems like an awesome deal for anyone who is holding bitcoins, but we’ll have to wait and see if there is a market for people who wish to purchase bitcoins with a huge markup. There is definitely some added convenience when it comes to using a credit card to purchase bitcoins, but the chargebacks and fees associated with credit cards make it an uneconomical choice for bitcoin trading. In other words, there will be Bitcoin spenders lining up around the block to get 7% cash back on their online Bitcoin purchases, but that doesn’t mean there will be people willing to buy bitcoins with a 7% surcharge on the other side of those transactions.
A few different companies have tried to allow customers to purchase bitcoins with a credit or debit card in the past, but there have been mixed results among those who have gone down this road. BTCQuick is perhaps the most successful company in this space, as they were able to sell $2 million worth of bitcoins as of October 2013. After their early success, BTCQuick was eventually forced to shutdown due to many issues related to credit card and ACH payments. Brawker, which is based out of Hong Kong, offers a new twist on this niche market by making a Bitcoin buy order as simple as buying something off Amazon. While the fees are still much higher than what you’d find on a normal exchange, there will likely be a few individuals who are willing to pay a few extra dollars for the added convenience of purchasing bitcoins with a credit card.
Another interesting aspect of Brawker is that it could open the door for buying and selling bitcoins in an anonymous manner. If someone wishes to purchase bitcoins anonymously, all they would need to do is order a product for someone on Amazon. That person would receive the product, and they would receive bitcoins from that individual. This service can also be used to buy items off Amazon in a somewhat anonymous manner, although the two parties will always be connected indirectly through Amazon or any other online store. As a company based in Hong Kong that is not directly tied to the financial transactions of its users, Brawker does not plan to share the personal details of their customers with anyone. Here is what their FAQ says about that very topic:
Does Brawker disclose my identity to anyone else? How about government agencies?
Brawker does not disclose users’ identities. Note that because of its operating structure, Brawker is not a financial institution subject to banking industry regulations.
It will be interesting to track the success of this business to see if it’s something that people will actually want to use. The 7% cash back and anonymity features will be enticing to some users, so it would not be that surprising to see some traffic build up on this site over the next few months. One major issue that could pop up is the usage of this service with stolen credit cards. If someone is trying to sell their bitcoins for products on the Internet while taking advantage of that 7% cash back service, then they need to be careful about doing business with individuals who are using stolen credit cards. During the dispute resolution process, the credit card company could come after the individuals who have decided to sell their bitcoins through Brawker. For a clearer definition of how this new system works, watch their introduction video below: