Alex Adelman: The Rewards of Bitcoin

Bitcoin Pizza Day on May 22 is fast approaching. It will mark the 12th anniversary of an annual celebration of Bitcoin and a solemn parable for the virtue of HODLing. (Laszlo Hanyecz spent 100,000 bitcoin (BTC) on two pizzas, crypto that’s now worth upwards of $4 billion.)

A decade ago, Bitcoin was considered a digital payment system (rather than the store of value narrative today), and Bitcoin enthusiasts would spend hundreds of bitcoins (then worth only couple of bucks) on everyday items like coffee and pizza.

But times have changed. These days bitcoiners typically want to acquire as much bitcoin as possible – or “stack sats” as they call it. And what could be an efficient way of stacking sats? Alex Adelman, co-founder and CEO of bitcoin rewards company Lolli, thinks he’s unlocked the answer. Lolli lets people earn up to 12% back in bitcoin when they make purchases using U.S. dollars from companies like Nike, Adidas, eBay and many more.

This article is part of Road to Consensus, a series highlighting speakers and the big ideas they will discuss at Consensus 2022, CoinDesk's festival of the year June 9-12 in Austin, Texas. Learn more.

Adelman has a long track record in e-commerce. In 2017, he was selected to the Forbes 30 Under 30 list for the retail and e-commerce category. So his journey to launching Lolli is anything but a coincidence. He was previously the CEO and co-founder of Cosmic (acquired by PopSugar, then Ebates), an e-commerce infrastructure company. At Cosmic, Adelman and his co-founder invented the "buy button,” which has now become a common piece of online architecture.

As an economics major, he was influenced by Muhammed Yunus’ microfinance experiments in Bangladesh, which demonstrated (among other things) how access to mobile phones can empower the poor. Adelman’s approach to Bitcoin comes from a similar conviction: The idea that Bitcoin as a software is a powerful financial force that could unleash trickle-up economics. And for that reason, he’s passionate about creating a way for people to get their hands on their first bitcoin – or satoshis (sats) – that doesn’t involve investing, which tends to turn off plenty of risk-averse people.

Adelman, a speaker at CoinDesk’s Consensus festival in June, spoke with CoinDesk from Miami, Florida, where he attended the Bitcoin Conference 2022.

So right now, you’re in Miami because of the Bitcoin Conference. Do you see Miami becoming the Bitcoin city as Mayor Suarez hopes it to be?

Miami's definitely compelling. There's a lot of really nice parts of Miami, but I think Miami has some catching up to do with New York.

But I think a lot of the young kids, the 20 to 30 year olds, are moving to New York overwhelmingly. It's impossible to get a lease right now in New York, and all these builders want to live in a cool, fun, young city. I think there's so much going on around Web 3, Bitcoin, crypto, and NFTs. That's happening in New York because it's such a cultural hub. A lot of investors or people who have already made money are moving to Miami, but I'm not seeing the true builders – the engineers, the founders – move there overwhelmingly.

The sad thing is that New York, on a regulatory side, has been a laggard. It's probably the worst place to build, on a regulatory standpoint, a company. But then, from a talent perspective, there are so many brilliant people, executives and hard working individuals that have deep experience in financial technology, engineering and security that I think New York is still the best place to scale a financial company – a fintech company. I think that e-commerce, retail, everything is in New York.

I have a hard time thinking about moving the company to Miami, but there's a lot of really interesting things happening in Miami and, clearly, things like conferences, everybody flocks here, and it seems really great. But I personally love being in New York, and I love having a presence in North Carolina as well, which is where I'm from.

It's interesting to think how cultural factors can be more important when it comes to making a decision on where to be based rather than macro considerations, like political, regulatory factors.

Yeah, it's really tough to be building. We're pushing regulators to really make New York a more Bitcoin-friendly state, and New York City a more Bitcoin-friendly city. I think (Mayor) Eric Adams has big plans to make it a hub of innovation, but it has a long way to go. They have to get rid of BitLicense.

