Soon We Will All Be Cryptocurrency Users

Cryptocurrency is the beating heart of investment mania right now — despite the recent downturn. Despite that, a surprising number of cryptocurrencies have seen over 1000% appreciation in less than a year. Thousands of people are far wealthier than they were a year ago, and hundreds of thousands more are throwing their money into the hat. But let’s set the investment craze aside.

Cryptocurrencies are supposed to have an application. And, although it’s not making the news, some people are actually using their cryptocurrencies as money. They are buying and selling using Bitcoin, Bitcoin cash, Litecoin, Dash and Monero as if they were dollars. There are over a thousand businesses and retail chains that accept payments in crypto, though most do so via the web. You can also use crypto to buy gift cards. You can even get crypto debit cards, which any retailer will accept because they do a currency exchange in real time and pay in the local currency.

But will these currencies ever become commonly used as money?

It’s unlikely that Joe and Jane Public will start exchanging hard earned dollars for crypto, get wallets and apply for crypto debit cards — too much effort for too little reward. So what will eventually tempt them to do that?

The Utility Token

This is where utility tokens step in. If you are not familiar with the difference between a coin and a token, think of it this way: a crypto coin intends to be used as a medium of exchange, just like the dollar. In contrast, a token is designed, like “air miles,” to enable the provision of a service. Because it has value and is freely tradeable, there’s nothing to prevent a token being used as a currency, but its primary purpose is the service it supports.

Algebraix’s ALX is such a token. It’s primary role, initially, is to pay the users of the ALX mobile app for viewing ads. Put simply, users make anonymized data available to advertisers to create target lists for their ads. The ads are then presented to users who choose whether to view them. When they do view them, they are paid directly in ALX tokens by the advertiser. The proposition for the user is simple: get paid the money that Facebook or Google would otherwise get when you view ads.

Initially, Algebraix intends to focus on the entertainment sector: movie ads, TV program ads, games ads and music ads. By this tactic, Algebraix will swiftly grow its audience, before expanding its advertising business to involve other sectors. This is a “narrow strategy” that imitates the way that Amazon grew its online retail business: first, concentrating on books and then CDs, before expanding it to address a much broader market.

Cryptocurrencies as money

So consumers will be paid for doing what many of them were already doing, except that their activity will be permission-based and rewarded. And because they will be rewarded in Algebraix’s ALX token, the mass audience for this advertising fare will quickly learn how to earn, save, and spend a cryptocurrency, encouraging the mainstream adoption of cryptocurrencies.

Now, if businesses that appeal directly to the average consumer, as does Algebraix, become successful, they will popularize cryptocurrencies far faster than the current investment mania is ever likely to do. Only 48% of Americans invest in the stock market. Cryptocurrency investment may be growing like mushrooms in the morning, but even now — at the height of the mania — there are roughly 13–14 million accounts on Coinbase.

Impressive indeed, but most of those investors are exactly that, investors and not users of cryptocurrency. With the successful launch of Algebraix, there will be tens of millions of people holding small but gradually increasing amounts of ALX tokens. Tokens earned without changes to their behavior, without complicated steps to complete, and without the mystery that currently surrounds cryptocurrencies. Ultimately, ALX holders will be able to spend their tokens on goods and services offered on the Algebraix platform, just as they currently shop for those goods and services in other marketplaces.

When that happens, crypto-money will be in direct competition with the dollar.

Robin Bloor Ph D. is the Technology Evangelist for Permission.io, author of The “Common Sense” of Crypto Currency, cofounder of The Bloor Group and webmaster of TheDataRightsofMan.com.