Exploring the Contrasting Use Cases of Crypto Between North & South America with Uphold CEO JP Thieriot

Episode 1 of Season 2 of The Scoop was recorded with Frank Chaparro, Ryan Todd, and JP Thieriot, CEO of Uphold. Listen below, and subscribe to The Scoop on Apple, Spotify, Google Play, Stitcher, or wherever you listen to podcasts. Email feedback and revision requests to [email protected].

JP Thieriot is the CEO of Uphold, a crypto broker that serves 184+ countries, across 30+ currencies (traditional and crypto) and commodities with frictionless foreign exchange and cross-border remittance for members around the world. 

In this episode we explore:

• Competition in the crowded landscape of crypto brokerage
• The key distinctions between the U.S. and South America in regards to crypto utility and speculation
• How Uphold is promoting utility and providing a safe haven from inflation in countries such as Venezuela and Argentina

The transcript is provided for your convenience, please excuse any errors or typos resulting from the transcription process:

Frank Chaparro Ladies and gentlemen, thank you so much for tuning in to what is the first episode of The Scoop for 2020. I am your host, as always, Frank Chaparro Chaparro. I am joined this time by my very special colleague, Ryan Todd. And it's the New Year, so it's a new us. It's a new The Scoop. We're going to be changing things up a little bit. The same old quality guests, the same old quality questions, but the focus and the presentation of it, so to speak, is going to be a little bit different. The crypto universe, as many of you know, it is saturated, very oversaturated with folks coming on and, you know, basically having a Q & A type conversation around that guest, their experiences, etc.. Each episode moving forward, we're going to change things a little bit. We're going to try to explore a question, and, of course, have guests come on who are experts in that in that given arena and explore their question with us. So I'm very excited about that. I'm very excited to kick off the new year with our guest today, JP Thieriot. He's the CEO of Uphold, a position which he's held since September 2018. They're one of many places you can buy and sell cryptocurrency assets. And Ryan, you know, I think we were discussing what we should talk about with JP. You met him in Davos, he has a great background in payment--  

Ryan Todd Money20/20. That's our standard correction. 

Frank Chaparro There's always one thing that you need to correct me on. Davos maybe next year he can join our event, or this year. 

JP Thieriot Las Vegas Davos. 

Ryan Todd Same thing, yeah. 

Frank Chaparro But we were talking about potential topics, and, you know, obviously, something that we're witnessing here at The Block is just the--not only is the podcast market oversaturated, but the market for places where you can buy and sell cryptocurrency assets, I think has never been more saturated with as many players as there are now. And at the same time, you have traditional--quote-unquote traditional--fintechs moving into the space, expanding their offerings. We're thinking Cash App, right? 

Ryan Todd Provenance, Robinhood, SoFi.. 

Frank Chaparro All of them are getting in it, and so the question is for a place like Uphold, JP, how do you see that playing out in 2020? Will this be the year of shaking out, where we see certain players, you know, kind of rise to the top? Or will it be more of the same? Is it just going to be a continuation of more players coming in and old players trying to survive? What do you think it'll look like? 

JP Thieriot So that's a great question, and thanks for having me on your inaugural 2020 show. So I think 2020 is likely to be a year of consolidation for sure. Too many players in the crypto space, a long, sort of sideways to down, market and really no real delivery of utility to mom and pop, anything that's meaningfully changing their lives. Some interesting fodder for trading firms to speculate on and for, you know, Wall Street, for lack of a better term, to move into. Probably higher margins, less efficiencies than in equities and other trading markets, so it's interesting for folks to move in that direction. But in terms of moving from sort of crypto-native outward, I think we're still sort of waiting for--I think "the killer app" is maybe the wrong descriptor, but something that just makes people's lives easier on a day-to-day basis and doesn't mean that they have to be 25-year-old technophiles to be able to benefit. So, speaking from Uphold's vantage point, you know, we've always viewed it as, "That will happen when one has a critical mass of things insofar as financial contents," and not just crypto, but maybe, you know, other asset classes that would be complementary, and to have them all in one place, easily accessible--and in many cases accessible for the first time, let's say the big regions of the world: Latin America, Africa, even Europe and some in some context--the second you can do that then you've done something different. And so, lots of people converging on a space, each with a slightly different angle, but I don't think crypto as a whole has delivered the compelling benefit yet. 

Frank Chaparro There isn't a compelling product out there that you see at the intersection of crypto and equities?

