Creating Utility For Blockchain
An Interview With JP Thieriot from Uphold
JP Thieriot, CEO and President of Uphold and founding member of the Universal Protocol Alliance, has always been a tech visionary. He started his career in the early days of the internet and has been involved in the technology sector ever since. JP has also been working in the blockchain economy since early 2013.
We recently caught up with him about his origins in blockchain and his opinions on the current state of crypto.
Tell us a bit about yourself JP. Where do you come from and how did you get started in blockchain?
JP: I was born in Argentina and raised in the United States. My first job out of college I was incredibly lucky and wound up at Hambrecht & Quist, an investment firm in San Francisco. It was about six months after I started before anybody had heard the term ‘world wide web.’ At Hambrecht & Quist we did the Netscape IPO and the CNET IPO, which was such an incredible experience. To be 21 years old and in the middle of that you think to yourself, “Wow, it’s sure easy to make a lot of money.” Of course though, at that age one isn’t particularly aware of the pitfalls and the eventual hard lessons that always mark the end of such frothy beginnings.
Being born Argentine, which has always had a fractured currency and economy, led to an early interest in Bitcoin and the crypto space. I don’t think it is an accident that my fellow countryman Wences Casares is regarded as ‘patient zero’ for Bitcoin. I think he has related many times to growing up in a country where 20,000% percent inflation colored his childhood — I have the same experience. I think Argentines have a very different and perhaps wildly more sophisticated view of what currency is by the time they are 10 years old.
What was the basis for starting Uphold? ? Where is the company located ?
JP: I was an original co-founder. My co-founder is a brilliant technologist a was a contact I made while at Hambrecht & Quist. He himself co-founded CNET and later Salesforce. He came to me with the idea of a digital wallet provider in 2013, and we launched what was then Bitreserve. Then the company evolved into Uphold, which supports over a million users and 36 different currencies and cryptocurrencies.
That was how we started Uphold. In those early days we were working with groups all over the world. A group out of MIT, a group in Florida, a group in Argentina, a group in Eastern Europe, and the group in Portugal. The group in Portugal kept coming back with the best product, delivered on time and on budget. They were dramatically out-performing all of the other groups. So we went to Braga in Portugal and discovered this small company at the time, with probably 8 developers. We got along great with them and eventually bought the company. In terms of how did this place come to be such a rich vein of talent? The answer is that the local university — Universidade de Minho — has the oldest computer science program in Europe. Since our having set up shop there in 2014, a number of other leading tech companies and fintech companies have sprouted up.
What exactly does Uphold do? Can you tell us what Uphold is all about?
JP: Uphold is a digital money platform. It can be viewed in two different ways. On the one hand it has a consumer facing business, which has over a million users and is a sort of more global, breadth-of-content version of Coinbase. Today the platform covers 30+ fiat currencies, 9 cryptocurrencies, and 4 precious metals. Uphold has also acquired a broker- dealer, in the effort to eventually offer equities like Robinhood. The differentiator versus Coinbase and Robinhood is that Uphold is global. We service 182 countries and have an even distribution between Latin America, North America, Europe, and then a little less density in Asia and Africa.
The other side of the business which has differentiated Uphold from any other company in the space — and is probably the most exciting aspect — is the progress that has been made over the last four years in terms of proofs of concept around open API for third party digital money applications. The best of example of which is probably the Brave browser. Uphold is the mission-critical payments capability inside of the browser and inside of the entire Brave ecosystem. Brave proposes to improve how we consume the Internet by reorganizing value flows between consumers and advertisers and publishers. Most publishers aren’t interested in receiving a cryptocurrency for their services. So what allows the seamless translation of BAT and Bitcoin into Dollars and Euros, in real time, very fluidly and very globally is Uphold… making Uphold a true ‘platform’, as opposed to an exchange, perhaps the only true ‘platform’ in the space. Today, 38% of our volume comes from businesses transacting as opposed to retail investors speculating. This is pretty amazing and both makes Uphold relatively more resilient than exchanges that are dependent on speculation and is a sign that underneath the expanding and exploding bubbles, something more fundamental is happening
Tell us about the early days of Uphold. Who were your first customers?
JP: We started in early 2014 and rode the first spike in Bitcoin, which I believe got to a peak at the time of around $1,800 in November of 2014. Obviously we were the early beneficiaries of some of that early interest. Those were the days that Mt. Gox blew up and Charlie Shrem went to prison; it was the more sort of the ‘Wild West’ days of early Bitcoin. What’s interesting — and where we can lay claim to having basically invented the concept of ‘stablecoin’ — is how unenthusiastic people were back then about Uphold. The ecosystem was evangelical and heavily libertarian. Bitcoin was supposed to replace the US dollar as the world’s reserve currency and topple governments’ monopoly over coinage. Our unique and orthogonal view was: Bitcoin in and of itself, is so volatile, strange and slow, that it really isn’t a mass consumer value proposition. The underlying technology is revolutionary, the unit of account is an interesting long-term shorting of the fiat system… but payment processing in Bitcoin? Makes no sense. We were the first people to put dollars, pounds, euros, etc., on crypto rails.
The early audience for us was an interesting one. It was a lot of the ‘true-believer,’ fervent, almost religious wing of the ecosystem that was proclaiming that people should get rid of their bank accounts and pay their employees in Bitcoin and all that good stuff.
