Dallasite sells toilet paper NFTs for fun, then pays off $7 million in medical debt

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NFTs went on a veritable frenzy in 2021 as sales soared to $25 billion, prompting a Dallas software developer to use the cash heist to eliminate millions in debt for lower-income families.

“People made stupid amounts of money in space,” said Joshua Lapidus, who works by day at Denver-based Opolis, a tech company that helps manage health care benefits and payroll for independent workers.

The medical debt project took shape last fall, as do many in the crypto space, through a group chat Lapidus started with blockchain experts he knew. They landed on a unique topic for their non-fungible tokens – toilet paper – to poke fun at how people would buy something if it was an NFT. About 70% of the funds would go to charity.

“We joked about how bad the scenery was with people selling everything to make money,” Lapidus said. “And we thought we should get people to buy our thing and donate something to charity.”

The project, called Rainbow Rolls, launched in October with 10,000 toilet paper NFTs for sale. The limit was later lowered to 1,000 reels, and the week after reaching 1,000. sold roll sold many additional rolls. So far, around 855 rolls have been bought through word of mouth.

The cost of the NFT is 0.1337 of Ethereum’s current price, which varies. As of Monday, Ethereum is trading around $2,590, which means the Rainbow Roll NFT is selling for around $346. Buyers use Ethereum bought with dollars on an exchange like Coinbase to buy the NFT. Rainbow Rolls then makes the donations through the Giveth platform, which instantly converts the Ethereum donation into dollars.

Rainbow Rolls donated 20% of its sales, or $91,000, to New York-based RIP Medical Debt, which then used them to pay off over $7 million in medical debt by purchasing debt in pooled portfolios. According to their website, every $1 given to the nonprofit cancels an average of $100 in medical debt.

The project also donated 16.5% of the funds to Gitcoin, which helps fund community projects in the blockchain-powered Web 3 space, and another 16.5% of the funds to Giveth, which funds social charity projects.

“People who bought rolls didn’t care about the art itself,” said Michael Lewellen of Rainbow Rolls, a protocol security consultant at OpenZeppelin in Walnut, Calif., an open-source library for developing smart contracts.

“It was about making a meaningful impact on someone’s life — the same reason you contribute to any charity,” Lewellen said.

Founded in 2014 by two former collections executives, RIP Medical Debt uses data analytics to target households whose income is less than twice the federal poverty guideline or whose medical debt is at least 5% of gross income.

Low-income families often cannot pay their medical debts, so hospitals and debt collectors are eager to sell that debt to RIP Medical Debt for pennies on the dollar.

Rainbow Rolls’ donation was significant considering the average donation to RIP Medical Debt is under $300, said Scott Patton, director of development at RIP Medical Debt.

“I think it resonated with people because when you get a serious illness, it not only damages your physical body, it also damages your financial fortune,” Patton said. “Everyone in America realizes that even with insurance and a decent living, you may be a little isolated, but you’re still vulnerable.”

States have varying amounts of medical debt that can be purchased based on their laws and statutes, whether hospitals are selling debt or how available the secondary market is, Patton said.

Texas has always been a state with lots of disposable debt, he said.

RIP Medical Debt also offers to review hospital charitable policies to help them avoid further debt.

criticism

As with any new trend, NFTs have their detractors, some of whom have criticized RIP Medical Debt for being associated with them. The main issue seemed to be the energy associated with NFT transactions.

Rainbow Rolls’ Gavin Nicholson, a legislative director working for DeSoto Rep. Carl Sherman, said those concerns are valid but perhaps misplaced.

“There’s nothing wrong with the NFT itself,” he said. “The problem is what drives them. But nobody complains when you buy a new computer because it adds value.”

The Ethereum community has long recognized the need to move away from their current model because of high energy consumption. In June, Ethereum 2.0 will be launched, which experts say could reduce energy consumption by 99%.

“It’s kind of weird because Rainbow Rolls reached audiences that wouldn’t have normally been reached and managed to get them to care about important issues that they wouldn’t normally have known about,” Nicholson said. “We brought them the problem and the solution.”

RIP Medical Debt was also surprised by the criticism, Patton said, noting that some objections did not appear to be well researched.

“Denial of contributing to medical debt relief does not help objections to NFTs,” he said. “You can have those concerns and investigate them and find solutions.”

Patton also noted that every room has bad actors.

“I’m just glad we’re working with good actors,” he said.

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Rainbow rolls 2.0?

The team behind Rainbow Rolls is pleased with its success, although it fell short of its original goal of selling 10,000 rolls. Lapidus said when the effort launched in October, it got slightly past the peak of enthusiasm. The NFT community also appreciates knowing the identity of the artist, which Rainbow Rolls has kept anonymous, he said.

The group plans to launch a second project and is considering registering as a nonprofit, Lapidus said. Timing is dependent on when everyone becomes available, but he’s estimating an April launch.

Most of the money will continue to go to charities, Lapidus said. The group plans to work again with RIP Medical Debt and maybe some new charities.

“The people who are helping with this are very high paid, very successful employees, so there was no way I could have dragged them in for the money,” Lapidus said. “If we wanted to, there is a very simple formula to make $10 million overnight. They did it to help people.”

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