With the advent of cryptocurrencies, a new wave of startups is beginning to set its sights on something different, with mainstream brands like Telegram and Kik pivoting to embrace an alternative model that wasn’t yet possible when they launched.
If you’ve been confused about the announcements, there’s a simple idea close to the center – namely, that companies in question could use cryptocurrencies to distribute revenue in a more equitable way, using a digital asset that behaves like bitcoin or ether in that it gives users an actual, tradeable stake in a platform’s growth.
It works like this: companies issue a certain number of crypto tokens (keeping a percentage for themselves) to be used on a platform now or in the future. If users see value in the platform, they’ll purchase the tokens needed to interact with that platform.
Yet, since the amount of crypto tokens is limited, supply and demand pushes the value of the token up (or down). And as the company holds a reserve of the tokens, the value of that reserve fluctuates as well.
Effectively sales revenue is being replaced with asset appreciation, with payroll covered through the early years with proceeds from the coin “offering.” But, as announcements have shown, you don’t exactly have to be a new company to get involved.