Who will lead mass market adoption of crypto?
Creators of crypto economies need to acknowledge the elephant in the room: even if communities are willing to participate, most established businesses are hesitant to transact with tokens. Established businesses transact with fiat money. Right now, given volatility and businesses’ lack of crypto domain knowledge, tokens represent unnecessary financial risk. Tokens also create incremental friction: businesses must create process and policies to transact with tokens — they are a new form of payment. Until these fundamental problems get solved, most business-dependent crypto economies will be dead on arrival.
Businesses are likely to adopt crypto by crawling, before they walk, before they run. We need to let them experiment with tokens, yet work within their current process and financial framework of doing business with the form of money they’re accustomed to using.
I believe a path to greater business adoption starts (but certainly does not end) with an industry that has over 2.3 billion active consumers¹: video games.
Video games use a non-tokenized virtual currency best practice called Value Exchange Advertising. It’s a mechanic that’s familiar to consumers and businesses. It can be easily tokenized.
Value Exchange Advertising is best explained as quid pro quo. If consumers choose to engage with a marketing message, they get something that has financial value in return. The value exchange model is prolific in mobile games — but also appears in other media. It can be direct: watch a video, get free internet access at the airport for the next 60 minutes. Or, it might be serendipitous: in the game you’re playing, you finally beat level 7 and Brand X wants to congratulate you and give you in-game virtual currency (which is usually purchased in-game from either Apple or Google). The key takeaway is a consumer’s data/time/moments are valuable, and in exchange, a media company shares some form of financial consideration which originated from the advertiser.
Here’s the important part: Value Exchange Advertising is an existing consumer and business practice. It’s familiar to consumers and a path to onramp businesses into crypto.
Although there isn’t third party data to validate the size of the Value Exchange Advertising market, general consensus (by talking with key players in the industry) points to a $1B-$2B existing ad market. More importantly, because Value Exchange Advertising is an existing business practice, we don’t have to educate, then convince established businesses to adopt a new business process. Finally, there’s no financial risk associated with tokens. Advertisers are still buying ads, a portion of their marketing dollars (on the backend) are getting converted into virtual currency and the virtual currency gets distributed to consumers — except this virtual currency is crypto.
I talk to marketers quite often, and most are interested and fascinated by crypto. Yes, they don’t want to transact with tokens today, but that certainly doesn’t mean they might not want use them tomorrow or experiment now if given an easy path. They just need someone to teach them how to crawl.
Finally, crypto reminds me of the late 1990s when the original Internet boom hit. There’s a lot of great technology; however, at the end of the day, it’s not about the tech. It’s all about how it makes a consumer’s life better and helps businesses transact with those consumers. Although getting online seems like a no-brainer today, back then it wasn’t a walk in the park — especially for businesses. We had to teach companies to crawl, before they walked, before they ran. Value Exchange Advertising helps established businesses crawl into crypto.
¹ Source: Newzoo Global Games Market Report, 2018
About me
Roderick Alemania is the Co-Founder/CEO of ReadyUp. An accomplished entrepreneur, Roderick has been at the forefront of industry transforming technology throughout his career. As the internet was transitioning to commercial use, Roderick helped to grow Infoseek from startup to publicly traded company, which was then purchased by Disney. As gaming shifted to the mass market, he was a key contributor for driving IGN’s value from $26MM to a $650MM acquisition by News Corp. At Vudu, he moved digital distribution to high definition formats (HD) when the industry was still in its infancy. At Six Apart, he helped to lead the development of the influencer marketing industry during the early days of blogs. And, at Tapjoy, he pioneered mobile value exchange advertising strategies for consumer brands.
