Halsey Minor has seen it all. He made millions founding tech legends like CNET.com and Salesforce.com in the 1990s.
He then withdrew from the world plagued by a severe bout of depression which took him six years to overcome. He ended up losing his fortune when he declared bankruptcy in 2013.
Because of his experiences with banks during his half a decade of suffering, he decided to change the consumer experience of money for good.
In this exclusive and in-depth interview, Halsey Minor told Epoch Times how Uphold (formerly Bitreserve) works for consumers by taking money into the cloud.
Epoch Times: What is Uphold?
Halsey Minor: This is really an institution of money and it should provide for consumers the ability to take hundreds of billions of dollars of costs out of the banking system. Over the long term it should provide an institution, which because it’s transparent, will always be fully funded.
So there’s no chance that people can lose their money by essentially putting their savings in an institution that collapses.
Epoch Times: To clarify: Uphold [previously Bitreserve] is not completely reliant on Bitcoin
Mr. Minor: Bitcoin is the only thing on the block chain. The block chain keeps track of it. It’s not so with dollars.
You have to have a reserve function and that was the notion behind Bitreserve, a digital reserve, applied to all of these other forms of assets.
So Bitcoin can be on the block chain because there’s nothing behind it, but a dollar, if you’re going to exchange it, we better have it someplace.
And we have to show not only that we have it, but to over-reserve and be transparent. So you know how those dollars, euros, yuan, yen, etc. are all being held on your behalf.
Epoch Times: So you can transfer money instantly, without cost, in all major currencies, and everything is fully reserved and transparent?
Mr. Minor: Transaction by transaction. So if we went and we decided we wanted to make more money, as banks often do and say three months ago went and decided to buy Greek bonds because they were paying a very high yield … Well everybody would know literally in real time.
We’re an open book. Every rate we charge is listed, there’s no transaction fees that aren’t listed. We are 100 percent transparent about everything that we do. There are fees connecting us into the banking system; there’s nothing we can do about that.
You take a credit card and you deposit money into Uphold, it’s 2.75 percent. If you connect to your bank account, it’s free. That’s just because credit cards cost money in the banking system.
Our mission is not to make the banking system free. Our mission is to create a better monetary system. It is free and it is global. You can have your money anywhere on any device and send to anyone at any time and at no cost. That’s the cloud.
Epoch Times: And if you don’t like currencies, you can own real gold.
Mr. Minor: The purchase of gold is the only thing that’s not free because metals have a cost. But we’re still very low cost and there’s no holding cost.
If I send you gold, which is free, it’s free to send gold as a monetary asset. We have to buy it but you can exchange it with people. It just stays in the same vault in Switzerland.
Epoch Times: How can I know about Uphold’s safety as a consumer?
Mr. Minor: There will be businesses set up that monitor everything we do and there will be people who argue over how we administer the money.
There are people who believe the federal government of the United States is bankrupt and that, if we buy government bonds, they'll believe that we’re buying instruments that are worth nothing. Let people have the debate: really, for the first time.
When you go to your bank and you deposit the money, you don’t know where that money is going. You have no idea.
Because our data is real-time and it is ubiquitous, everybody external to us can construct our balance sheet as easily as we can. There’s nothing that we know about our risk and our securities that is not projected out into the world in real time.
Epoch Times: What about regulators?
Mr. Minor: You have all this money moving from bank to bank, and you know, the bank here doesn’t know who is over there—the bank here—and there’s a lot of risk.
With us, you become a member, you go to the website, you join, you give us the information that you need depending on how big your transactions are and you’re sending it from member to member inside of our system.
So we have a lot more security because we know both sides. Who is exchanging the money so it makes us much more attractive to regulators who are concerned about misuses of the financial systems.
We use the most modern technology in everything that we do, including security. We’re built from the ground-up, based on technology that’s available today. Financial institutions by and large are conglomerations of technology over decades and decades and decades that have kind of been glued together.
Epoch Times: How do the transfers work in practice?
Mr. Minor: It works the same way as if I send you gold. If I send you gold, we just change in the cloud. We just take one ounce of gold out of my account and we put it in your account. That’s a simple transaction.
