The solution taps the Bitcoin Blockchain as the payment rails, and tiny fractions of bitcoin to pay the fees required to ride these rails.
Gyft is using Chain’s enterprise asset issuance and management platform, co-signing service, and development sandbox. Currently the platform integrates with the Open Assets Protocol, an open source protocol, and over time will also support other asset issuance protocols.
Adam Ludwin, Chain.com founder, blogged:
Blockchain issued digital gift cards will lower costs, reduce fraud, and provide merchants and brands with new marketing opportunities. These dollar denominated digital gift cards are powered by the Internet and open protocols, and the experience of using one will be familiar to anyone who has paid for something with a smart phone. The fact that bitcoin is being used as the enabling technology under the hood will be invisible to end users.
Through this service, a typical gift card will only cost a few cents over its lifetime, according to Ludwin. This cost savings is partly a result of the multi-signature private keys securing the digital asset itself, as opposed to plain text codes which can easily be stolen, and dramatically reducing fraud.
Ludwin also noted:
And since block chain issued gift cards will, over time, interoperate with other digital assets like points and coupons, consumers will experience something new at checkout: their wallets will automatically detect which digital assets they can use to pay and then construct a single transaction with multiple inputs. For example, you could scan a merchant terminal with your smart phone and see all the available gift cards, coupons, points, and credits that the merchant accepts. Simply select the ones you want to spend and pay in a single tap.
Customers will apparently over time be able to trade cards more easily, move them seamlessly between different wallets, and more consistently track their balances.