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The Knowledge You Have About Money [Part 2]

Yesterday, I wrote about financial literacy rates in the United States and how the lack of financial acumen is highly notable when we’re thinking about mass adoption in crypto. TL;DR: if most people have never heard of a high-yield savings account, what is the actual addressable market for crypto?

I named Coinbase as a good example of a company that gets it, one that is successfully meeting people where they are and capitalizing on the equities-nerd to crypto-nerd pipeline. 

But the crypto community is also growing. I’ve met countless people who don’t know much about equities, but it’s because they choose not to; they believe it to be an antiquated investment vehicle. And maybe they’re right. 

Yesterday, we talked about crypto attempting to come to the masses. Today, let’s talk about the masses demanding more utility from crypto. 

Bitcoin ATMs (or BTMs) 

Roughly once a month I get my nails done in the Lower East Side of NYC. I won’t tell you where, it’s already too difficult to get an appointment.

The last time I was there, I was emotionally oscillating between hot pink and sunflower yellow when I noticed something curious about the ATM. 

It wasn’t the slightest bit curious that they had an ATM (it’s 20% off if you pay in cash after all). But what was curious was that plastered to the side of the very old, very sticky (let’s say circa early 2000s) ATM was that all too recognizable bitcoin B.

One of the many joys of my bizarre career path is that I understand how ATMs work.

On the backend, it looks quite a bit like any debit card transaction, and goes something like this:

You enter your card

The ATM says to the network: “Is this a valid card and card number?”

If yes, you enter your pin number. 

The ATM says to the network: “Does this person have a right to use this card?”

If yes, you tell the ATM how much cash you would like. 

The ATM says to the network: “Does she have that much money or has she already spent it all on painted nails and frivolities?”

The network asks the bank: “She’s broke, isn’t she?”

If not, the ATM disperses the funds. 

The network then says to the bank: “OK, now she’s broke.” 

Even without understanding the gossip happening between the network and the bank, we all know how to use an ATM. Over 10 billion ATM transactions are processed every year in the United States alone. 

So, it’s clever to add bitcoin to a place we already know and love.

At over 31,000 locations (in the United States), you can withdraw USD using your bitcoin wallet balance or add to your bitcoin wallet balance using withdrawn USD. 

I don’t have any numbers to support this, but I have to imagine that getting a bitcoin wallet is one of the first things people do when they start to play around in crypto. And anecdotally, when I talk to people who only know a little bit about crypto, they think of it as a currency — but one that you can’t use in most places. 

Holding BTMs as an esteemed example of the future is perhaps silly, but it is a limited example of bitcoin having true mainstream utility as a currency. I paid for my nails with my bitcoin. Easy peasy. 

Our friends at Bitpay 

You might have noticed that you can buy your Permissionless ticket with crypto. That’s pretty neat.

What’s extra neat is that Blockworks doesn’t need to turn around and hold that crypto if we don’t want to. Now, as the head of finance at Blockworks, I am obviously a crypto genius and portfolio management extraordinaire. 

But let’s say for the sake of argument I’m not. 

It would be meaningful to me that I can allow my customers to purchase my product with crypto (super straightforward API integration) and have US dollars seamlessly deposited into my bank account.

We aren’t necessarily expanding our addressable market. All of the (very wise) people purchasing Permissionless tickets probably have credit cards and debit cards too. But it’s an instance where all paths are conjoined. It’s not crypto people choosing one unique user experience over the normies. 

It is simply…choosing a payment method. As a Blockworks employee, I pay for my Permissionless ticket in blood sweat and tears. But if I wasn’t, I could have used my bitcoin for that too. Currency. Utility. 

Make their lives better

Those are just two very specific examples, and maybe I’m getting preachy here, but my overarching point is this… 

Technology evolution is an intense and ongoing push and pull between the nerds coming to the people and the people coming to the nerds. The nerds have a business to run and the people have a life to live. 

And along the way, the velocity demands winners and losers. 

You have long term winners like Microsoft and Apple. Short term winners like Blackberry. And the vast majority of companies will lose… can’t give you an example because, well…they lost. 

In general, people don’t know much about much. It’s not cynical, it's an understandable reflection of the limited capacity most people have to learn and gain comfort with things that are new. If there’s one takeaway you have from this, it’s the hard truth that people don’t adopt new technology because the backend is better. 

They adopt new technology because it makes their lives better. Make their lives better, be a long term winner. Easy peasy. 

Until Byron’s next vacay, my friends. Be well. 

Alex Gray

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