It doesn’t actually move. The gold sits there, it’s just that the accounting system changes from me owning it to you owning it.
Same for U.S. dollars. The dollars just sit there, they don’t have to move, and that’s really where the innovation is. The innovation is that in this new, highly-connected world, money doesn’t have to move around among institutions.
It’s what Facebook did to pictures. Before, everybody had their own pictures and they'd send them to each other and now Facebook has one picture.
If 100 people are looking at a picture, it’s just one picture that’s there and everybody shares that same picture. So the pictures don’t have to move anymore, they sit in the little picture database and when you and I look at the same picture, we look at the same one.
That’s why these cloud businesses can connect a billion and a half people and be free. Pictures are a lot more information, actually, than money is. Money is just information.
It’s just a number of how much you have and how much I have and we just change the numbers if you send me money or if I send you money. The only difference is that you have to have a very high level of protection and information security.
Epoch Times: How can businesses benefit?
Mr. Minor: We’re going to make the lives of businesses much easier. But businesses, they work globally and if you can imagine, a big global company has 10,000 bank accounts around the world and they’ve got people logging into each bank account everywhere, writing down the numbers. It’s very difficult.
We’ve become a one-stop place for you to put all of your money in whatever currency you’re in and you have to pay somebody in some country in some bank account, you send them the money. You can move the money around internally in your corporation and create as many sub accounts for as many people as you like. Instantly and at zero cost.
Epoch Times: Once people give you $1 trillion or more, you will become a very powerful institution.
Mr. Minor: No matter whether I’m around or still part of the business or not, there will always be a strong pull toward putting money in liquid, safe investments and that’s because people can see what we’re doing.
I have to tell you so many times that we’ve been transparent. We can’t explain to people how something’s working, so we do simple things with the money. As people begin to focus more and more on our reserve it puts a lot of pressure on us to put it in things in like U.S. government bonds or in German bonds or in assets where a country has to go under in order for its value to basically go away.
But in the end people are going to basically be choosing forms of value they want to hold; we’re going to make currencies competitive with each other.
Epoch Times: That will put pressure on countries to become open and competitive as well.
Mr. Minor: Countries like China where they are very restrictive in their currency, they’re going to find that their currency is more expensive. For instance, supply chains don’t use their currency, they use the dollar.
I think it’s going to put a tremendous amount of pressure on all countries to have an efficient currency because everybody wants their currency to be the reserve currency.
Everybody would love to displace the dollar. I think that’s true of China. Even though we give you the ability to use the Chinese yuan, it’s harder to get it out of the system because it’s harder to connect to the Chinese banking system.
Countries ultimately realize you really have to create an open economic system to be competitive globally. Money that’s overly managed is just going to be very difficult in a world where things are frictionless.
That’s what we’re trying to do. We’re just trying to make it completely frictionless to move money from one place to another or from one form to another.
I think there’s too many good reasons to be a global currency these days. My expectation is: China is going to open up their currency in the next two years, maybe not so much as they are in India, but more than today.
Epoch Times: When you have your money in Uphold, how to you pay for goods and services?
Mr. Minor: I think people will start to accept Uphold and there’s a very good reason for why online retailers will accept Uphold; we’re zero cost, unlike credit cards which can cost 2 to 3 percent.
They become members. When I go to a website I put in my Uphold name and password and all that happens is money goes out of my account into their account instantaneously at no cost. I think that will take care of itself just because retailers operate on very thin margins.
In December or January all of our members will be able to get debit cards in the United States and Europe. That opens up the ability to be able to hold money and be able to spend it freely using the very convenient form of payment called a debit card.
When we launch the debit card it will be zero foreign exchange fees. For anyone who travels internationally, it will be the card they use.
You'll be able to buy coffee with gold on our system. It can make it really simple and easy to choose whichever form of value you want to use. If you have your credit card attached to your dollar account but you buy in euros we do the internal conversion to euros with no fees.
Epoch Times: What about loans?
Mr. Minor: We expect next year that a lot of the people providing online loans like peer-to-peer lending will come to our platform and you can choose them and have them compete for you.
