Since the launch of Bitcoin in 2009, cryptocurrency has been an easily escapable topic for those who find the new concept cloudy and the investment far too volatile. But as alternative assets become increasingly relevant during inflation and the crypto market hits another extended period of record lows, more individuals and companies are embracing the nebulous technology and trying to make crypto less cryptic.
North Texas is home to industry leaders in the global multitrillion-dollar crypto space, including Fort Worth-based Coinsource, the largest Bitcoin ATM operator in the world, and startups like Blockmetrix, the crypto mining company that has raised $50 million in funding. Even some energy players are entering the arena, including Taylor Billingsley, grandson of Tri Global Energy Founder John Billingsley. Former Dallas Cowboy turned commercial real estate exec Darren Woodson has also joined the fray via non-fungible tokens.
“The ledger transparency, the simplification of payment flows, and the tech that comes with it is creating a lot of opportunity,” says Alex Holmes, CEO of North Texas-based MoneyGram International. But what exactly is cryptocurrency, and how does it work? (Pro tip: See sidebar for definitions of a few of the most common terms.)
Many tie cryptocurrency’s launch to Satoshi Nakamoto—an individual or several developers, the specifics are unknown—who unveiled a white paper detailing plans for a digital currency that could be traced in an ecosystem: the blockchain. The launch corresponded with the chaos in financial markets during 2008, when trust in banks wavered.
Since then, the crypto space has evolved to include roughly 20,000 digital currencies and become an investment play across industries and demographics. Sectors including art, sports, retail, financial services, and more have developed entry points into cryptocurrency for consumers. But the recent failure of the former cryptocurrency exchange giant FTX has disrupted the entire industry.
At its peak this past January, FTX was valued at $32 billion—now, the company is bankrupt, and its former CEO is in serious legal trouble. Sam Bankman-Fried, the founder of FTX, was allegedly using the capital of company creditors to transfer into his hedge fund, Alameda Research. Crypto publication CoinDesk reported that Alameda’s balance sheet was stuffed with FTT—FTX’s native crypto token. As a result, Binance, a top exchange competitor of FTX, engendered a crypto bank run after its own investigation into mishandled funds and, in early November, liquidated approximately $500 million worth of FTT tokens off the platform. Consumers followed suit, eviscerating the token. FTX found itself in a multibillion-dollar hole just three days after the sell-off began.
The value of top cryptos Bitcoin and Ethereum fell 20 percent in wake of the FTX collapse. Cave-ins are nothing new, though; in fact, Bitcoin has been pronounced “dead” some 200 times since 2017, according to BitStacker. But the recent crumble speaks more to poor business leadership than it does to the tech, crypto-truthers say. And for DFW companies, many leaders in the space are still bullish.
On the leading edge of the technology is money transfer giant MoneyGram International. Founded more than 80 years ago as Travelers Express, the company built its brand by providing non-bank financial transaction services, including international transfers. Now, through partnerships with crypto companies Coinme, Stellar, and G-Coin, it allows its cusomers to buy, sell, and trade Bitcoin, Ethereum, and Litecoin with its mobile app. It has also established an online crypto wallet and it offers a crypto-to-cash conversion tool, which allows customers to instantly convert their crypto to government-issued currency across 20,000 corridors in more than 200 countries.
“There’s an infinite amount of regulatory questions,” Holmes admits. “But crypto and blockchain technology are here to stay. And we want to push innovation and new ideas into the marketplace.”
Even a few traditional financial institutions are embracing crypto. Dallas-based First Foundation Bank recently partnered with fintech giant Fiserv and Bitcoin company Nydig allowing its customers to buy and sell Bitcoin as well as view their Bitcoin holdings on their digital platform.
“There’s an infinite number of regulatory questions. But crypto and blockchain technology are here to stay.”
Alex Holmes, MoneyGram International
“We didn’t want to be left behind,” says Lindsay Lawrence, First Foundation’s COO. “Research shows that 81 percent of clients would be interested in purchasing Bitcoin through their financial institution.”
