Can Blockchain Technology Make Inroads Into Existing Business Models?

Blockchain technology broke onto the technology scene several years ago, and quickly produced a lot of exciting byproducts. These include new funding options like ICO offerings, and of course, the rapid, sustained, exponential growth of cryptocurrency, a phenomena that made it possible for 12 year olds to become multi-millionares, nearly overnight.

Early thought leaders in the blockchain space predicted so much more. They envisioned a new way to conduct business, based on the blockchain’s limitless potential, and fueled by the decentralized nature of bitcoin, ethereum, and other cryptocurrency. But everybody else didn’t read about that part.

However, recent years have seen cryptocurrency gaining validity and established itself as not only a financial player, but as a potential business gamechanger – both in terms of capital investments and business operations. With 435 successful ICO offerings in 2017 (out of over 900 total), they have gone from being a way to raise capital for start ups to being a way for successful companies to move their platforms forward in the global economy.

This new strategy is known as the reverse ICO. It is being embraced by small tech startups and industry giants alike, and is quickly gaining ground.

ICOs as valid business models?

Who are the pioneers using ICOs as a viable alternative to VC fundraising and traditional business models? There are more than you’d think. Coindesk estimates that $6.3 billion has already been raised via ICOs in 2018, nearly double 2017’s $3.8 billion total. This rate of growth looks a lot like what happened a couple years ago with cryptocurrency.

For example, Cool Cousin, an app that entered the travel market in 2015 and now boasts over a half a million users, is in the pre-sale stage of their ICO.

Cool Cousin is seeking to establish themselves as a reliable trip planning and travel recommendation hub, entering the market with the likes of Yelp and Reddit, while utilizing the social media networking value of Facebook or Instagram. In their business model, expert users, or “cool cousins”, post reviews and recommendations of local hotspots in their city of expertise.

The systems is gain tractioning. After all, who doesn’t want a cool cousin to tell them where to go and what to do in a new city? For most travelers, unless their destination is both fortuitous and intentional, the trip doesn’t automatically include a local expert, passionate about their city or destination. TripAdvisor, Yelp, and the like have somewhat lost validity as reliable sources in this space, whether through their advertising policies or lack of personal accountability.

Cool Cousin has harnessed blockchain technology to boost their business model. By decentralizing their financial accountability and utilizing smart contracts to maintain stakeholder value via unbiased and verifiable content, they have cleverly bypassed the current monopoly in the online travel market and created their own space.

Another company who is successfully transitioning to a blockchain model is encrypted messaging service Telegram. Telegram is primarily used in countries with heavily regulated and monitored Internet and email service, including the Ukraine, Uzbekastan, and Kazakhstan.

Currently building a blockchain, they have also launched a public ICO. They are an ideal company for this space, as they will hopefully rebuild their existing encrytion security into their blockchain model, utilizing the capabilities of their new infrastructure to maintain and even build upon their existing value.

Social media app Kik successfully raised $98 million in it’s 2017 ICO. Boasting 300 million signed up and 15 million active users, they also are built on user privacy, but are more widely utilized in the western world than Telegram. Their Kin currency was able to be purchased with ethereum currency, and like Cool Cousin, they aim to be monetized through user interaction and digital services.

Gaining mainstream attention

Other companies are working to integrate cryptocurrency and blockchain technology into their payment systems, for example Amazon and Starbucks. With organizations of that size and reach, it will be interesting to watch how they utilize blockchain security and smart contract capacity into their day to day business practices.

In conclusion, as existing businesses, led by smaller platforms like Cool Cousin, Telegram, and Kik, as well as larger icons such as Amazon, and Starbucks recognize, integrate, and utilize blockchain functionality into their business practices and customer relations, we just may begin to see ICOs from existing business entities on a much more frequent basis.