I think that New York has a long way to go to get to a point where it is attracting businesses to be started there because right now we're losing out to other [places]. Wyoming and specifically, Miami, are doing a really good job of attracting this next wave of people. It's going to be like a flag theory type approach, where every state is going to compete to have the best talent. And states that don't, will get left behind. I think it's gonna be interesting to see how that develops.

What about North Carolina, your home state?

North Carolina is kind of in between. We're working with regulators in North Carolina as well, but they're just slow moving. There's not a lot of tech-world leadership in North Carolina. We're constantly educating people. The Research Triangle has this amazing talent if you treat it as one city. It has more Ph.D.s per capita than any place in the country, and it's such a hub of innovation. And we're just gonna keep losing people if we don't actually be a crypto-forward state, and specifically, a city. Personally, I think North Carolina has everything to gain and everything to lose. I've been pushing regulators to be more forward-thinking. And I might just have to get more involved in politics in order to actually create real action there!

How was the Bitcoin Conference this year? Last year, there were lots of weird clips or anecdotes from the Bitcoin Conference, right? I mean, we had this dogecoin guy who went up on stage. We had Max Keiser who yelled “f**k Elon” and a bunch of other stuff. Like, none of it happened this year, or maybe it didn't make it to Twitter – was that your experience as well?

Yeah, I wonder if security was tighter or something like that, but it was massive. There were so many people. I don't know the final count, but I heard it was estimated at 40,000 people. I have been going since they started the Bitcoin Conference, and it's just night and day. Just amazing to see how many more people joined, and it was way less, to your point, chaotic in a really nice way. It was just a very well organized conference and just a lot of really good people.

Another really cool thing about the conference this year is that a ton of bankers were there, merchants were there, and traditional investors. I had never seen so many legitimate people from the outside industries who were there, and looking to partner with Bitcoin companies. That was really cool and very different.

When did you start going to the conference?

I believe 2018 was their first conference, and we had just launched Lolli – the first Bitcoin rewards company out there – and the immediate reception was amazing. The Bitcoin community was incredibly welcoming. I think that a lot of bitcoiners are constantly looking for a use case for bitcoin, outside of just store value. Lolli created a very innovative way of talking about bitcoin, and making bitcoin a part of everyday life. Now, we’re part of the ecosystem.

We’re in a market slump right now. Do you find it to be ironically bullish for Lolli because now people have more purchasing power, so they get more bitcoin for their buck?

Yeah, there's kind of a meme internally in our community where it's a “stack the dip,” that’s what a lot of people say. When bitcoin is down, it's “stack the dip,” and then when bitcoin is up, a lot of people will talk about their earnings doubling or increasing 5%, 10%.

And with most cash back systems, you get your $5 in cashback, and it's $5 – you're not even accounting for inflation. When you get $5 in bitcoin, and it goes up, people get really excited about it. More and more people talk about the rewards and how much they've gone up. We've even had this phrase that our users call “the Lolli effect,” and it's when the reward is paid for the item you bought. The item becomes free because your purchasing power is so great with bitcoin that you've accumulated. Since we launched, bitcoin is up about 9x as of today, a lot of people have already had their items mostly paid for with their bitcoin rewards.

Do you feel like Lolli helped onboard people onto Bitcoin, or is it the bitcoiners who use your product, and so you’re kind of preaching to the converted?

I think over 50% of our users, from what we can tell, never had bitcoin before. They're looking at Lolli as a risk-free way of getting into bitcoin. And the nice thing about the natural user experience is that, because people shop all the time, people don't really invest all the time. But everybody shops and everybody does it all the time.

The other nonobvious thing about our product is that we're bringing merchants that never touch crypto into the space as well. I estimate less than 10 of our 1,100 partners actually accept crypto. We have over 1,100 partners today. For a lot of merchants, we’re their first interaction with bitcoin.

Would it be a trade secret if I asked how you managed to convince all those big players like eBay to partner with Lolli?

Great question! I previously started a company called Cosmic, and we built a buy button technology. And that company sold primarily to merchants in North America. I made these merchants a lot of money. When I was starting this company, I had already sort of built their trust. I came in and asked for a lot of favors, and was able to get 500 merchants to launch. Then the data started coming back, that we were really doing well to drive sales and increased conversion rates, so the merchants ended up really loving what we were doing.