Until you create something that is less interesting as a speculation, it’s not transactional. Dash seems to me to be the biggest cryptocurrency really working hard to solve that issue and doing it in the right kind of ‘low-hanging fruit’ markets like Venezuela where even if something is relatively volatile, it is so much better than the local alternative.
What is the purpose of the Universal Protocol Alliance in your own words?
JP: The purpose of the Alliance is to join leading companies in the blockchain space, each of which does something very specific and are regarded as a ‘best of’ in their respective sectors. Uphold’s role is reserve management and value substantiation. We have done over $4 billion worth of transactions over the last three years.
Another Alliance member, Cred, has secured $300 million to democratize lending and borrowing They are an amazing team, they’re well funded, and have great leadership. Blockchain at Berkeley is the largest university-associated blockchain group in the world. They have over 700 applicants per year who are whittled down to the most talented 50 applicants. All of these efforts we are attempting with the UP Alliance are going to require a firehose of talent which we hope Blockchain at Berkeley can provide. With Brave I think Brendan Eich is possibly among, if not THE most respected technologist around today, with particular thought leadership on issues of privacy and end-user experience.
Each member of the Alliance provides a different attribute, viewpoint, and skill set. We all believe that for the blockchain and crypto industry to succeed, it needs to resolve some of the constraints holding it back. The way we have collectively agreed to define those constraints is that there is a lack of a common language. So the notion that blockchain 2019 kind of equates to the internet 1989, which is to say that a lot of people recognize its potential and are enthusiastic. But in the internet context, it was AOL, CompuServe, and Prodigy, and none of these things spoke to each other. It wasn’t until later on, the fusion of TCP and IP, and ultimately DNS, that allowed the conditions for mass consumer uptake and unrestrained innovation.
Today everyone is excited about blockchain, but you have this primordial soup of competing protocols. So if you are a small business or an early mover, you are uncertain about what your entry point is. What should you do? Should you reprogram your business’s logic to Ethereum? Hire Solidity developers? Maybe. But what if this thing called EOS overtakes it? Or Neo, or Monero, or Zcash? What we are trying to do with the Alliance is connect a value substantiation and reserve management capability to the edges of the critical mass that Ethereum has generated to date. That will go a long way towards beginning to create the foundations of a common language that can narrow the scope of people’s efforts to move it forward faster.
The second issue we all agree that is out there, is the lack of conventional user safeguards that are more typically associated with mature asset classes. While young technologists can deal with the risk associated with managing private keys, the mass market is not there.. The notion of losing a string of digits that is a whole lot like an online banking password and that loss means that you have lost your money, is a pretty big issue. Or if you pass away, that value goes into the ether. Those are the sorts of things that need to be addressed, making these assets recoverable, inheritable, easy to use as collateral, insurable, etc. All of these things are required to take that leap from 24 million people that have touched crypto today, and move towards the 2.5 billion people with bank accounts and the billion beyond them that don’t have anything other than rudimentary access. This is the group’s mission. Again, it’s an amazing team. Unlike other ICOs, the technology is built and ready to deliver. We are excited to get that off the ground.
Would you say that one of your goals is to democratize access to traditional financial institutions and tools? Are most crypto projects purpose to upend or just adjust what is currently available?
JP: Well I think that there are going to be some of those. Bitcoin itself is a new thing that competes with US securities, real estate, and with fiat currencies. Crypto is going to produce a few of those ‘virtual currency’ status cryptos, but it’s really not in continuing to create more of those, or thinking that somehow those are going to overthrow anything. There is an appetite for legit virtual currencies because they are uncorrelated and it is true that all fiat currencies devalue over time. So some well structured, well conceived, novel units of account can fulfill a real need in the market — but we are absolutely in the realm of diminishing returns vis a vis any need for the next BTC, ETH or XRP.
Democratizing access to these assets, rather than replacing them, should probably be the bigger thrust. Just digitizing and democratizing access to more traditional asset classes that have been completely out of reach for all but the wealthiest is a really big deal — asset classes like US securities, venture capital, private equity, real estate, art, etc. I guess also doing away with banks’ monopoly on holding people’s money, that is the ‘overthrow’ component. I don’t see a lot of reasons that the current version of a correspondent bank will continue to be particularly relevant in an internet-of-money future. It’s a bit like the big city newspaper implosion — inconceivable when it was competing with a static Yahoo webpage in 1991 — but it did lead to an entire revamping of the industry.
Where do you see blockchain by end of 2020? What do you think about the next 2–3 years of blockchain? Will we have achieved a big transition to digital currency?
JP: In terms of the digitization of assets and their replacement of inefficient rails, that has to happen pretty quickly and means big changes in the next five years. In terms of how Bitcoin ends up playing out, it’s interesting. Somebody described Bitcoin as not so much as a bet on one thing called Bitcoin, but as a shorting of the status quo. I guess if you look at the condition the world is in today, and you see stuff like trade wars with China and radical religion causing distortions in birth rates and war, shorting that is probably a pretty good idea. Wences Casares view on that is “Hey look I’m not a short term holder, this will play out over 20–30 years.” So I think that component is on a longer arc, but the digitization of conventional units of account, and the incremental improvements to speed, access, transactionality, ease of use that is going to accelerate. There will be marked milestones every year for the next five or ten years.
