Into The Fold
by Will Reeves
January 31, 2020
frank | I’d like to talk about how you found yourself at Fold, and the idea of incentivizing people to use Bitcoin.
WR | I've been working in technology, specifically building payments and consumer facing products, for a while now. I've been a founder creating startups around different ways of transacting. My first one was a recurring payments platform to allow anyone to Amazon Prime their business, give certain perks to your subscribers. From there, I spent time building out the Google store, another great example of creating great checkouts and great content to support Google's answer to the Apple store. Then I moved on to building peer-to-peer marketplaces where people can exchange goods without middlemen. Whether that’s their car or a house – high value transactions that require quite a bit of trust, and right now there’s quite a bit of infrastructure to support those types of transactions. How can we do that in a way that brings it to a place between just two people in a way that keeps everyone safe and happy and secure?
My work has always been around building consumer products that introduce new ways of transacting. Whether it’s the idea that you pay for a service on a subscription on a recurring basis as opposed to one offs, or how do we do exchange in a peer-to-peer way as opposed to relying on middlemen, and how do we create new retail stores that are able to capture attention in a very crowded market.
I consider Fold a consumer first business. It's introducing new forms of payments and rewards to people that can give real benefits in people’s everyday lives. It just happens to be based a lot around Bitcoin. I've had an incredible history with this asset, learning about it, using it, seeing it being used in various circumstances that really point to the promise of it as a technology and a social phenomenon, and Fold is really all about accelerating that.
It’s about making it easier for more people to start learning about and start accumulating Bitcoin. The way we've chosen to do that is through rewards and payments. Everyone spends money every single day and there's an existing pattern of earning rewards for spending. We have taken that existing pattern and are introducing a new paradigm with a new asset, a new type of money to people in a way where they don't have to purchase it. They don't have to go through onerous KYC or go to an app that looks like a casino with money being made and lost, it’s a low commitment way to start learning about an asset which I believe can change the world.
You don’t even need a wallet to participate in Fold?
Our whole approach is to meet merchants and consumers where they are today. What do we know about consumers? They have a credit card or a debit card, which they spend with every single day. We have merchants that have existing POS systems, so Fold works in that reality and meets both consumers and merchants where they are today. With Fold, a consumer can download the app, load in their credit card or debit card, and they purchase credit at these retailers. Amazon, Uber, Starbucks – they might buy $50 worth of Starbucks credit that they spend down and earn 5% back in Bitcoin on that purchase. That Bitcoin is instantly deposited to their Fold account, which they can use on a future purchase or they can withdraw to a wallet. We are changing the whole idea of onboarding.
It used to be that to onboard into Bitcoin, you would need someone to, number one, go to an exchange where they can actually buy Bitcoin. They'd buy it, they'd go through the KYC, submit all their personal sensitive data, load a payment method, they would then buy some Bitcoin and then maybe get a wallet, set that up and then send that Bitcoin from that exchange to that wallet.
The only utility being experienced is just taking a risk on something unknown and new for them.
Fold changes the whole thing saying you don't need a wallet now. You don't need to buy Bitcoin now. You don't need an exchange. All you need is this app and you're going to be passively earning Bitcoin on every purchase. This gives Fold the opportunity to help people accumulate this asset, learn about it, and then when they're ready, we can suggest the right wallets that make it easy for them. We can help them use that Bitcoin to send it, to spend it, to save it – whatever pathway that user thinks is best for them.
Why are you so interested in promoting Bitcoin?
I think Bitcoin specifically is an unprecedented experiment that's happening in real time that I don't think many people understand the magnitude of.
A monetary system that is globally accessible to anybody, with a playing field that is equal for everybody.
The idea that no matter where you live or what you do, you can participate in an economic system where the rules are transparent and it cannot be manipulated by economic misfortunes of a certain country – really all of the problems that we've seen with mismanaged economies around the world. It is, in my opinion, an experiment that is very deserving of attention and focus. I want to do everything to help see this experiment through. However, I would say we're already at the point where this is looking a lot less like an experiment and more like an actual thing. An alternative system is starting to arise.
And why do I think that's great? Well I believe it gives individuals more freedom and ability to transact without censorship. I think it opens and makes our world a more connected place. It is more forgiving and open to people of all backgrounds, regardless of where they're from.
It’s hard for many people to wrap their heads around – both technologically and theoretically. Do you feel the barrier to entry is beatable?