So if you need to borrow $3000, rather than going to a bank you can go to one of these online peer-to-peer lenders. You put your information in, they come back with a rate and they'll fund your Uphold account.
That means that the debit cards we issue become more like credit cards. Except instead of having one institution called a bank doing it you can bid it out across everybody on the web who are no competing for you.
So you put in your information once and you go get a bunch of people to bid for the lowest rate and then you use that to fund your account. That creates even more consumerism and lowers costs and makes things simpler.
Epoch Times: Tell us about the difficulty to get plugged into the banking system.
Mr. Minor: The beginning of the company is October 14th even though we’ve been around for a year. Because that’s when we can finally touch where all the money is, which is in the banking system and we can now compete with that system by being a part of that system. That’s a hard thing to do.
I had no idea. It’s one of those things when you start a company, you have no idea how hard some of the things are going to be.
There are certain compliance and regulations and things you have to do which are all very well-intended and very important. It required us to develop a lot of internal processes that are all extremely healthy. There are some things which add time and don’t necessarily add a lot of value.
The system doesn’t really want new entrants. As much as everybody talks about innovation, the United States has given out one banking license since 2008.
So the government actually wants fewer, bigger banks because it’s easier to regulate them. They don’t want lots of financial institutions and nobody even wants any innovation in this country.
Everybody gives lip service to it and we go show off and say, “hey we’re innovative we want connect to the system:” Nobody is trying to help you get there. They’re trying to scare you: If you did this and you do this, well, you’re going to be in a lot of trouble. It’s very daunting. So we had to put in the right kind of people who understand these processes who understand what you have to do. That’s all very healthy.
It is clear that despite all of the talk about Fintech and innovation, the system’s not really looking for innovation. Banks are not interested in innovation. For the regulators, innovation is more work for them to look at so they don’t really want it. We haven’t really created a system in this country that incentivizes financial innovation.
There’s no assistance that’s been provided which is odd.
Because you‘d think that, with all the troubles that we’ve had in finance and the fact that basically all the banks were bankrupt in 2008, you’d think that we'd want to find a better way. That’s just not been the case.
Epoch Times: How do you make money?
Mr. Minor: Our costs are dramatically lower. The reason Facebook doesn’t charge anything for their services and they have billions of users, is their costs are very low.
When I started CNET I had to take a very big risk because nobody had ever launched a magazine that was successful, that was large, which was free.
When I launched the company there were no paying advertisers on the internet, but I went for the advertising model and I gave away my product for free, which nobody did.
I ended up with a NASDAQ 100 company out of it. I had 100 million users a month and I didn’t charge any of them anything. Out of it came this remarkable business that made a lot of money.
What’s unique is that if you’re a cloud-based music service you have to hold music and that costs money. If you’re a cloud-based YouTube you have to hold videos and that costs money.
We hold people’s money. That in itself is a business model and it’s been a business model for a very long time. You put your money in the bank and they make money off the money that you’re not using. You give your money to a hedge fund, they make money holding your money.
We use the money that we hold, hold it safely but we wanted to earn enough that we could obliterate all costs and fees.
Given that our costs are very low, we can be a highly profitable business without doing anything reckless with people’s money. By being completely transparent in the fees that we charge and our intersection with the banking system as well as the investment of proceeds.
I don’t see anything a year into our business that makes me believe otherwise. I think we will probably end up being profitable far sooner than most internet companies. Most companies, period. Because I think we'll grow very quickly.
Our goal is not to be an investment vehicle. Our goal is really to use the money we have to cut out the cost.
Even checking is not free. Even when they tell you that you have free checking it’s not free, it usually affects the lowest part of the socioeconomic order; they’re the ones who are paying most of the fees but they’re paying enormous sums of money.
Our goal is to take the money we get to build a sustainable business for us and to make hundreds of billions of dollars that are paid today in fees go away for consumers, and for businesses.
Halsey Minor is the founder and chairman of Uphold (previously Bitreserve). He has successfully founded several multi-billion technology companies: CNET.com, Salesforce.com, and the company that is now Google Voice.
This interview was edited for brevity and clarity.