The partnerships with Fiserv and Nydig were essential as many banks won’t store crypto—it’s not an FDIC-insured asset. Customers can see a Bitcoin balance statement via First Foundation’s platform, but Nydig is the keeper of their crypto wallets. When customers want to buy, sell, or cash out of their crypto position, cash can be deposited or withdrawn from a First Foundation account to complete the transaction with Nydig. “There’s that little loop, that cul-de-sac, that’s happening there,” Lawrence says.
New York-based investment platform Republic helped lead the way for companies hoping to fundraise via token sales that comply with SEC regulations. The company launched a blockchain division in 2017, pioneering the first legally compliant token sale through their platform. “We are probably in the top tier of crypto projects out there,” says Pialy Aditya, senior advisor and board member for Republic.
These kinds of relationships allow companies and investors to interact with the uncharted landscape that is the blockchain—an integration many say will be further ironed out soon. “I think you’re going to see centralized banks have cryptocurrencies,” says Travis McElroy, co-founder and CEO of Dallas-based startup Tronic. “I think you’ll see a Wells Fargo crypto. I think you’ll see Chase Bank crypto. I think you’ll see Nike and other big brands have it.”
CRYPTO GOES CORPORATE
As retail investors become more accepting of crypto, companies are feeling pressure. Business leaders are beginning to include crypto assets in calculating their company’s net worth. A few early adopters even offer employees the option to receive wages or invest in cryptocurrency through their 401(k) plans. “I don’t think brands see all the benefits and all of the money they can save by moving to a crypto and digital ledger,” McElroy says.
Even nonprofits are capitalizing on the trend, accepting donations and launching fundraising campaigns in crypto. For example, contributions to nonprofits using The Giving Block platform saw a 66 percent increase in average giving in 2021, from $44,000 in crypto donations in 2020 to $69,644 in 2021.
“Brands accept cash and credit cards, but why aren’t they asking the question, ‘Why don’t we accept Bitcoin and Ethereum?’” McElroy says. “I think we will see everything from capital raising and stock ownership in the form of NFTs in the future.”
The movement to greater endorsement of cryptocurrencies is primarily spurred by the idea for a new iteration of the World Wide Web, known as Web3, and a push for decentralized ownership of content within digital spaces. One of the most significant elements of this shift involves non-fungible tokens, or NFTs, a unique code that can be purchased for ownership of a one-of-a-kind digital item. (Think trading cards, only online.) Typically, these codes cannot be traded like stocks, bonds, or cryptocurrency.
Republic is helping expand the adoption of NFTs across industries, with a project that uses NFTs to track fractional ownership of art, working with appraisal and digital registration companies to provide a digital record of ownership. “I’m excited about future applications of this in the luxury goods space,” Aditya says. “You’ll see more and more caring about the secondary market and having true ownership—being able to say what’s authentic and leveraging the blockchain for authentication purposes.”
McElroy’s Tronic specializes in building decentralized platforms for businesses and NFT creators by leveraging the technology of Web3 and its NFT marketplace. Some of its clients include Dallas-based footwear brand Hari Mari and 200-year-old firearm and ammunition manufacturer Remington Arms Co.
Less than a year old, Tronic is in the middle of a $7.5 million seed funding round. The most recently released NFT collection on its marketplace—one of 14 active collections—is called Chill Cowboy Country Club. It gives NFT owners access to exclusive merchandise, free concert tickets, backstage access, unreleased music, and more from country music artists. Former Dallas Cowboy Darren Woodson, co-founder and chairman of counterfeit NFT takedown company Counterfind, says the value of NFTs is found in real-world utility. “It’s about experiences and how companies can give consumers a unique experience—whether it be a crypto that allows you to get on an exclusive yacht or something else,” he says.
According to a report from Chainalysis, as of May 2022, total global sales in the NFT market reached $37 billion, extending across industries and incorporating digital assets and NFT ownership into marketing opportunities. For example, the Dallas Mavericks became the first NBA team to accept Bitcoin as a form of payment for merchandise and game tickets in 2019. In 2021, Mark Cuban named Voyager Digital, one of the fastest-growing, publicly traded cryptocurrency platforms in the United States, an official partner.