I think on the macro level, Bitcoin is money. It can be sent to anybody, you can use it to buy things, you can put it away and, and use it as a savings just like the dollars in your savings account. Now, there are some differences – and that's because Bitcoin is the first successful native digital currency created. That requires new infrastructure, new wallets, new behaviors to arise to be able to make that money usable. What we're seeing right now is not a thing of insurmountable user experience challenges to get people to use Bitcoin. It's that we're actually building that infrastructure now. You can imagine the way you used to use your email back when that email provider first started.
They were certainly not the Gmail of today, but the Gmail of today will come and that will be ready for Bitcoin.
You're catching it at the time where the infrastructure is just starting to be ready for mainstream audiences to start to use. At the same time the idea of Bitcoin is being more and more solidified in mainstream people's heads as something real. It's been around for 10 years, it was the highest performing asset over the last decade. It's having some incredible use cases that have proven out several different values for it. But, at the end of the day, it's just money.
Imagine building our current monetary system from scratch. You have to build the banks, you have to build ways for people to loan money, send money, receive money. Think about how you have to send money.
You have to have many layers of infrastructure to get from Fort Knox to Venmo.
All those things take time to develop and come to fruition. The interesting thing is that Bitcoin is different enough from our existing types of money that you can't just take a carbon copy of what we have in today's world and adopt it for bitcoin. Bitcoin has some very different things about it that are really great, but the infrastructure still needs to be built for it. When I really look at this stuff, it's just about the time horizon, I’m confident that all of the UX problems and engineering issues will be solved. That's not a doubt in my mind. It's just going to take some time to do so.
Blockchain will be able to move as quickly as Visa or MasterCard. It could run that many transactions that fast.
Yes. You know, when we think about crypto or Bitcoin there's many ways people have decided to judge the success of it as an asset. Initially what it was created to be an alternative money that wasn't controlled by a government. It wasn’t created to have a transaction throughput as fast as Visa or MasterCard because that's not what Bitcoin is. Bitcoin is the fundamental underlying money, it’s more like the treasury system than Visa and MasterCard. What we're building now are the credit card networks and banks of Bitcoin.
You start to see how even our existing traditional system is just layers and layers of different structures and operations to eventually get to a Visa. Really Bitcoin is going through this evolution. It has the raw material at the base and now what you're seeing is the infrastructure built on top of it that you will begin to recognize. How to use it, to spend it, to save it, to earn it to, to earn interest on it – all that is what we're currently building on top of what is fundamentally just a new type of money.
Regardless of theme when we look to big new ideas that fundamentally change existing infrastructures, like solar or wind replacing coal and gas, there’s an idea that a) regulation stifles innovation and b) new is good – especially when replacing something suspect. Money is central to so much of our lives, what’s keeping crypto ‘good’, why do we think Bitcoin replacing Fiat currency is definitively good?
Technology is fundamentally amoral and apolitical. However, it can be used in ways that promote certain morals and politics. Anytime we are looking at a new technology, I think you have to start from that perspective. If it wins and does take over, it will produce a whole set of new challenges, new inequities, new benefits, and new opportunities. The only thing that's going to change and decide whether it goes one way or the other is the people who are building and using it every day, and what they build it for. We can kind of see how Bitcoin would work because we've actually had periods of time where we've seen the qualities of it.
Bitcoin is peer-to-peer cash and we've actually had peer-to-peer cash for a long time. It can be exchanged privately amongst individuals. It can be used for whatever purpose you want. We know what happens when you have that. But, physical cash is increasingly being eliminated as a form of currency. Across the world the use of physical cash is going down, and it seems that that trajectory shows no signs of stopping. Physical cash gives us certain freedoms and ability to transact with one another, and that freedom is potentially going away in favor of more closed controlled systems that have much more restrictions.
In some ways Bitcoin is about reclaiming the freedom of peer-to-peer transactions that we’re accustomed to.
We know what that is like, we know the freedoms afforded by it and the problems afforded by it. Bitcoin is saying, okay, if we are outlawing physical cash, Bitcoin can preserve the fundamental qualities that we have been able to enjoy with physical cash. We can think of bitcoin as a brand new technology, but also as a new technology that is securing older freedoms; it’s not an unknown future. We know that Bitcoin, like cash, can be used for good and for bad – the funny thing is a lot of criticisms can be equally applied to U.S. dollars and so you start to think about it, we actually have a really good blueprint of how it will work.
What we don't have a good blueprint for is what if Bitcoin doesn't exist and physical cash goes away? All of a sudden we have ceded an entire area of rights and freedom of transaction to corporations and governments that have the ability to censor all activity. In my mind, not doing something, not supporting a project like Bitcoin, is in fact leading to an unknown world, that has negative impacts that we haven’t seen before.
