Start-up

This Startup Has A Master Plan For Taking Bitcoin Payments Mainstream – Forbes


Back in 2013 and 2014, payments were a key area of focus for tech startups interested in building on Bitcoin. By 2017, it became clear that Bitcoin was not ready to takeover the world of payments and many startups pivoted to products and services built around the speculation and store of value use cases of the digital asset.

Having said that, the Bitcoin payments dream is not completely dead, and a big reason for that has been the development of a secondary protocol layer known as the Lightning Network (see an explanation of the Lightning Network here). Earlier this year, one online retailer revealed that Lightning Network payments had already become more popular than all of their altcoin payment options.

While other crypto payment solutions have been criticized for not staying true to the ethos of decentralization, the power of the Lightning Network is that it enables an improved payment experience in a non-custodial manner.

While the Lightning Network makes Bitcoin payments more practical, it appears more consumers need to be holding Bitcoin in order for more widespread merchant adoption to make sense. This is where Lolli thinks they can provide a solution via their master plan to bring Bitcoin payments to the masses.

What is Lolli?

Lolli is browser extension that allows consumers to earn rewards when they shop online. However, unlike the other major online shopping rewards programs, Lolli users are rewarded with Bitcoin when shopping at places like Walmart, Hotels.com, and Best Buy.

The Lolli website claims the company works with over 500 brands, and consumers are able to earn up to 30% back in Bitcoin when shopping online.

Building Incentives for Merchants and Consumers

During an appearance on a panel at the recent Bitcoin 2019 conference in San Francisco, Lolli CEO Alex Adelman discussed how the company’s long term vision goes far beyond providing Bitcoin rebates to consumers. According to Adelman, Lolli eventually wants to leverage their own userbase in an effort to bring Bitcoin payments to large, well-known retailers.

“When we think about: How are we going to have mass adoption for Bitcoin? It’s not just for consumers. It’s also with merchants as well. And if we want Bitcoin to be the rails, we have to think about: How is it better and to whom is it better for?” explained Adelman.

Adelman went on to point out that Walmart, which is one of Lolli’s top partners, and other merchants pay an incredible amount of money in credit and debit card fees every year; however, the Lolli CEO doesn’t think pushing the acceptance of Bitcoin payments today on the retailer is the correct approach.

“We’re not going to talk about credit card fees. We’re not going to do this giant hurdle, this giant technical integration that other companies — I won’t name names — failed at with Bitcoin adoption and payments five [or] six years ago, which we all got really pumped up for, which sort of failed to see the light of day,” explained Adelman.

Instead, Adelman would like to see incentives for both merchants and consumers to use Bitcoin for payments developed in tandem. Today, Lolli’s sales pitch to Walmart, for example, is that their rewards platform can drive more consumers to shop at the retailer, and Walmart doesn’t have to worry about setting up this integration at all.

“They don’t even have to touch Bitcoin. It’s just a thing for them to attract new customers,” said Adelman.

Meanwhile, Lolli’s rewards program can help create more consumers who have some Bitcoin and need somewhere to spend it. While the average consumer doesn’t care about the philosophy behind Bitcoin today, Adelman believes Lolli can create more believers by giving them skin in the game and having them watch the value of their Bitcoin-denominated rewards grow over time.

“When you can incentivize someone with something for free that, so far since we launched, has 3xed in value, you start to train the savvy shopper,” said Adelman.

Adelman provided anecdotal evidence of this strategy working in practice during the panel discussion when he talked about a mother in Michigan who has been telling all of her friends about Bitcoin due to the fact that her rewards earned through Lolli have grown over time. According to Adelman, this Lolli user doesn’t care about Bitcoin at all, but she’s happy that her holdings have increased in value in U.S. dollar terms.

Put another way, Lolli wants to create more Bitcoin holders because it will then make sense for merchants to accept Bitcoin payments. In the past, merchant adoption of Bitcoin has been stagnant because there simply aren’t enough people who wish to pay with Bitcoin.

This is effectively a way to get Bitcoin into people’s hands and have them want to learn more about it as they see the price potentially rise over time due to the crypocurrency’s deflationary monetary policy. There are many other credit card and merchant rewards programs on the market, but none of them reward consumers in an asset that is intended to appreciate in value over time.

As a side note, many speakers at the Bitcoin 2019 conference, including Adelman, indicated that Facebook’s Libra cryptocurrency could have a similar educational effect regarding Bitcoin on the general public. This is not to say that Bitcoin and Libra are similar, as Libra may end up looking more like PayPal — if it ends up launching at all.

The Long Term Play

Eventually, Lolli could go back to a retailer like Walmart and point out that the rewards platform has a large number of consumers who are both holding Bitcoin and shopping at Walmart on a regular basis. At that point, it could make sense for Walmart to accept Bitcoin directly.

“It gets really interesting because you have to reevaluate what they’re optimizing for. You start playing into those margins of the $5 billion worth of credit card fees, and you say, ‘Look. We have a million users that are shopping at Walmart. You’re spending, let’s just say, $10 million in credit card fees on those users. What if we saved you $10 million in credit card fees by accepting Bitcoin?’” explained Adelman.

In the past, Bitcoin payments never took off because the incentives were skewed towards the merchant. With Lolli’s master plan, both the consumer and the merchant would eventually be benefiting from Bitcoin payments.

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