Cryptocurrency made possible by blockchain technology has created a Klondike gold rush of sorts on the Internet.
Following the trail blazed by bitcoin, there are 1,800, or so, entries in the cryptocurrency realm attempting to gain traction as a means of exchange in the digital world.
Among them is Coupit, whose backers think of their organization as the melding of the likes of Amazon, Groupon and Craigslist into a single source of exchange.
Blockchain is the record-keeping system behind cryptocurrencies, allowing buyers and sellers to record transactions in an unalterable format. It also can be used for storing nonfinancial information; its strength is in its encryption and the permanent record it creates.
“Fundamentally, blockchain creates trust because of its immutable data base,” Portland consultant and futurist Steve Brown said.”When you put information in there, you can’t change it.”
With billions of dollars at stake in this new frontier, the more technology-, finance- and marketing-savvy you are the better chance you have to succeed. Having deep pockets doesn’t hurt.
Andrew Hamilton left Chicago’s commodities exchange to take a breather in Grants Pass after the Great Recession; eight years later he still resides in Josephine County. He continued investing in e-commerce firms and became enamored with bitcoin in 2012. Seeing the potential in cryptocurrency, he began developing Coupit, which not only is developing its own digital coins, but also is creating a marketplace where businesses and individuals can sell products and services using all forms of payment, including other cryptocurrencies. User reviews can be verified and trusted, participants can exchange loyalty rewards — digital punchcards of sorts — with one another.
Hamilton doesn’t shy away from big names.
Antivirus software pioneer John McAfee is serving as a marketing and cybersecurity consultant for Coupit.
“Coupit is a game-changer,” McAfee said in a statement earlier this month. “Completely different from any other retail platform, because it creates an open marketplace that centralizes retail and peer-to-peer transactions in one place with complete transparency and with a simple smartphone app. I believe that Coupit will be a Fortune 500 company in the next three years, the retail powerhouse of blockchain.”
Coupit began its first-stage presale for its initial coin offering May 12, selling tokens for 5 cents. The presale will ramp up by 1 cent weekly until the initial coin offering kicks in June 16. There are 475 million tokens for sale, with a total supply of one billion.
The minimum buy-in for one token is $75. As of midday Wednesday, 38 percent, or $9 million worth, of Coupit tokens have been sold. Hamilton anticipated Wednesday would be a heavy sales day with McAfee’s social media followers weighing in.
“As the price of tokens rise at the end, there will be 100 million dollars worth circulating,” he said.
Coupit’s launch party is slated for Saturday in Beverly Hills. The event will include Mike Tyson, Dennis Rodman, McAfee and other celebrities.
Despite the glitzy Hollywood splash, however, Hamilton said the company will be headquartered in Grants Pass.
“We’re looking for the right property to build,” he said. “We want to have a real Silicon Valley look, and put that kind of feeling into the office.”
Coupit has 26 employees now, and the founder anticipates a full-time payroll of 30 to 40 full-time developers and multimedia marketing staff.
“We’ve got developers in six or seven states,” Hamilton said. “We know they’re never going to move. But in Southern Oregon, we want to see what everyone is doing, especially with the exchange.”
Half of the funds raised in the initial coin offering will go to development employment costs, 30 percent to marketing and expansion, 15 percent to contingency and infrastructure, and 5 percent for legal support to expand globally.
Token distribution is scheduled for July with marketplace testing to follow through mid-2019, at which point the tokens will be spendable. Wallet, web client and mobile apps will be released in December 2019.
Once the coins are purchased, the owners can use them to make online or point-of-sale purchases from outlets that accept cryptocurrency. Coupit’s claim to uniqueness is that it will also accept other established cryptocurrencies and serve as a sort of exchange service, allowing people using different cryptocurrencies to carry out transactions with each other.
Rather than the 3 percent that credit cards charge merchants, or the 2.9 percent associated with PayPal, Coupit will charge half a percent.
“Coupit makes life easier for users and businesses with everything in one spot,” Hamilton said. “We do the tracking for you so you don’t have to remember or keep papers.”
Even with hedge funds wanting a piece of the action, nothing is sure.
The discovery of gold in the Yukon in the late 19th century set off a global stampede with a 100,000 would-be prospectors seeking their fortune. Less than a third made it to the frozen frontier, and a mere handful struck it rich.
Although more accessible and less rigorous than a trek to the Yukon River, the odds of striking it rich with cryptocurrency are just as long as for the stampeders.
“You’re not going to have 10,000 blockchain companies all make it,” Brown said. “There are going to be some fantastic flame-outs, but there will also be some multi-billion dollar companies created out of this because they create new value that people want.”
Brown finds a parallel between cryptocurrency and the early dot-com era.
“Back in the ’90s, an important technology emerged which set off the dot-com boom, the development of HTML language, which described how you created a web page and how you interacted with it,” Brown said.
What determined winners and losers in that era was the value the website created, he said.
“Frankly, there were a lot of good websites that lost because the owners didn’t have a marketing plan,” Brown said. “It’s a race to scale, and it’s the exact same thing this time. ... There are going to be winners and losers again.”
Hamilton, who has already snapped up e-commerce sites that accept bitcoin, expects to be among the winners.
“Bitcoin wasn’t worth much when I started, and I just kind of hoarded these things (bitcoin),” he said. “When it broke out last year, it went from $800 to almost $20,000. Everybody thinks it crashed, but it really didn’t; it’s still worth 10 times what it was the year before.”
In a future scenario, if you’re a Dutch Bros regular or Fred Meyer shopper, you won’t have to worry about punch stamps and rewards cards. Instead your phone will track purchases, reading barcodes.
The rush to blockchain and cryptocurrency is, if for no other reason, because it’s the hot new thing, Brown said.
“It’s a really interesting model,” he said. “Not only are you building a new platform, but it (Coupit) is a platform with distribution on top of it.”
The apps are a way of creating value that has no centralized authority, Brown said.
Brown likens Coupit’s approach to the way Bernie Sanders funded his presidential campaign.
“People don’t want big-ticket investors that will kick them around,” Brown said. “If there is a shopping mall for sale, you can’t afford to buy the whole thing, but with tokenized assets, you can cut it up into $25 blocks and anybody can buy in.”
Reach reporter Greg Stiles at 541-776-4463 or firstname.lastname@example.org. Follow him on Twitter at www.twitter.com/GregMTBusiness or www.facebook.com/greg.stiles.31.