How do crypto gift cards work?

A crypto gift card is a prepaid card or digital code that someone buys with dollars and that is later swapped for cryptocurrency. Many work like a store gift card tied to one company, so the card only redeems inside that company's app or account.

How does a bitcoin gift card work?

The buyer pays a dollar amount, either online or at a store, and receives a card number and PIN or a printed code. The recipient then enters that code with the issuer to claim the crypto.

Fold, one US company that sells bitcoin gift cards, illustrates the usual design. Its cards range from $25 to $500 and are sold online and at participating retailers. The bitcoin value is locked in at the market rate when the card is redeemed, not when it was bought. Fold says processing fees may be taken from the card balance, and that the fees can change.

How do you redeem a crypto gift card?

Redemption usually follows the same steps:

1. Install the issuer's app and open an account.
2. Pass identity checks, often called KYC, if the issuer requires them.
3. Enter the card number and PIN, review the amount and confirm.
4. Keep the crypto in the app or send it to your own wallet.

Fold, for example, only redeems in its own app with a verified account. After that the bitcoin can be sent to any bitcoin address. If a user cannot finish registration, Fold says the balance can be claimed in dollars instead. Moving coins into your own wallet is covered in how to send and receive crypto.

Can you buy crypto with gift cards?

Not on Coinbase, for example. Its list of payment methods for US customers covers bank transfers, debit cards, PayPal, Apple Pay, Google Pay and Samsung Pay, with no gift card option.

Trading store gift cards for crypto often happens on peer-to-peer marketplaces, where strangers swap with each other. That market has long attracted fraud. In 2019 the peer-to-peer platform Paxful said gift card fraud was far higher than other payment types and added identity checks as a result, Decrypt reported. Gift card payments cannot be reversed like card payments, which makes them attractive to scammers.

How do crypto gift card scams work?

The FTC says no real business or government agency will ever tell you to buy a gift card to pay them. Any request to read out a card number or PIN is a scam. Common stories include fake tax agents, fake tech support, prize fees and romance scams. The FTC also says only scammers demand payment in cryptocurrency, and crypto payments usually cannot be reversed.

If you gave a scammer gift card details, the FTC advises contacting the card company straight away to ask for a refund, keeping the card and receipt, and reporting it at ReportFraud.ftc.gov. More patterns are in common crypto scams.