Companies Must Not Be Too Slow About the Crypto Economy
Let’s think about the “crypto economy” for a minute.
Many people I’ve talked to since I became a “blockchain enthusiast” in 2016 view cryptocurrencies as a replacement for fiat currencies (issued by a centralized government). Or, they link them to initial coin offerings (ICOs), an unregulated way to finance businesses (particularly young technology companies). Others are more dismissive: they think it is all just hype.
I think all three views are “wrong.” At least, I don’t think that is where the real value of coins and tokens will be found in the crypto economy.
Instead, crypto coins and tokens will be an essential “tool” for companies to remain relevant in a fast-changing digital world. Individual businesses will issue their own tokens and such company-specific tokens will play a crucial role in how companies operate, communicate, and transact in the future.
To understand “why” and “how”, it is helpful to think about “platforms” and the idea that every company needs to think of itself as a smart or intelligent platform.
“Intelligent Platforms” in the Crypto Economy
I’ve used the term “Intelligent Platforms” (or “Smart Platforms”) before.
In a technology-driven, “digital world,” many of the largest and most successful businesses now operate as “intelligent platforms.” These platforms leverage networked technologies to facilitate economic exchange, transfer information and connect people.
Think Amazon, Apple, Facebook, or Google. These companies all facilitate interactions between creators and extractors of value and generate wealth for the platform itself.
But there is something more to these platforms than merely utilizing new technologies to enable economic or social interactions. What intelligent platforms all have in common is that they design their “internal” and “external” organizations in a flatter and a more inclusive way. This facilitates experimentation, collaboration, and creativity amongst multiple participants. These participants include consumers, employees, investors, flex workers, developers, content creators, service providers, other companies (both large and small), non-profits, educational institutions, governments, etc.
By doing so, they maximize opportunities to deliver constant innovation in the platforms’ products, services, and other solutions.
What makes an “intelligent platform” really smart is that it uses the platform participants’ input and feedback to continuously improve their experience and engagement with the “platform.”
And here is where crypto coins and tokens can and will become essential:
Not so much as a universal currency or funding mechanism, but as a tool for an innovative approach to organizational design.
By adding a “token” to the platform functionality, a business creates multiple opportunities. And since all businesses (and not just tech-businesses) need to think about becoming a smart platform, the potential for disruption is enormous.
Token-Driven Organizational Design
Every once in a while, you read or hear about using blockchain technology, crypto coins, and tokens to design platforms.
For me, this is what the crypto economy is really about.
When I was discussing the benefits of a token-driven organizational design last week during a Summer School lecture in Düsseldorf, it became very clear that it is only to be expected that we will see more blockchain-based coins and tokens in the near future.
We can call them “company/industry-specific” coins or tokens, or “loyalty” coins or tokens if you like. In the crypto economy, companies (or groups of companies or industries) will issue their own tokens as an integral part of the platform operations.
These tokens can perform a number of functions and bring multiple benefits:
#1 — Perks
In his book Masters of Blockchain & Initial Coin Offerings, Andrew Romans compares the issuance of these coins/tokens to a company’s (or group of companies) loyalty program. The coins/tokens provide access to products, services, discounts and/or other perks. This will be similar to loyalty programs that help gather a community of participants, such as developers, investors, consumers, etc. on the platform. They tie individuals into the platform’s ecosystem.
#2 — Liquidity
But unlike a mere loyalty program, the coins/tokens have many more benefits attached to them. Most importantly, they offer liquidity. Platform participants can sell and transfer them to other interested parties on crypto exchanges or secondary markets. These parties could be the “public” or a more restricted and pre-defined group of people. Either way, it integrates the token (and platform) into the mainstream economy.
#3 — Funding
Because the owners of the coins/tokens aren’t locked into the loyalty program, the issuance of coins/tokens can be a straightforward and relatively simple means to attract capital/funding for the platform (without issuing shares in the company).
#4 — A Level Playing Field
Intelligent platforms are built around the idea of delivering constant innovation via an open, inclusive and constant process of “co-creation.”
Multiple participants are crucial to a successful platform, but each group may have their unique capacities/capabilities. A well-designed token-driven platform can carefully plan the distribution of coins/tokens across all network participants.
All the participants (consumers, developers, investors and alike) are aligned and work together on the success of the platform. The issuance of coins or tokens creates a “level playing field.”
Crucially, this helps establish a “community-owned” platform, which isn’t based on traditional hierarchies between the platform participants (think about the hierarchies between shareholders, managers and staff).
By doing so, crypto coins and tokens:
- Provide the right incentives to multiple platform participants.
- Satisfy participants’ dynamic needs.
- Provide a “personally” relevant experience to all platform participants.
- Facilitate connections to a community that “matters to them.”
- Help build a strong and open “company culture” of involvement, engagement, and connectivity.
In short, the coin/token offerings will be integrated into the core functionality of the platform, making them “community-owned and driven.”
#5 — New Digital Technologies
Finally, crypto coins and tokens offer opportunities for integrating “near future” digital technologies.
For instance, coins and tokens can be “smart contract” empowered, allowing specific operations/benefits only if and when predefined rules and requirements are met.
The smart contracts could, in turn, be empowered by “artificial intelligence” algorithms, allowing for customized services, continuous communication, and better alignment of interests amongst participants.
One Last Thing
Of course, I understand that the loyalty coins/tokens will not be widely introduced and adopted tomorrow.
Challenges do remain.
Blockchain-based coins and tokens still have significant regulatory, technical and operational shortcomings.
Yet, I agree with the blockchain “die-hards.”
The companies embracing the crypto-economy will be the winners of the future.
The issuance of coins or tokens will be linked to the company culture, it will be the way to attract and incentivize consumers, investors, employees and developers, and offer the expected experience. It will be linked to company’s capacity to deliver constant innovation.
When you think about it in more detail, you will see that blockchain technology, crypto coins and tokens do offer tremendous opportunities.
In fact, I would argue (as I did in Düsseldorf) that understanding the “crypto economy” will significantly increase your career advancement.