JP Thieriot Well, so it's really such a fascinating question. So what's the product? Is Bitcoin a product? Because if Bitcoin is a product, it's a fascinating one, right? It's digital gold, it's non-correlated. You could describe it as being--as someone did and I've always loved it--a shorting of the status quo. And I think, you know, those things have been delivered. Can a Libra, as an example, take that thread further? No. It just takes it back into boring old territories. What's a basket of fiat currencies? To whom does that deliver a benefit? Maybe for large multinational corporates are looking to hold balances in something that better reflects their business and say dollars or euros, but it doesn't introduce anything new. Bitcoin introduced something completely new. I think some of the utility tokens are useful in the measure that their ecosystems are delivering something new. Brave and BAT is a perfect example: you have a privacy browser that's captured the Zeit Geist insofar as the problems with Facebook and Google making you the product or us the product, so in the measure those things are delivering into real needs and they have a utility token that is an integral part of that ecosystem, those things will flourish as well. And, if you want me to keep going on this, one question, the one part that I've sort of been meditating on a little bit is if you look at this proliferation of tokens, 99.9% of them are probably pretty useless. You know, Bitcoin is useful. You could argue that XRP has some legitimate functions. And then again, I'll go back to BAT. There'll be others, but what sort of really caught me the other day was this notion that if you look at purchasing power over time. Yeah, I heard somebody describe the other day--in fact, I think we did an early video--that look at gold, right? An ounce of gold today, what is it, around 1500 bucks? It's about what it costs to buy a suit. For a Roman senator, buying a toga cost about an ounce of gold. So, you know, over time, it's held its value. I grew up--forget my Argentine childhood, in my U.S. childhood, a dime bought me a Kit-Kat. I don't know what my kid's paying for a Kit-Kat today, but, you know, two bucks or something, right? 

Frank Chaparro I think it's around two dollars. 

JP Thieriot Two dollars. Right. 

Frank Chaparro I love Kit-Kats. 

JP Thieriot So the point is the best of the fiat currencies has not held its value relative to a marker of that over the eons, which is gold. And now you have a far more practical equivalent of it in Bitcoin. So you have some units of account scattered, you know, over a page, right? If you take that to extremes way below the dollar, you have Venezuela, Zimbabwe, Argentina, lots and lots of countries in the world have done a far worse job than the United States of managing its currency, and really the compunction there is spend this as fast as you possibly can because it's losing value by the hour. And I think people expected that Bitcoin would somehow become this transactional thing, but it hasn't. It's at the opposite end of the spectrum. I'm holding Bitcoin because I expect, given the way the world's unfolding, it'll be worth ten times what it's worth today at some moment in the possibly distant future, right? But in the middle, that's the fascinating part. Are there going to be private denationalized currencies that actually become transactional? And if that's a possibility, then it can only really come from crypto. That's what's fascinating. And the math, the calculus there isn't, "I'm going to speculate on this thing because it's going to moonshot," or whatever the other descriptor would be. I just have to believe it's going to do better than -3% a year, which is the U.S. dollar. And the second crypto produces something like that, that's a game-changer. And it ain't Libra, right? It's somebody with some scale the economy where their currency of the realm can outperform any public currency. 

Ryan Todd So you would say, to the Libra point, that even though it's stable in the sense that it's backed by some of the more stable currencies in the world--yeah, I guess this is all hypothetical because it doesn't exist yet--. 

JP Thieriot Right. And it probably won't, by the way. 

Ryan Todd Yeah, exactly. If people in, say, Venezuela and other countries with high inflation had access to something like that, you're still saying that because they're still exposed to these other currencies, that that's still not beneficial for them, or? 

JP Thieriot No, it's totally beneficial. I mean, if you live in Venezuela, access to the Mexican currency is beneficial for you, right, in incremental terms. So, of course, it would be preferable to their current options then. I'm just saying that it doesn't introduce anything new into the world, whereas a crypto can introduce a denationalized currency into the world alla Hayek's theories. And now you have something kind of--how can a public sector currency, with trade unions and political trade-offs and compromises in the whole world that has a government, ever compete with an ecosystem that might be growing at 50% a year? Their products are demanded. There's a finite supply. You can always print more dollars, you can always print more pesos. You can't produce more BAT token, as an example. So if you have an economy that's now 10 million people--the size of Ireland's three, the size of Uruguay is three--you have something that's like nation-state size with fundamentals that are far better than public fundamentals could ever be. At some point, somebody is going to say, "Wait a second, private currencies can be transactional and in fact, they ought to, they ought to out-compete."

Frank Chaparro It's interesting, the way you sort of describe or think about some of these crypto assets as being products themselves, right? And addressing where those products might find a market, right? Product market fit, whether it's Venezuela or somewhere else. Bringing the conversation back to the broader business landscape for so-called--I don't know if we'd call you guys a broker or something else, but a venue where you can buy and sell crypto assets--is the core of doing that successfully viewing crypto assets as a product and then thinking about where you can best deliver and serve that product? 

Ryan Todd Good question. 

Frank Chaparro I would guess, right? It sounds like you guys are in a similar vein as Abra, right, where it's like let's address the international market because that's where there is product-market fit: not necessarily here in the US, but in places like Venezuela. 

JP Thieriot Well, that's where you can deliver life-changing benefits as opposed to incremental conveniences, right? I think there's a market for it globally, but, you know, the new, scarier regime in Argentina is just coming in January. They wasted no time. Now Argentines can only buy two h