We're already well into 2018 and yet many people and businesses are still doubting blockchain. If there's one thing that 2017 showed, it's that blockchain is a technology to be reckoned with. Surely, the cryptocurrency market's massive correction has recently tempered a number of investors' sentiment towards crypto, but believers continue to stake on the technology, and Initial Coin Offerings (ICOs) continue to attract big money. Thus far, ICOs have already attracted around $6 billion in funding, clearly outpacing 2017 investments.
Blockchain is turning out to be a legitimate disruptor for all types of businesses in a variety of industries. Traditional financial institutions have already recognized this by embarking on blockchain projects themselves. A European banking consortium tapped IBM to develop a financial platform for small and medium sized enterprises (SMEs). Japanese banks have also tied up with Ripple to power their backbone. Many are now looking to large enterprises and big brands for a cue to finally acknowledge blockchain and an increasing number of established companies are entering the crypto space or have expressed keen interest in blockchain technology.
Making its way through the grapevine is the supposed entry of social network platform ASKfm's in to crypto. If it pushes through, the move can introduce ASKfm's has over 200 million users to the space. Salesforce officials have also expressed a possible line of products that are based on blockchain. Further, Starbucks chairman Howard Schultz created major buzz when he remarked that blockchain may be part of the coffee company's direction, leading many to speculate that we might see a Starbucks token in the future. And Kodak's foray into blockchain with its KodakONE platform underscores how companies are willing to stake their revival on the technology.
These developments only emphasize the potential impact of blockchain across industries. Here are three reasons why even big brands are willing to bet on blockchain's disruption.
1. Monetization through tokens.
Blockchain technologies help create self-sustaining ecosystems through smart contracts and tokens. Established companies seem willing to give this a try since some of them continue to struggle in monetizing their services. Those that launched as free services and later on introduced paid tiers often find it a difficult shift. It's tough to create "premium" functionalities that users will be willing to pay for. As such, many resort to other monetization strategies like advertising to earn.
A token economy addresses this by requiring users to spend tokens when using the platform. Users also get a chance to earn tokens back by contributing to the development and improvement of the platform.
This creates interesting possibilities particularly to platforms that rely heavily on user-generated content. Services like ASKfm, for instance, may be able to use tokens either as payments or rewards for various actions done on the platform. This way, at least service based businesses could already factor in their revenue as part of the economy and become less reliant on advertising revenue.
2. Introducing blockchain can add to ingenuity and new offerings.
Blockchain is also providing companies with opportunities to create new offerings. Kodak, for example, has struggled to find relevance ever since digital photography exploded. The company has now found some glimmer of hope by using blockchain to address a real market need. Intellectual property theft, licensing, and payments are all real concerns in the creative community.
The KodakONE platform is an image rights management platform that uses blockchain to enable photographers to secure their intellectual properties. Blockchain is used as an immutable record that can prove ownership of an image. Smart contracts will be used to record licensing agreements and even facilitate payments.
By tapping into blockchain, Kodak has found a way to possibly become a key player in photography again without having to compete in the heavily contested photography hardware, peripherals, and supplies market that numerous other digital imaging companies now occupy.
3. Consumers appear to be gaining confidence with using crypto.
Consumers are now also increasingly becoming comfortable with blockchain and cryptocurrencies. Companies can't afford to overlook this growing demographic of crypto asset holders. Businesses would do well catering to this market given the buying power they now possess.
Blockchain may also be the answer to secure corporate currencies. Instead of relying on conventional systems to enable gift cards, store credits, and loyalty points, companies may be able to use crypto tokens instead. This is possibly a major reason why companies like Starbucks, which have existing loyalty programs, are reported to be looking into blockchain to power their own corporate currencies.
By creating and supporting cryptocurrencies, companies would help solve the nagging issue of liquidity. People would be able to readily spend their tokens on goods and services unlike the way things are done currently. Presently, consumers have to go through the tedious process of having to exchange their crypto assets to fiat before they get any real value from it.