As the benefits of blockchain are more recognized by businesses in several industries, the widespread adoption of this technology has focused the spotlight on its most game-changing component: cryptocurrency. Capable of being much more than simple digital cash like bitcoin, cryptocurrency is put to a specific use by blockchain companies to denominate the transfers of value between stakeholders in their ecosystem. “Tokenization” is how we describe this idea: that businesses are using digital coins to drive more meaningful behavior from customers besides just purchasing. Ideally, all participants in any service will benefit from a token-exclusive economy.
Cryptocurrency can be used to incentivize other valuable participatory activities from customers, thanks to its suitability for use with smart contracts. With the blockchain ledger and cryptocurrency to keep tabs in real time, a contract can be set up to immediately fulfill itself when certain conditions are met. With this, companies are using cryptocurrency’s relative value to fiat money to automate the payment of employees, invoicing, and other transactional activity. However, this isn’t thinking outside the box. The market is increasingly witness to new entrants like HotNow, which uses the special characteristics of cryptocurrency to create a more equitable, tokenized discount economy for the retail sector.
Evolving Cryptocoin Economies
Tokens were first derived from the Ethereum platform, which allows companies to crowdfund themselves by launching a derivative currency with value relative to a more liquid underlying coin. Those who invest in these new blockchain startups exchange their valuable coins for a greater number of the company’s new tokens, which can be used for speculation or to be patrons of the company’s eventual offering.
Speculation is the name of the game currently, with the unregulated nature of these tokens making it possible to move money between hundreds of different alternative coins to try to ride hype waves and multiply returns accordingly. However, many businesses aren’t providing good enough reasons to hold and use these tokens for their intended purpose, making the idea more than questionable. However, leading blockchain companies like HotNow recognize the unsustainability of this trend, and are building healthy ecosystems for cryptocurrency that justify their use over more traditional means.
The HoToKeN cryptocurrency is a more productive medium for exchanging value between local businesses and their online communities and encourages both parties to continue participating in a carefully balanced dynamic. Merchants using HotNow can reward locals with HoToKeN for writing reviews, taking and posting product images, referring friends, playing mini-games and other activities that help support their brand. HotNow plans for HoToKeN to be able to purchase goods and services at these retailers, providing businesses with both advertising and customers simultaneously. Customers don’t have to engage with businesses they don’t support, meaning that they’re essentially being paid as grassroots advertisers with money that is fungible at their favorite stores. Their spending performance is also tracked by HotNow, enabling the most loyal of them to borrow HoToKeN for even better deals.
A Token for Each Business?
Such a system is one of the few that deserves to be labeled as “tokenized” because it succeeds in being a truly insular, self-sufficient value cycle. The needs of every participant in the HotNow ecosystem are satisfied sufficiently, which can’t be said for some other cryptocurrency endeavors. Other businesses can emulate this model simply by building better use cases for their own cryptocurrencies. It’s not enough to crowdfund and label the resulting token as money for purchasing a service. Incentivizing the money to stay within these ecosystems, like by letting prolific users become administrators or VIPs is necessary.
Following this model, it’s easy to imagine that one day, every business will have its own token, and everyone’s digital wallet will have different coins depending on the places they like to shop, eat, or play. It might resemble the way that people currently use branded credit cards that offer rewards for buying items in a specific store or category. HotNow has already demonstrated a similar vision for their HoToKeN, and gives other companies an example to follow. Merchants using it can skirt gatekeepers like Groupon and search engines to win customers and gamify the process of earning social proof for their business within the community as well—all without breaking the bank.
Companies and consumers who see the value in such an idea are rushing to participate in HotNow’s upcoming initial token sale, for which the presale is already live. Over $3,400,000 has been raised for HotNow’s ambitious goal of having their platform live in the entire Asian region by 2020. Part of the momentum it’s gained so far are the stellar metrics it can illustrate to potential investors, like its running tally of over 600,000 downloads.
As tokenized platforms gradually illustrate their advantages over those that measure growth by dollar value exclusively, more services will switch teams. A situation in which businesses compete to provide better services and token benefits as well is the likely result, and this can only be good news for customers and retailers both.