For web platforms considering a token strategy: cryptocurrency vs. dollars?

A lot of founders / teams have been asking if they should be adopting a cryptocurrency strategy.  This is understandable given the frenzy of fundraising recently and the ongoing dialogue about the potential for cryptocurrencies as an alternative business model for web platforms.

As “traditional” web & mobile platforms explore this option, there are a few important considerations (esp given the risk in this model):

1) What is the advantage of using a cryptocurrency instead of traditional money?  Answers could be: programmability, international exchange, earnability, etc.

2) Could I use an existing cryptocurrency (e.g., zCash) instead of launching my own?

3) From a revenue / value perspective, is there a model for value creation independent of funds that could be raised in an ICO?  e.g., are you just looking to raise short-term funds an alternate to an equity round, or is there a real value theory of cryptocurrency running inside your application?

4) Could you imagine such a cryptocurrency spanning beyond the borders of your own application?  Generally speaking, if there’s a more use = more value theory (i.e., “fat protocols“), there’s an incentive to go broad to increase use.

5) What is the model for internal economics around the cryptocurrency?  E.g., how would people earn it, and how would they spend it, within the ecosystem?

I’ll follow up with more on these in a future post, in particular #5, as I believe that is the most fundamental question.

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  • jason wright

    e.g. zcash but not i.e.

    • ?

      i believe my grammar is correct!

      • awaldstein

        (you are. and i’m the guy when i ran huge marketing departments would distribute Elements of Style to everyone once a year!)

      • Siding with Nick in this beef

      • jason wright

        It’s about greed and not grammar

  • 1) Depends who your user is. In our case because the people we serve have no money of their own.
    2) Depends if you trust the current batch of issuers (who all seem to hail from the same sort of background). We don’t.
    3) Unlocking the true value of community will pay dividends to all with the keys. Let’s face it, ‘community’ is one of those magic bullets that everyone kind of longs for.
    4) Yeah – we reckon one massive big members club will do the job just nicely
    5) Earned into existence for contribution to our common good. As defined by us and measured by us.

    That’s our take on it from over here in Manchester – the home of the Co-operative.