Sidney Rice has been a busy investor and entrepreneur since retiring from the NFL three years ago. He created a coffee shop chain in Seattle; opened chicken wing eateries; started a t-shirt company; and made investments in several tech startups.
Now Rice is getting into cryptocurrency.
Founded in 2014, Coinme first launched as a fully-licensed Bitcoin ATM operator. The company now operates 39 ATMs around the U.S. and has since expanded its offerings to include a digital wallet, a digital exchange, and a cryptocurrency IRA investment service.
On Monday, Coinme opened a sale for UpToken, a new “rewards-based” virtual currency it created in part to help encourage more use of Coinme ATMs.
Rice, who played for seven seasons in the NFL and three with the Seahawks, first began researching cryptocurrency last year. He got connected to Coinme CEO Neil Bergquist and installed a Bitcoin ATM in one of his Drip City coffee shops in Seattle.
Now he’s advising the startup and participating in today’s token sale. Even though many questions remain about the legitimacy and future of cryptocurrency, Rice said he’s confident in Coinme after spending time with the company and learning more about the new financial technology.
“I’m still doing tons of research and learning as much as possible, but I think I found a great group to learn and grow with,” he told GeekWire.
Rice said he has lots of friends who reach out and ask him about purchasing Bitcoin and other cryptocurrency. His favorite app right now is Coinbase, a digital currency wallet — “I check it every 10 minutes,” he noted.
“I definitely think people are picking up on it and in the next couple of years it’s going to be out there,” Rice said of cryptocurrency.
Coinme, meanwhile, employs 25 people at its Seattle headquarters and has raised $1.5 million to date. The company makes money off transaction fees from its Bitcoin ATMs; each ATM is now processing around $100,000 per month, Bergquist said.
Coinme’s mission is to enable people to buy and sell cryptocurrency, Bergquist noted.
“Access is still a big barrier to global adoption,” he said. “We found that for a lot of non-technical people, ATMs are a great entry point. Most of our users are first-time crypto purchasers.”
The creation of UpToken is meant to further this adoption. Bergquist compared it to a cash-back program and described it as a “new genre of loyalty token.” Users will be able to buy and sell UpToken at the Coinme ATMs, just like they can buy and sell other cryptocurrency.
Here’s more info on UpToken from its FAQ page:
UpToken is a reward for our ATM customers. Coinme uses 1% of every ATM transaction to purchase UpToken, which is given to customers as a 1% “cash back” reward. The customer can use their UpToken to receive a 30% discount on ATM fees by paying with UpToken. However, the UpToken that is rewarded to ATM users through using the ATM is not available for withdrawal until that user has reached $10,000 in ATM volume.
Coinme’s ATMs only facilitate Bitcoin and UpToken exchanges for now, but will soon add capability for other cryptocurrencies like ethereum.
Bergquist, formerly the managing director of Seattle-based SURF Incubator, admitted that his company is working in a wild west industry, but noted that “we have four years of learning under our belt.”
“All of our numbers and learning thus far gives us good validation that virtual currency is absolutely here to stay and ATMs will play a really big part in that ecosystem,” he said.
Bergquist added that “virtual currency has the potential to do more for rising economies than even micro-finance.”
“By just giving people an alternative currency from the one of their potentially-unstable government’s currency, it gives them options to thrive, and protection during periods of hyperinflation,” he said.
Bitcoin reached record high prices last week amid rumors of Amazon accepting the currency, as Bitcoin’s market capitalization exceeded that of Goldman Sachs. But there is still a feeling of uncertainty around this nascent industry, particularly as government regulators crack down on cryptocurrency. The price of Bitcoin and other currencies continue to fluctuate wildly.
At the GeekWire Summit last week, three venture capitalists talked about the future of cryptocurrency. A key theme from their discussion was about how regulation might affect the value of Bitcoin and other currencies, as well as companies working in this industry.
“Lots of things that make crypto so interesting are all the things that have to go away, in a way,” said Rebecca Lynn, a partner at Canvas Ventures. “It has to be regulated; people have to be known and not anonymous. In the end, it has to be switched back, so you sort of lose the free rails aspect of it in a way. There are definite applications of crypto but I think it was really overhyped for a while.”
Sarah Tavel, general partner at Benchmark Capital, said she’s “very long” on Bitcoin and the concept of blockchain technology, but more wary of other smaller token projects. Tavel noted that any investor in this new industry must take a “leap of faith.”
“This is one of those markets that regardless of how you invest in this space, you are ultimately taking a leap of faith that it is something real and that it’s a small fraction of what it will be 10 years from now,” Tavel explained. “So if you feel comfortable making that bet, then you can make a bet on what feels like a smaller market now, knowing that in the future it will become bigger.”