(This is article #4 of “180 Days to Startup” series documenting my entrepreneur journey. In case you want to start from the beginning, please click HERE to the first article.)
Blockchain is amazing at keeping all transactions recorded without having to rely on another individual or organization. Users on the blockchain can have a peace of mind that all their recorded assets can never be lost, stolen, or forgotten. It is perfect for fields like finance, asset ownership, or even supply chain where exchanges need to be securely documented and verified. But how does this feature benefit small business marketing? What can blockchain do for businesses that the current marketing platforms can’t already? Will blockchain really add any value to small mom n’ pop shops? To answer the blockchain-necessity questions, let’s look at some commonalities between a successful business and a thriving blockchain project:
Commonality #1 — Solution Focused
Business: Any successful business needs to be solving some sort of problem for a group of people. It can be as simple as “I want a coffee shop at this corner on my way to work” or it can be “I want to get survey results faster”.
Blockchain: Time and time again it has shown how institutions have failed us. The lack of transparency and their drive for self-interests at others’ expenses left all of us feeling frustrated or even betrayed. Blockchain aims at solving that problem and eliminates the middleman.
Commonality #2 — Trust Earned
Business: No one would trust a restaurant that constantly causes people to feel ill nor will we trust brands that violate their own value. Earning trust from others is difficult but highly rewarding when obtained. Unfortunately, trust can be lost easily when things go wrong.
Blockchain: It is the first real alternative that has shown potential in solving the trust issue with centralized institutions like banks or government. Through the use of smart contract within the blockchain, users no longer have to trust another human being to handle their transactions.
Commonality #3— Network Growth
Business: Throwing money at advertisement can only go so far. It is normally the referrals and returning customers that will ultimately make or break the business. A business that has already earned customer trusts can acquire returning business much easier than from a brand new customers.
Blockchain: A highly involved network of users is key to success. There are contributors and then there are beneficiaries. Sometimes it takes just one person’s influential action to get it going. It wasn’t until someone bought 2 slices of pizza with 10,000 Bitcoins that people realized this “digital money” can actually be used and have value.
Blockchain Really isn’t for Everything
Many people will consider the potential to blockchain everything but I personally doubt that is a good idea. It is really good at recording transparent transactions and gathering consensus but it has a significant disadvantage in speed and efficiency. It is more effective in time and money when only a few people make decisions versus a network of thousands of people making decisions. It all comes down to how the unique blockchain advantages are being applied.
Blockchain and Marketing
As I have mentioned in my last article, nodis.io is not meant to just create another cryptocurrency to follow the hype. We really needed to evaluate the necessity of using a blockchain before development starts.
Currently, there are so many marketing options for businesses to consider. Aside from social media, there are e-marketing, print media, radio, TV, billboards, direct mailing, and all sorts of other ways. And in each categories of marketing methods, there are countless companies trying to compete with each other. While I doubt that blockchain can truly disrupt all the ways of marketing, I believe it does have some unique advantages that businesses can benefit from.
The most obvious one is the perception of cryptocurrency among the millennial generation. Even with all the massive gains/losses of Bitcoins and the questionable ICOs out in the world, many still see cryptos as a viable financial instrument. It can act as a unique reward system given to customers upon purchases like a loyalty program. Based on research, 95% of the people are in some sort of reward systems in Canada (see our white paper for more detail and stats). Cryptocurrency has earned a ton of interests from the general public and has the potential to be used as a loyalty program. Our research has shown that 47% of the people would own cryptocurrency if they can be obtained easier. Even my 62 year old retired dad, who hates social media and doesn’t know how send emails, is trying to understand Bitcoin/altcoins.
For a good example of how someone can possibly go from a skeptic to an advocate, check out my co-founder’s article HERE!
