Gemini, the cryptocurrency exchange founded by bitcoin billionaires Cameron and Tyler Winklevoss, announced this morning that it’s joining forces with Flexa, a platform that enables shoppers to spend bitcoin, ether, Bitcoin Cash, and Gemini dollars at major retailers across the U.S. including Barnes & Noble, Baskin Robbins, Bed Bath & Beyond, Caribou Coffee, Crate & Barrel, Express, GameStop, Jamba Juice, Lowe’s, Nordstrom, Office Depot & OfficeMax, Petco, Regal Cinemas, Ulta Beauty, and Whole Foods Market.
What this means is that you can use Flexa’s app to buy groceries with your crypto windfall. (Best to check with your tax advisor before your shopping spree, though, as you might be subject to capital gains tax since cryptocurrencies are treated as property by the IRS.) Would-be zillionaires who would rather hold on to their bitcoin can use the app to spend the Winklevoss’s Gemini dollar, a stable coin pegged to the U.S. dollar and designed to never fluctuate in value. According to CoinMarketCap, there are currently about 33 million Gemini dollars in circulation.
A beta of Flexa’s app will be available on iOS for attendees of Consensus 2019, the massive crypto conference taking place in New York City this week, and then will open to the general public.
As a way to manage cryptocurrency, Flexa has plenty of competition. Coinbase now has over 20 million accounts, Circle has 8 million, and Robinhood surpassed E*Trade with 4 million accounts when it added crypto to its mix. Now some of the largest financial players are viewing crypto as a path to fuel growth, including Fidelity, TD Ameritrade, E*Trade, NYSE (Bakkt), Visa, and Square.
The Winklevoss brothers are best known as the Hamptons-born, Harvard-schooled Olympians who battled Mark Zuckerberg in court over Facebook’s origins (as chronicled in the film The Social Network), eventually settling the dispute for $20 million and 1.2 million pre-IPO Facebook shares. They parlayed that windfall by amassing 1% of all the bitcoin in the world while also investing in companies such as AngelList, Carbon38, and Eaze via their family office, Winklevoss Capital.
I talked with Cameron and Tyler Winklevoss about the competitive landscape and how they envision the market for crypto evolving. The following is an edited transcript of our conversation.
Fast Company: Why have you moved into crypto payments?
Tyler Winklevoss: There was this documentary [Life on Bitcoin, 2013] where people tried to live on bitcoin. It was very difficult and not easily repeatable. The friction was too great for any mainstream adoption, but with the Flexa app and Gemini dollar, that’s now possible. You can now get everything you need to live on, just from the list of Flexa retailers.
FC: There are other wallets with larger retail footprints, why did you pick Flexa?
TW: We really liked the Flexa team. They had extensive history in the payments space before crypto, understand the pain points, and apply blockchain where it’s best, but they’re not a solution in search of a problem. That’s been one of the mistakes of the crypto industry. Historically, the posture has been, “Blockchain. Now what’s the question? What’s the problem?”
FC: What are your marketing plans to reach the retail consumer and what was the response to your recent #Cryptobus campaign, which wrapped public transit with your messaging? Will we see a #CryptoCashCab anytime soon or Gemini Super Bowl ad?
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TW: We had a great response. This was our first out-of-home marketing campaign. We also market through digital channels and we’ll keep building off of it.
Enter the giants
FC: You have big competitors. Do you perceive yourself as David versus Goliath?
TW: Our approach has been different. We’ve started with an institutional-grade platform from day one. That is our core. Everything else can follow including a retail story. It’s usually harder to start at the other end of the spectrum, the retail spectrum, and later decide, “Oh we need greater security, greater compliance, greater internal controls.”
Cameron Winklevoss: Gemini has always been a cryptocurrency platform. It’s not a platform that’s started as an equities platform that is now entering the crypto space or doing our own take on crypto. I think we’re going to increasingly see financial incumbents build a crypto story, but there is no Gemini story without crypto–we are crypto native. Our cold storage system we built over two years is the most cutting-edge security platform. We didn’t back ourselves into it, or try to build business cases around why we should enter into crypto. We started in crypto and that’s where we’ve been living for the past five years.
FC: Is it a zero-sum game?
TW: It is not necessarily a winner takes all market. Gemini won’t build the market alone. A few of us as companies, whether competitors or not, we’re going to build it together. Usually in the financial markets, you see a couple of different players doing the same thing, the pie is very big and so for the consumer to have more than one option–where they trade, who holds custody–that’s very healthy for our industry. People don’t want to put all their eggs in one basket. If there’s some sort of incident, it’s better to have multiple players. We see people use multiple banks. Stocks don’t just trade on one venue. There’s room for all of us.
CW: Tyler makes a great point. We’re in the phase right now where we’re trying to grow the pie together, and we are actively trying to work with other established, regulated people in the space to help build safer and more rules-based markets. One of our initiatives, the Virtual Commodity Association, is all about getting like-minded folks on the same page to build best practices to make a safer industry for the consumer. Ostensibly, we’re all competing and competitors, but we’re also fundamentally trying to build an entirely new market from the ground up, helping grow this new financial future of money.
FC: Facebook coin has the potential to drive mass adoption through its 2 billion users. Do you see them as part of this community where all boats float?
TW: It’s huge validation for cryptocurrency and blockchain. Those kind of announcements really push the ball forward, they get people excited and demystify the space, so we think it’s a boon.
FC: Is there anything else you’d like to tell the Fast Company reader?
TW: The promise of crypto is really big, it feels like the promise of the internet itself. It isn’t just buy, sell, store. It’s got to be use, it’s got to help bank the unbanked. It’s got to help foster financial inclusion. This is a watershed moment on that journey.
CW: A lot of smart people thought their way out of crypto historically, only to later realize that they listened to a quote expert, a capital markets genius, and that person was taking a framework to value companies and couldn’t square it with how you value a cryptocurrency network like Bitcoin. They didn’t understand the technology, decided it has no value or merit, and have been on the sidelines. Warren Buffett is probably the most famous bitcoin bear and obviously one of the greatest investment minds in terms of understanding the value of a company, but crypto is new. It’s a different paradigm.
Cryptocurrency is going to reimagine entire industries and everything we touch. It’s not just the future of money, it’s the future of many industries.