In 2015 I was working at a fintech startup in Austin, TX. We were dynamically discounting small purchases and sending our customers refunds on the order of $1 using a traditional payments processor. Every transaction cost us about $0.50 in fees and most of the team was too busy keeping up with growth to pay it much mind. Personally, I couldn’t stop thinking about this unsettling fact. I had heard of Bitcoin and went back to the books to see if it could create efficiencies.

Short story — it couldn’t. Not only was it too early for crypto on the adoption curve, but also Bitcoin wasn’t the answer. There was only one unit of account — the bitcoin — which was not stable with respect to the U.S. dollar. A $1 payment made today could be worth $0.50 next week. Bitcoin was a non-starter, but in the process I stumbled upon Ethereum, which was preparing to launch its public chain. This was my moment of clarity and I quickly fell down the rabbit hole and never looked back.

Ethereum can change commerce

I firmly believe stable coins are the future, at least in the short-to-medium term. The world economy is not going to forsake national currencies overnight and we need to establish infrastructure playing by the current rules if we are ever going to disrupt the global financial system. Simply put: we need stable coins, which we can build on Ethereum today. But right now, everyone is building app tokens.

What is an “app token”?

Although stable coins captured a lot of interest in the early days of Ethereum, the ecosystem seems to have collectively pivoted to a world full of “app tokens”. I won’t go into the reasoning because I think you can read between the lines. I will state, for the record, that there are many ways to incentivize use of your platform in a way that benefits initial contributors (e.g. the GRID token, discussed in the Grid+ whitepaper).

In any event, we now have a bunch of decentralized applications which each require their own token for internal use. This is what I mean by an “app token” — a token that each user must acquire to simply use the app. None of these tokens are liquid or stable with respect to the currency in which 99.9% of mainstream users transact (their national currency) and I believe this is a recipe for failure.

I don’t think app tokens are the future. Some may be able to bootstrap large enough networks to survive and that would be great, but I worry they have fundamental inefficiencies, especially for payments. Of course each app coin is different and I think there are some great projects in the space — I just think the days of the app token as the go-to model are numbered. It’s been a fun experiment, but I think we as a community will eventually return focus to using stable coins, which are necessary for mass adoption.

BOLT, Our Stable Coin

Grid+ is committed to building a product that solves a real-world problem for a mainstream customer base. We use Ethereum behind the scenes, but our customers don’t need to be aware of this fact. Sure, Ethereum nerds (I am one!) will be free to pay their electricity bills in ether, but your grandma doesn’t need to — she can use U.S. dollars.

When a customer makes a deposit with her credit card on Grid+, we mint BOLT tokens equal to that payment (less transaction fees) and send them to the customer. These tokens, which are ERC-20 compliant, are now 100% backed by deposit and may be used to pay for electricity in increments over a payment channel with no transaction fees. Any Grid+ customer may redeem these tokens at any time and receive U.S. dollars in return.

The Grid+ Master Plan

The beauty of stable coins is that they can interoperate between platforms. As we grow our customer base and add to our BOLT liquidity pool, we can build Raiden hubs and facilitate permissionless, general commerce on Ethereum with negligible transaction fees. This is what I needed in 2015 and this is what the world still needs today.

BOLT can be used in Ethereum dapps, too. Want to make long-term prediction market bets that aren’t susceptible to currency risk? Use BOLT. Want to outsource some computation? Use BOLT. Want to eat at a restaurant who doesn’t accept currencies that fluctuate 30% in a day? Use BOLT. Or better yet, use USD — because that’s basically what BOLT is.

As an aside, I dream of being able to order pizza with my BOLT in one click on Toshi or Status — someone please make this happen!

Disrupting global commerce

If we are to take on the payment processors of the world, we must provide a fundamentally better experience to the average business, which for decades has been bleeding revenue to transaction fees with no alternative in sight. If businesses don’t understand the currency you are making them use, you are not providing a good enough experience. Risk, to a small business (and really to most businesses), is death and in my opinion we are all doomed to fail if we do not recognize this fact.

On a recent interview with Blockchannel, Corey Petty asked us if energy is the best way to bootstrap this effort. We believe the answer is yes and we spent 40 pages of our whitepaper describing how the retail electricity space is ripe for disruption. But the point was well taken — our long term vision is much more than energy. Our name suggests this, too. We want to catalyze the growth of crypto infrastructure that will eventually bring us to a world where ether is commonly accepted at Starbucks.

But we’re not there yet — really, we’re not even close. There are many mountains to climb and the first one is using a currency accepted by a mainstream audience. This ecosystem needs stable coins. Fortunately, Grid+ is building one.

If you liked this article, go to gridplus.io to download our whitepaper, join our slack and sign up to our mailing list.