If you use a computer, you’ve heard of cryptocurrency in one form or another. If you’ve dug a little deeper, you likely understand the basics fairly well despite the complexity of cryptocurrency.
Crypto is broad term for a digital currency. A decentralized ledger system records the transactions based on a blockchain computer code. There are lots of different cryptos. They fluctuate in value.
Beyond those basics, things get … complicated. Maybe complex is a better word.
Somewhere inside the ledger and the code and everything else, within the complexity of cryptocurrency, Bill Rice sees an opportunity.
“‘If I can’t touch it, if I can’t see it, I don’t necessarily trust it,’” said Rice, the founder of CryptoBuxx. “That’s how a lot of people see this. They may see their credit card and not realize it is tied to something electronic. People are moving toward all-digital things, but it takes a while for an idea to be adopted, to get comfortable with it.”
Basically, CryptoBuxx is a certificate representing a specific denomination of a specific crypto. One BitCoin, for example. Like a stock certificate, the face value – one share of stock, one BitCoin – never changes. However, the underlying price fluctuates with the market.
The CryptoBuxx certificate idea is then a physical way to involve people with the intangible concepts behind crypto. The certificate becomes a conversation starter and a transitional catalyst.
The idea began to gel when he saw the number of crypto evangelists trying to simplify the complexity of cryptocurrency to others. In many of the conversations, a common ground was missing.
“It can be difficult to talk about what crypto is without something to show people,” Rice said. “[These certificates are] a way to start a conversation with people about Crypto and help new consumers experience crypto for the first time in a way that is non-threatening with something they can touch and feel.”
First steps are important, Rice said, because they open the market space to new ideas.
“Cryptocurrency is still in its infancy,” Rice said. “With regulation, you’re going to see less speculation and see it become more of an investment tool. The real growth is going to be in the blockchain applications – decentralized apps and smart contracts.”
With these new technologies, the crypto associated with a particular blockchain app become the currency used to facilitate the transactions within the app. A limited number of coins are created for the app. The coins can then be bought and sold to enable future transactions. The higher the demand for the transaction, the more potential value exists in the supply of coins.
One of the most popular stories in crypto lore is the pizza purchase. The pizza purchase demonstrated the potential value of a particular digital currency. It shows the value without diving deep into the complexity of cryptocurrency.
“Suddenly, BitCoin had value, because of what the pizza cost,” Rice said. “The value was set by the market and that’s exactly how it works today.”
A portion of the payment for each block of transactions is allocated to the ledger hosts. Another portion is allocated to the developer of the app. As the value of the technology increases, the value of the coin used to power the transactions should see a proportionate increase.
“There could be a PizzaCoin,” Rice said. “But, no one builds something and says, ‘Hey, this is a good idea, so I’m going to give it to people for free.’ The coins become an incentive for developers to develop and then as a form of payment for using the apps developed alongside the coins.”
There is no official relationship between a given crypto and the specific CryptoBuxx certificate. For each purchase, Rice’s company, Certificate Exchange, Inc., buys the crypto and links it to the encryptions, codes, and keys on the certificate. Certificate Exchange is currently offering services for around a dozen coins with significant histories.
“Because a lot of these coins are decentralized, and even though they do have sponsors, the contracts themselves are self-governing,” Rice said, saying Cryptobuxx are currently available for purchase has a solid history. “It’s very transparent. Once they’ve been created, they can’t be changed unless you change the entire contract. I think it is going to be a very difficult thing for them to classify a lot of these coins as securities, certainly under the current definition of a security.”
There are strong similarities between the stock market and cryptocurrency. However, the two markets are different enough to stand alone from one another. Rice believes the similarities are strong enough to justify the regulation from the SEC. Similarly, the global nature of the coins and the underlying contracts create some new regulatory constraints.
“I think you will see some regulation coming, Rice said. “I don’t think it is going to be as much as the government wants or as little as the industry wants. They are going to find a middle ground [and] that is going to take a lot of the volatility out of the marketplace. Then, you’re also going to see a huge spike in prices because it is going to bring in a whole new class of investor, an institutional investor who is not interested in speculating but who is interested in creating a diversified portfolio.”
These ideas are nothing new to Rice. He spent nearly 30 years in financial services, working with mutual funds and other Wall Street-focused assets. He started organizing Certificate Exchange in June 2021 with a handful of partners. The company formally launched in December 2021.
“I think this is something that really will benefit a lot of people, but it isn’t for all people,” Rice said. “If someone who has crypto coins wants to engage someone else in the idea, this is a really easy way to do it. It’s a way to share the idea. It starts a conversation.”