Software developer sells toilet paper NFTs as a joke, then wipes out $7 million in medical debt

NFTs had a frenzy in 2021, with sales surging to $25 billion, prompting a Dallas software developer to use the cash grab to wipe away millions in debt for lower-income families.

“People were making stupid amounts of money in the space,” said Joshua Lapidus, whose day job is at Denver-based Opolis, a technology company that helps manage health benefits and payroll for independent workers.

The medical debt project took form last fall in the way a lot do in the crypto space — through a group chat, which Lapidus started with blockchain experts he knew. They landed on a unique theme for their non-fungible tokens — toilet paper — to poke fun at how people were buying anything if it were an NFT. About 70% of the funds would go to charity.

“We were making jokes about how bad the landscape was, with people selling anything to make money,” Lapidus said. “And we thought we should have people buy our thing and give some to charity.”

The project dubbed Rainbow Rolls was launched in October with 10,000 toilet paper NFTs for sale. The limit was later dropped to 1,000 rolls, plus however many additional rolls are sold the week after it hits the 1,000th roll sold. So far, about 855 rolls have been bought through word of mouth, with their price varying according to the price of ethereum.

Rainbow Rolls donated 20% of its sales, or $91,000, to New York-based RIP Medical Debt, which then used it to wipe out more than $7 million in medical debt by buying debt in bundled portfolios. On average, each $1 given to the nonprofit forgives $100 in medical debt, according to its website.

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

“People who bought rolls didn’t care about the art itself,” said Rainbow Rolls’ Michael Lewellen, a protocol security adviser at Walnut, Calif.-based OpenZeppelin, which is an open-source library for smart contract development.

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

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

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

The donation from Rainbow Rolls was sizable, considering that the average gift to RIP Medical Debt is below $300, said Scott Patton, director of development at RIP Medical Debt.

“I think it struck a chord with people because if you get a serious illness, it harms not just your physical body but your financial being, as well,” Patton said. “Everyone in America is aware that even with insurance and a good living, you may be insulated a little but you are still vulnerable.”

RIP Medical Debt also offers to review hospitals’ charity care policies to help them prevent more debt from being created.

The team behind Rainbow Rolls is pleased with its success, despite not coming close to its original goal to sell 10,000 rolls. Lapidus said that when the effort was launched in October, it came slightly past the height of the craze. The NFT community also values knowing the identity of the artist, which Rainbow Rolls has kept anonymous, he said.

The group is planning to launch a second project and considering registering as a nonprofit organization, Lapidus said. The timing will depend on when everyone is available, but he estimates a launch around April.

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

“The people helping with this are very highly paid, very successful contributors, so there’s no way I could have drawn them into this for the money,” Lapidus said. “If we wanted to, there’s a very simple formula to make $10 million overnight. They did it to help people.”