And you studied economics at Chapel Hill. Which is funny, right, because people who study economics don’t often end up being bitcoiners since it’s a very doctrinal discipline. Would you say your economics training maybe make it hard for you to be “orange-pilled”?

The way my brain works is, I question everything, I’m very skeptical of things, and I don't take experts as truth. A lot of my teachers were Keynesian – very classic, old-school economists. I felt like a lot of the things that they were teaching were outdated. I didn't really agree a lot of times or really understand, to be honest, monetary policy. I felt like it was sort of this black box that they tried to rationalize with 60% accuracy. I was more curious with the 40%: What was happening in the unknowns, what were the behavioral sides, and how are we basing monetary policy on these sort of archaic beliefs?

Fast forward a little bit, I just felt like I was constantly questioning a lot that was going on at university. And then I really got into microfinance and everything that the Grameen Bank was doing in Bangladesh. Muhammad Yunus was working on this experiment that I was studying, where he gave the poorest woman in every village a cell phone and saw the trickle-up economics that would occur from that initiative. It was really impactful for me in my learnings, and I've been building technology since I was 12 – professionally, since I was 16. I kept thinking, “Okay, well, what do I want to build that's going to contribute to giving people - everybody – technology that's going to enable them?”

I ended up starting a company with this idea for Cosmic in college and then started really working on it after college. Then, we built the first dynamic “buy button” that lets merchants sell their products in different channels, anywhere, trying to open up and democratize commerce for merchants.

In 2013, I ended up learning about Bitcoin when I was crashing on couches, and I ended up getting really excited about the idea that you could connect 4.5 billion people with an internet connection through money. And it brought me back to the early days of learning about economics and seeing a monetary policy that everybody had the same rules on. And everybody understood, it was dead simple.

It didn't take an economics degree or Ph.D. to understand what was actually happening – it was like, there's only 21 million of these things. Everybody that you know can see the code base, everyone has the same rules, and it's actually way simpler than the monetary policy that I was learning that fiat institutions were built on for the last few decades.

There's this liberating power of cell phones in some of the poorest parts of the world, isn’t there? Did you perhaps also see Bitcoin as a financially liberating software – like how a cell phone is as a hardware.

Absolutely. Going back to the example of the Grameen Bank, giving the poorest woman in every village in Bangladesh a cell phone is not too different from giving somebody a Bitcoin wallet. You give someone a Bitcoin wallet, and that person now has access to a bank – they now have access to hold their own money, to hold their own keys.

That sort of financial empowerment, I think we're going to see this trickle-up economics where now, 100% of people that have an internet connection immediately have a bank; they have a right to a bank, and no one can take that away from them. That is so incredibly powerful, it's going to do so much good for the world, and there’s no stopping anytime soon. I'm incredibly excited for that future and it's really not too different from the initiatives of the Grameen Bank back in the day.

You said you found out about Bitcoin in 2013. That was a time when people would enthusiastically spend bitcon on coffee or pizza. And now the irony is, people don’t want to spend their bitcoin! And at Lolli, you’re in the business of getting people to spend fiat, and earning bitcoin in return. Funny contrast from the time you first found out about bitcoin, isn’t it?

It's a really cool contrast. It's also kind of questioning everything, right? Reading the original white paper of Bitcoin was incredibly inspiring for me, and what I think it will eventually do. But it was a hypothetical of a future world where we lived on a bitcoin standard, and people were able to pay for things with bitcoin – we don't live in that world.

My extrapolative interpretation of the Bitcoin paper was very different from most people, where it was like, “How do we get there? How do we fill in the gaps?” I think a lot about behavioral psychology and behavioral economics, and how do you study what people are doing every day? And then how do you get somebody to change their behavior? It's incredibly difficult.

Before we started Lolli, there were no bitcoin rewards companies. It was just people buying bitcoin as an investment. And so I was like, if you're just doing it as buying, and you're just doing it as payments, no one wants to pay with something that's going up.

