Cellblocks Wants to Put Cryptocurrency Behind Bars

A digital payment system called CellBlocks wants to use blockchain to change the way America’s prisoners receive money and use it behind bars.

U.S. inmates typically aren’t allowed to hold cash, but they can receive funds into commissary accounts that can be used to purchase items such as snacks, personal hygiene products and stationery. Funds can come from friends and family on the outside or from wages for prison work.

But third-party processors that enable transfers from outside charge a lot. For example, JPay charges an $11.50 fee to send $100 by phone to an inmate at the Louisiana State Penitentiary. JPay, which describes itself as the fastest such service, says transfers post within one business day.

“We don’t want to give tokens out to people who are looking at making a profit, so we’re going to raise money from private investors,” Brown says. “We want inmates to be able to control it.”

According to a recent report from Prison Policy Initiative, incarcerated people spend an average of $947 annually at prison commissaries. In 2014 Time Magazine reported on the high fees charged by companies such as JPay.

Tokens as Prison Currency

This is where Castle Rock, Colo.-based Cellblocks says it can help. By using a blockchain-based system, this startup says it can dramatically reduce the processing fees and times and also allow inmates to send funds securely to other inmates. Because inmates typically can’t possess cash, black-market economies develop in which prisoners trade contraband or commissary items. Cellblocks’ system would allow them to give each other “official” funds that could be used at the commissary.

There are benefits for correctional institutions, too. They can pay inmates wages for prison work using Cellblocks’ CLBK tokens “recycled” from the commissary’s account, Jonas Brown, CellBlocks’ founder, tells ThirtyK.

They can also gain insight into how inmates are transferring funds to other prisoners, he adds: “If we see Joe Blow is paying out a big chunk of money to [another inmate] we know to keep an eye on it.”