Do you think Bitcoin will stabilize enough to be used every day?
Right now, Bitcoin is volatile because people don't know how to value it yet. Some people look at it as digital gold where you don't use it, some people do believe it can be used as a form of digital cash, others see it more like real estate. Others think Bitcoin could become the standard of a new global monetary system. All three of those things address different markets with very different capitalizations.
You have the real estate industry, you have gold, you have payments, all of those are very large industries. But even amongst those, there's a huge disparity. What we're seeing is people making bets about what bitcoin is. What market does it actually fill? Does it fill multiple of these markets? It could be all of the above, or it could just be one or two of those. The world is grappling with something fundamentally new and trying to categorize it. And, the way they're categorizing it guides their investment.
Do I think this is the new property investment? Would you invest differently than if you thought this was a new Visa or MasterCard. People are all doing this independently of each other. And what Bitcoin's price represents is the sum total of all of those individual decisions coming together at once.
With Bitcoin, you're not going to see volatility end until that value proposition and how it's categorized starts to solidify a little bit and it starts to actually tack towards something, then we can think about what it should be worth.
You have people investing in it like it's a really great startup. If Bitcoin was a startup it would be the most profitable successful startup over the last 10 years. Over Uber, over all of that. Is it a new mechanism for investing? All of those bring different market caps that have different implications. We're not going to see stability until all of that is figured out.
To me, the idea that it's volatile is actually what generates the interest. That's what gets people involved. They see the ups and the downs, but the downs are always higher than the previous year. You start to get more and more people in it.
This is where Fold comes in – to accelerate this price discovery by bringing and applying a product that can attract millions of customers to start holding Bitcoin. They start to make their own decisions about what type of asset this is. Is it just a better reward? That's how Fold brings them in, but Fold also introduces it as a form of money and payment or savings so we get to inject a million new users who are going to help us figure out what the price should be and what their coins should be used for.
Outside of your work what makes you excited in this space?
If we can imagine building an imaginary house, Bitcoin is a solid concrete foundation and it does little else, maybe a little electrical wiring, but there's no light bulbs, there's no light switches – the doors are a little hard to get to. You have to climb a ladder into it and then go down a spiral staircase and then a door appears. That's how it is now. I'm looking forward to the foundations and the plumbing, the electrical, as Bitcoin continues to improve. That's everything from a protocol level about making sure the protocol is secure and improved to have better privacy or efficient transactions. But I am also looking forward to better doorways.
We're building the foundation, the plumbing, better doorways and staircases like the Fiat to Bitcoin on ramps and off ramps. Then we need better signs above the door. We need better reasons why you would even want to come in this house. And that's what Fold is about. A sign on the door saying, hey, you earn airline miles, you earn points, you earn cash back. We have a better reward for you now.
Not only can you spend it like cash back, not only can you send it to friends and family like cash back, but now this cash is increasing in value. It was the best performing asset over the last decade. It's going to, on the whole, appreciate and value, and you can do all these other things with it. We believe fundamentally Bitcoin is a better type of money. I'm very confident we can win the argument that Bitcoin is a better reward than what we currently have. That's how we're going to bring people in, put that sign up, earn Bitcoin the best performing asset of the last decade on every purchase. People are going to come in and start accumulating it and start adding their little piece to the house that we call Bitcoin.
Cashback is also about building an electorate. What I mean by an electorate is that regulations will come and go, and it will all be dependent on the people who are using it, and how they want to defend it. Fold is about building a constituency that holds it and sees the value of it in a way they can understand to defend it. Any work that you're doing with frank news, even this whole crypto month is helping us demystify it, educate people about it, and the more that that happens, the easier my job is at Fold and the closer we are to making sure we don't miss out on this opportunity, that I think is a once in a very long time opportunity. I don't want to screw this one up.
At least from the small amount of time I've spent looking at it, people feel really determined to make it different – the approach is entirely 360.
I hope so. It's one of the industries where you can look around at one point, be like, "Oh my God, who the hell am I bedfellows with?"
"Wow, what a strange, strange world having anarchists, libertarians, capitalists, social justice people helping."
It really has an incredibly large tent of people that may not always see eye to eye. But Bitcoin is intended to essentially become the universal measuring stick of value. We have the metric system to universally measure distance and clocks to measure time, and Bitcoin can do the same thing but for value. Because people see it as an equal playing field that can be used for their own self interest, Bitcoin is welcoming to a very diverse community. And I think that's what makes Bitcoin so interesting and strange at the same time, Bitcoin is equally a technological and sociological innovation.