Like, you're not going in paying with your Apple stock, right? You're buying Apple stock, you're holding it, because it's life changing and hypothetically, it will go up as the market goes up, and you're making an investment. No one thinks to use that as a payment mechanism. That's how everybody was thinking about Bitcoin for most of the time.

There was no business case for merchant payments, so I was powering a lot of these cashback rewards coupon companies, with my last company being a buy button technology. I was listening to their problems and also listened to a lot of their successes.

Wait you mentioned this before, so I have to ask: what does it mean to be the inventor of … buy button?

My co-cook, Matt Senter, and I were the creators of the first dynamic buy button, and PayPal created a payments button that lets you pay on a merchant site. But my definition of a buy button – I think most people's definition of a buy button – is being able to buy anywhere. In order to do that, you needed to create an abstraction of that payment outside of the site. PayPal never did that, no one ever did that. What we did is … we created that. For the first time, a merchant through APIs could create a direct connection into their back end and sell an actual product backed by actual inventory outside of their site. That was what we really created.

Also, keep in mind this is 2011. Now, buy buttons are everywhere. But before Instagram, Pinterest, Google, nobody was buying outside of each other's sites, right?

Alright, since we talked a lot about Bitcoin and also mentioned the white paper … a hard question for you: Who’s Satoshi?

Who invented Bitcoin is a controversial and complex question. To be honest, I like this idea that it doesn't matter who made it as long as that wallet never moves. I think that there are a lot of conspiracy theories out there of “Who did it? Why did they do it?” So far, that wallet hasn't moved in a very long time. And it doesn't quite matter because proof-of-work is working, it's just an incredibly distributed network of miners and nodes and everything. The best part is that we don't know who Satoshi is. And it doesn't matter at this point who he is or who they are.

I have my theories, but I think those theories matter very little of who it would possibly be. And what they actually created and put out in the world was this near-perfect financial system and the start of a revolution of data and money.

It would be an absolute chaos if those Satoshi wallets suddenly moved one day though, right? Like, the worst day in crypto kind of situation.

It would probably be pretty crazy if someone moved those wallets. It's always interesting to kind of think in hypotheticals, like what would happen? It's fascinating, but I think it’s for the best that no one touches it and it doesn't move.

Okay before Bitcoin and before that long journey in e-commerce, a long time ago, you worked as a cook, didn’t you? Crypto and food are my two passions, so I’m gonna have to ask you for some culinary “alpha leak” as a former kitchen professional.

Oh my god, I love cooking! It's my favorite pastime. I love throwing dinner parties. My first job, when I was 15, was as a cook – my first real job. I was building software on the side. But my parents were like, “Okay, go get a real job at a restaurant”. And yeah, I started working as a cook and had a really good time, learned a lot about cooking. My family really loves cooking and it was a really cool experience.

Let’s see, some alpha ... I'm not typically a cookbook person, but I got a really good cookbook that I've learned a lot from, it's "The Food Lab" by J. Kenji López-Alt. It's very digestible – no pun intended – molecular gastronomy. It teaches you the science of cooking, which gives you this really good understanding of everything. It teaches you the basics of where proteins break down, and how to cook eggs and mother sauces.

I think it teaches you the basics, so that you can extrapolate into other things and get really comfortable in the kitchen. Because once you know the science of cooking, I think it makes all cooking and sort of the experimentation behind cooking really easy. Thank you for asking that! What do you like to cook?

Oh, I mostly cook Turkish stuff – I’m originally from Turkey – and I also like Asian stuff like Thai or Sichuanese. And also lots of French classics.

Turkish food - amazing. Too late in my life, I learned and started to enjoy Turkish breakfast!

And in Thailand of all places! There was this Turkish family that opened up an incredible Turkish restaurant outside in Phuket, and I had been eating Thai food for two weeks. This place was highly reviewed randomly, I went there and just had one of the best meals in my life. And then the people there were so kind and so friendly. Their Turkish family was visiting, it was just a really cool, communal event. And I was like, “Oh, wow, I have to get into Turkish food.” So now I'll go and I'll seek out Turkish breakfast if I see a good spot.

That's amazing. So an American trying Turkish food in Thailand. That's globalization for you, right?

Exactly. Yeah, it's pretty crazy.