Bitcoin’s crash risks consigning cryptocurrency to history as a gimmick, but some brands are realising its long-term potential and that of the blockchain technology behind it.
Whether you see the world of cryptocurrencies as a volatile speculator’s market or the new model for a decentralised economy, brands from Kodak and Burger King to startups in the loyalty and betting categories are all exploring the possibilities they offer.
Cryptocurrencies and the technology that enables them to exist, blockchain, are described at one extreme as gimmicks that simply make good fodder for PR stunts, and at the other as a new economic paradigm. So which is it?
Bitcoin has been hitting headlines since December, when its value surged to $18,700 (£13,386) per coin following the opening of the first Bitcoin futures market on the Chicago Board Options Exchange. To put this into context, Bitcoin was valued at just $966 (£619) at the start of 2017. The price has now slipped back to $6,602 (£4, 714), leaving the market open to accusations of dangerous volatility.
Cryptocurrencies plug into the power of blockchain, which enables organisations and supply chains to record data in a highly secure and fully verifiable fashion, without any one party being in control. Blockchain tech is based on the concept of an open ledger, which allows anyone in a community to validate the transactions taking place within it, explains Jascha Kaykas-Wolff, CMO at internet company Mozilla.
It also has many more – and potentially much more useful – applications than just cryptocurrency, which is the one gaining most attention.
“If we built an ad network that used blockchain as the tool that could validate that the ads were shown to people, you could effectively try to eliminate ad fraud.”
Brands will increasingly be drawing on blockchain technologies to prove the authenticity for the consumer.
Jeremy Bassinder, IBM iX
Over the past year, Kaykas-Wolff has seen more brands become interested in cryptocurrencies as a vehicle to fund their businesses. These ‘initial coin offerings’ (ICOs) encourage people to buy into cryptocurrencies or tokens, helping companies raise money in a way that circumvents traditional investment channels.
To drum up support for their ICOs many brands are cultivating communities on cryptocurrency-friendly messaging app Telegram, which is reportedly planning its own ICO later this year.
As well as using messaging apps to talk to the community, companies are publicising their ICOs with endorsements from industry insiders known as ‘blockchain influencers’ or celebrities such as Paris Hilton and Jamie Foxx. In August last year, for example, blockchain-powered market predictions website Stox.com teamed up with boxer Floyd Mayweather to promote its ICO.