Exploring the CyberMiles ecosystem: The value of governance in blockchain
Stablecoins, tokenization and the race to decentralized commerce, a #CMusecase
More and more people around the world seem to recognize the potential that blockchain has to revolutionize the global economy. This realization, in part, has paved the way for blockchain startups like ours to facilitate collaboration and transactions. With that in mind, let’s consider the concept of “de-commerce,” particularly from a non-speculative point-of-view.
Achieving Value Through Governance
To start, first understand that the price of a token is based on governance. As a crypto network scales, the community increasingly values the ability to help govern it, placing a higher weight on the value of a token. One scenario where I can see fixed supplies working out: governance-focused tokens. For example, while the U.S. population has grown significantly in the last 100 years, we’ve not added more presidents, senators, or house representatives. The cost, however, to run for — and get elected to — higher office has increased significantly.
When evaluating a crypto network, it’s worth asking yourself: How important is the protocol for you? How much money are you making by using the protocol? How dependent are you on the protocol? These are questions that help determine the value of the protocol/network and thereby its token. (I mean, what could be more valuable than having a real say in the direction of a very important piece of core infrastructure that facilitates the trading of tokens in a “tokenized” world?)
Governance Models for Crypto Tokens
A few years ago I thought bitcoin was similarly comparable to a gold type of asset, rendering it impractical for buying goods that can be bought with fiat currency. Why bother? Unless you get discounts or another incentive to do so, there’s really no reason for massive mainstream usage. Granted, less-developed countries may adopt it more widely before we are likely to, but could the answer lie in blockchain-based decentralized marketplaces that succeed where Silk Road, the notorious, now-defunct online black market, went wrong? Coming to mind almost immediately is OpenBazaar, which set out to erase the limits on what could be bought and sold online. Less a website and more a peer-to-peer network, OpenBazaar ran on open-source software that users could download and install on their computers. OpenBazaar didn’t maintain servers or store transaction data, so had no control over what was bought and sold. (Online marketplaces like Etsy, by contrast, forbid the sale of Washington Redskin merchandise, while Wal-Mart doesn’t sell music with explicit content.)
The big hurdle for a concept like OpenBazaar, a seemingly terrific idea on the surface, is always how to get users and drive adoption. Now that we have the benefit of hindsight (being 20/20, of course), I believe that OpenBazaar failed because of what it encountered while still under active development! Speaking to Brian Hoffman, CEO of OB1, OpenBazaar’s parent company, directly last year, I concluded that adoption success depends on three things:
- Easy graphical user interface
- Financial incentive to hold and stake tokens
- Front-to-end build in privacy
It’s as simple as that. We need something — a marketplace — that isn’t centralized, meaning someone would need to take down the majority of the nodes to compromise the network. Contrast this with traditional centralized marketplaces where disabling a handful of servers can shut down the entire service, leading to loss of any funds therein held. Making a privacy platform is harder, and it makes shoppers change their habits and expectations.
Enter CyberMiles, which is laying the groundwork for a truly private shopping experience. It won’t be a competitor to the biggest players till down the road.
Unlocking Blockchain’s Power with Stablecoins
The stablecoin, a cryptocurrency that has low volatility against the world’s most important national currencies, has the potential to unlock extraordinary benefits for a decentralized Internet. Moreover, it wouldn’t surprise me if one day each (successful) token has a partial governance use case. Think about it: Those who care will hold it, and the rest will use it at high velocity. I think that it’s essential for crypto networks to have cohesive and fair governance, or risk being forked to death. (No longer will people have to worry about the daily fluctuations of their cryptocurrency when deciding to make a purchase. Huzzah!)
In the short term, stability enables consumers to transact in a practical way, while long-term stability enables other important financial functions such as loans and credit. To summarize, as a stablecoin is a cryptocurrency with a fixed price, a reliable stablecoin has the power to unleash a greater number of use cases than what we see today on the blockchain. Just a matter of time.
Decentralized Financial Services
Stablecoins are, in fact, well on their way to unlocking the unique benefits of a modern, decentralized Internet. Their adoption not only will support capital market formation but also will usher in new applications for decentralized finance, such as lending and derivatives markets, on the blockchain.
Take decentralized cross-border lending, for instance, which can occur through the introduction of a stable cryptocurrency. This removes problems evident with popular, highly-volatile cryptocurrencies, problems that have contributed to an uncertain lending environment where borrowers and lenders cannot comfortably plan for the future. Providing a solution can potentially transform many industries, from supply chain to shipping, exchanges and more. Financing and financial planning offer another example. Ethereum (and the crypto-ecosystem at large) proved the large-scale potential for global crowdfunding campaigns. However, many projects face uncertain accounting procedures as they struggle to manage a predictable financial plan due to volatility of their assets.
Reflecting back, you can see two things at play here: rationality in pricing and the implication that value doesn’t equal price. The latter is actually quite reasonable, but we tend to confuse the two. All too often, for example, people will overpay due to stubbornness/irrationality/over-estimation of a future value. What if different businesses value tokens at different prices?
The CyberMiles Solution
CyberMiles, a public blockchain protocol designed and optimized for commercial applications, recently launched an online marketplace that is among the first e-commerce platforms to support cryptocurrency only. Blocktonic.io, which exclusively accepts the CyberMiles Token (CMT) as a payment method, offers more than 60 products including electronics and the CMT Cube, CyberMiles’ new mining machine.
Initially, every product that consumers can buy on Blocktonic’s website is essentially free because payments will be refunded over a period of time thanks to a cash-back program. Under the terms of this program, Blocktonic also will offer a 100 percent rebate within a year to buyers who use CMT to purchase the CMT Cube. Additionally, Blocktonic shoppers can earn referral bonuses when they invite their friends to shop on the marketplace.
Note: Blocktonic is incubated by CyberMiles, which plans to subsidize Blocktonic’s marketing expenses. The cash-back program applies to select products and is only for a limited time. For program terms and conditions, visit blocktonic.io/content/spending. To view and purchase products on Bloctonic, visit blocktonic.io.
If you have use cases (e.g. DApps and side chain ideas) for the CyberMiles blockchain, please email business@cybermiles.io for collaboration/ investment opportunities.