That being said, there are already startups out there that are or in the process of launching crypto-based rewards programs. One of the craziest loyalty programs I’ve heard of is from China. They were offering customers a full 100% cash back on purchases in cryptos. So if you were to buy a $10 meal, they will give you back $10 worth of tokens. If you were to buy a $50K car, they will give you back $50K in tokens. However, the big catch is that you can only spend a very small percentage of the tokens every day. It will take years before someone can fully use up all the reward tokens.
While these ideas may have merit, they rarely utilizes the decentralization function of a blockchain. There is really no middleman to eliminate by offering a different type of loyalty program. We believe that blockchain is created for so much more than just offering digital assets to replace fiat currency or rewards points.
We believe it is meant to solve the middleman problem
Nodis.io and Blockchain
Having blockchain in our product significantly increases the complexity and cost of development. On top of that, we have to battle the low adoption rate of the new technology and the negative sentiment towards crypto (thanks to all the questionable ICOs out there). We need to be absolutely sure this is the right way to go.
The team considered the following requirements as an effort to answer the blockchain-necessity question:
- We want a unique reward system that stands out in the overcrowded loyalty program space.
- We want the reward to have independent value that can turn to fiat currency if users wish to.
- We want to give the whole community a chance to help validate the Challenge submissions to prevent cheaters or biases (Click here to understand what Challenge means for nodis.io).
- We want the community submission process to be a part of the marketing strategy that allows the businesses to get the maximum exposure of the WHOLE network.
- We want a transparent and immutable system to track all transaction and decisions without having to rely on a human
We do not want to just offer a good loyalty program for businesses to get attention, we want them to get noticed by as many people as possible via our platform. The community validation idea will be a core functionality to our solution in helping small businesses to get exposure. It will cut out the need of a middleman to decide whose submission gets approved and whose doesn’t. It’ll also reduce the chance of bias and preferences. Blockchain is perfect for that.
More on the Community Validation Function
Originally, we thought to have businesses that posted the Challenge to be the judge of the submission. However, this will be extremely inefficient and time consuming. Small business owners/managers don’t have the time to be going through hundreds of submissions every month. In addition, some businesses may treat it as a “swipe-right, swipe-left” exercise, which can be unfair to some authentic promoters. Challenges are not meant to be a popularity or beauty contest, it is designed to give businesses opportunities to interact with the community.
Second option was to validate the submissions ourselves. This can be problematic when we have hundreds of submissions every week. It’ll be a huge bottleneck in scaling.
To stick true to what we want to do with nodis.io, we naturally came to the conclusion that EVERYONE should have the voting chance to the submissions. All voters will be rewarded for their contribution. However, to avoid people trolling and voting randomly, ONLY the majority side of the voters will receive tokens. We are hoping this will motivate voters to be more careful in their decision-making.
Now the most important question is… what are the values for both the business users and the promoters when nodis.io is on the blockchain?
- No upfront cost — promoters are paid in NODIS token. The only promotional cost for businesses is the discount they would have to give out for those vouchers.
- Businesses are tied to a cryptocurrency, which largely interest millennial and younger consumers.
- A Challenge is an engaging way to interact with customers and the community submission validation process will take the business exposure to a whole new level.
- Cryptocurrency is being earned through non-technological effort so anyone can get some (47% of millennials would get some crypto if they could be obtained more easily)
- NODIS tokens can be used for voucher-purchasing for redemption of products and services
- Challenges can be fun social events that participants can experience with others
By utilizing the decentralization functionality of the blockchain, we will be able to give businesses significantly more exposure. However, there is one major problem. When nodis.io one day reaches hundreds of thousands of users, all the submission validation calls on the smart contract could potentially be VERY expensive. Our decision to which blockchain to build on is critical for the success of nodis.io. This will be discussed in my future article 2 weeks from now.
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DISCLAIMER: The community submission validation function is currently still in research stage. We are trying our best to to make it work but it will depend largely on NEO blockchain to NEVER charge GAS for smart contract calls. The moment it starts charging, it’ll incur significant cost to us, which may make it not feasible.