A gloomy future for cryptocurrency, a promising future for blockchain technology.
The Crypto Winter has been happening for the longest time. Buzzes and rumours have circulated in the media saying that the 2017–2018 blockchain craze may actually just another hipster trend. Some businesses interested in the so-called hyped technology became skeptical towards blockchain, while some are still trying to make sense of these Crypto Tragedy.
To clear the cold winter air, the current crypto winter is not a discouragement to engage in blockchain.
Businesses should understand that blockchain and cryptocurrency, though strongly related, are two different things and crypto winter will not affect the potential growth of blockchain businesses.
3 Steps for businesses to brace for Crypto Winter:
1. Understand the future of blockchain is not represented by the crypto market
It is important that businesses have clear understanding on the difference between blockchain and cryptocurrency.
Blockchain is a technology, while cryptocurrency is simply its most famous application.
Take 2 minutes to understand the fundamental differences between blockchain and cryptocurrency from these 4 simple analogies. Businesses should not miss out on growth opportunities by using the available technology of the time due to misinformation or misconception.
Crypto winter is exclusively representing the world of cryptocurrency. Blockchain, the technology driving it, can not be represented by this same market condition, because the two has different ways of measuring their value. Coins have been brought to the attention of the general public because of their speculative investment value. A lot of people, especially after the rise in bitcoin prices in 2018, view them as investment opportunities and thus driving the volatile nature of the crypto market.
While the value of a cryptocurrency is measured by its store value — prone to speculation, blockchain’s value is measured by its projects, which should bring a specific utility to the space. Blockchain and decentralization is more grounded in the value of the dApps it supports.
For that reason, the core value of a blockchain cannot be found by looking at its trading volume or similar indicators, but instead in the applications that can be built on top of it. We need to go back to fundamentals and create products with added value.
Principal Strategic we’re focusing on just that: pinpointing a strategic application of blockchain technology for our clients so marketing efforts can be focused on presenting the unique added value. Check out our projects.
2. Leverage on blockchain technology’s advantages, not on the coins’ values.
As previously mentioned, cryptocurrency is merely an application running on top of a blockchain. This means that businesses can leverage all the advantageous features of blockchain technology in various ways. Therefore, blockchain platforms can actually exist without the use of coins/tokens system. Although the model may change in some way, it is still possible to build a valuable platform, or even a more valuable use in some cases.
Pointers to strategically market a coin-less blockchain platform:
- To replace coin-based incentives with rewarding experiential incentives
With a coin-based model, the incentive is clear. People who provide value to the system are rewarded with coins that increase in value as the system improves. However, without coins, the alternate economic incentive for people to participate could be the streamlined process or additional value gained from bringing an industry together around a use case. The blockchain technology is powerful in reducing inefficiencies and transaction costs or removing roadblocks when multiple parties transact with each other. Therefore, participants can be rewarded to use the platform because of the experiential value: cost savings & new business opportunities.
- To contrast the stable value of blockchain against cryptocurrency
In a coin-based model, volatility, securities laws, and taxes are all added complexities to take into account. The crypto winter is already a visible evidence of the inherent complications of cryptocurrencies. In contrast, using a coin-less blockchain model, the value is inherent in the ecosystem. Fiat currency that’s used for transactions offers much less volatility and that stability may be attractive to some participants.