Dallas Cowboy legend Darren Woodson, a managing principal for commercial real estate firm Cresa, is all in on NFTs as the chairman and co-founder of counterfeit takedown company CounterFind, which has removed thousands of fake NFTs valued at as much as $4 million off the internet. Alongside co-founders Rachel Aronson and Jamie Gerson, Woodson and company work with clients such as Anheuser- Busch, the United States Marine Corps, and Sesame Workshop (the producer of Sesame Street).
For businesses across sectors, NFTs grow brand reach, interaction, and loyalty. “Just like when the dot-com era arose, there are doubters about this tech,” Aronson says. “But the early adopters will benefit from incorporating a digital wallet now.” Woodson agrees that businesses should utilize NFTs delivering the promise of real-world utility. “There might be economic downturns, but I don’t see the NFT market moving,” he says.
Gerson continues, “Consumers want exclusivity; they crave a VIP experience that no one else can get, unless you possess one specific NFT. It is the perfect opportunity to grow your brand.” In 2021, the global art market recorded an estimated $65.1 billion in sales, per a study by Art Basel and UBS. In May 2022, global NFT sales were racing toward an annual pace of $111 billion. By all appearances, the digital shift is already here.
More recently, North Texas convenience store giant 7-Eleven partnered with tech firm Allink to launch the world’s first real-time in-store NFT membership service in South Korea. Customers who own a 7-Eleven NFT are rewarded with crypto coins when they pay with the 7-Eleven app. And in April, Yum! Brands filed NFT trademarks for KFC, Pizza Hut, and Taco Bell. The trademark includes operating a virtual restaurant featuring actual and virtual goods and home delivery. Also in April, the Dallas Cowboys became the first NFL team to secure a cryptocurrency partnership, inking a deal with Blockchain.com and signaling mainstream crypto exposure to a broader audience.
“I’ve talked to the NFL and the other major sports leagues… They are not budging and will continue to invest in this disruptive market.”
Darren Woodson, CounterFind
“I’ve talked to the NFL, the other major sports leagues, and the Dallas Cowboys, and they are not budging and will continue to move forward investing in this disruptive market,” Woodson says. “The sky is the limit for every industry to utilize this technology.”
A REGULATED FUTURE
Regulation remains the unknown variable. Currently, each type of cryptocurrency is governed by its own set of protocols developed by those using the technology, and there is no overarching entity controlling trades, investments, or growth. Lack of regulation is leading to a failure in mainstream adoption. The cryptocurrency ecosystem and government agencies will need to unite to establish a standard usage for these alternative assets.
“All the various blockchain networks and all the various cryptocurrencies don’t work well together,” Holmes says. “And that is ironic because if there were one blockchain, then suddenly, you’d have a simplified global process, but how those interoperate is not nearly as seamless as you think.
“If we apply the same rules that we use with government-backed currency today, in terms of information about the customers and information about the digital Know Your Customer (KYC) of the coins, and we blend those, we can think about a very compliant way to invite consumers into the crypto space and create this bridge between these two different worlds.”
For now, banks and businesses continue building out their interactions with cryptocurrency as it becomes more readily available, accepted, and democratized. NFTs also hold power to become representations of digital smart contracts, college diplomas, music albums, keepsake tickets to sporting events and concerts, and even pay slips. Until then, the bricks building Web3 will shape the foundation of society’s digital future.
“Many people thought the first iteration of the internet was just a fad,” McElroy says. “When the first [50 million] users hit Facebook, and there were no advertisers, think of what business leaders would have done differently knowing the future reach.”
Even as volatility continues to be a concern, innovators keep pushing the envelope; The youngest generations may grow up in a world in which digital wallets may be just as common, if not more so, as leather ones. The crypto clouds will part with time as clarity around the assets and regulatory actions develop. Until then, McElroy says, “Large brands will continue to invest. Over the next three to five years, we will begin to see mass adoption.”
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