Cryptocurrency, Starbucks and Facebook: The Dawn of the Mainstream Market – Opinionbr>
If you would have asked me in January – when we helped Kodak launch KodakOne and KodackCoin – if both Starbucks and Facebook would let the world know this year that they have their eyes on cryptocurrency, I would’ve said, “Not likely.”
But here we are, six months later, and Facebook’s blockchain lead just made a move that can only mean the social media giant is getting more serious about the much-hyped technology. And Starbucks recently announced a partnership with Bakkt, a new Intercontinental Exchange company whose mission is to create “an open and regulated global ecosystem for digital assets.” (People leapt to the conclusion that, before long, we’d be paying for our lattes in cryptocurrency, but Starbucks quickly clarified. The venture will allow people to convert their cryptocurrency into U.S. dollars, which they can then spend at the coffee chain.)
So while we’re not quite there with mainstream adoption of cryptocurrency, Facebook’s and Starbucks’ leadership into the space is a milestone. We will see more household names exploring and entering cryptocurrency, looking for new models of customer engagement leveraging their brand equity in powerful new ways.
Now some of these big-brand cryptocurrency plays have been nothing more than publicity stunts – like the tartly cynical Long Island Iced Tea-Long Blockchain stunt that now has the Security and Exchange Commission’s attention. But there is a growing cadre of the legacy brands we all recognize that are figuring out how to angle their way into cryptocurrency and blockchain. Why? They recognize that brands are exactly what’s missing from the exploding space.
That’s the “Why.” How about the “Why now?” Two reasons: bigger brands are almost always slower in adopting new technology, both because they tend to be risk averse and also because they naturally move more slowly. But also the cryptocurrency roller coaster has reached a point at which big brands are starting to recognize a mutually beneficial path forward. Many crypto projects will soon need access to larger audiences for wide adoption, and big brands, staring eroding brand loyalty or existential scandal the face, have the chance to hook themselves on to the new-tech media darling.
Returning to the KodakOne example, we helped this time-tested brand announce a blockchain platform and cryptocurrency when there were 10 other image-rights management ICOs going on. But the legacy brand won out – at least in terms of attention, as a simple news audit of the past 12 months affirms.
KodakOne is taking the ball and running with it. Soon, user-generated photos taken in six major U.S. stadiums will be instantly loaded to the KodakOne blockchain, with the prospect of the photographers getting paid instantly (in KodakCoins) for usage. But the even more drool-worthy part of this integration is that these same sports fans will be able use KodakCoins to buy in-stadium soda, chips, hotdogs, beer and merchandise.
As it’s estimated that 55 million Americans will use its mobile app to pay for their coffee before the end of this year. Couple that large of a community with a brand of its strength, and Starbucks has the potential to go beyond its existing business model, creating a new economy model for engagement.
When looking at Facebook, crypto inside the social network could create, for instance, a highly efficient global peer-to-peer payments model similar to that proposed by the largest ICO ever, Telegram, or Asian competitor WeChat Pay. It could also be used as part of a new-style loyalty program, or even as the basis for an adjacent economy – for example, the subscription economy or authentic verified-news economy.
Bear in mind this is all happening amidst some pretty drastic changes we’re seeing in the young ICO market. To separate themselves from the many scams, legitimate companies are doing the hard work up front – capital raising, platform development, early customer adoption – and then going to the public for an ICO raise. With the components of a true economy already in place, these tokens circulate according to traditional supply-and-demand models.
I understand that big brands entering cryptocurrency may sound like anathema to some crypto enthusiasts. But I would also think these sceptics would rather let market forces than their own biases determine how cryptocurrency can best be applied in our great, big world. After all, big brands won’t be able to just slide into cryptocurrency without working for it. Many will be romanced by the prospects of non-dilutive financing, speed of outsourced innovation and riding the hype wave, but only the clever brands who understand their power to connect communities will emerge winners. Like startups, many ICOs will struggle to achieve critical mass in customer adoption – and will, therefore, fail.
The crypto economies that are powered by well designed cryptocurrencies and token economic models (like the Image Economy for KodakOne) leverage both the power of brands and the power of blockchain. Will that also be Starbucks and Facebook? Ask me in six months.
Bruce Elliott is president of ICOx Innovations, which helps established organizations grow their businesses through the use of blockchain technology and cryptocurrencies. He is a 25-year e-commerce veteran who has held senior leadership roles in privately held and listed companies in online payments, gaming, venture capital, and trust and corporate service sectors in North America and Europe.