Defeating platform businesses by becoming the ultimate platform
Customer-focused B2C platforms are in for a new set of competitors vying for the same ultimate good: user attention. They are about to get competition from the unpopular kids: cryptocurrencies.
Platform business models have gone through an incredible growth phase in the first 20 years of the 3rd millennium. They are everywhere, even now, looking right at you, reading these lines (Medium is a platform business, in case you didn’t realize it). Amazon, eBay, Heroku, Mailchimp, Kickstarter, Spotify, iOS and Android: Platforms are everywhere and continue to penetrate more and more sectors of our society, the goal being always to help demand meet supply, in one way or another, and take a hefty cut in transaction fees. That scalability is what has fuelled the growth of thousands of platform business models, large and small.
How cryptocurrencies and platforms are related
Cryptocurrencies (a solid intro for total newcomers by Perri Corsello) have stampeded through the mainstream public’s attention span at least once in 2017, when Bitcoin reached its previous all-time high. Back in 2017, all the world was learning about centralized exchanges, cryptocurrency wallets, private keys and seed phrases.
What may have escaped notice is that cryptocurrency has a hidden use case that goes beyond the obvious use cases of trustless peer-to-peer value transfer, trustless peer-to-peer financial services and censorship-proof publishing (among many others). And that use case is enabling user-owned global platforms. In a sense, Bitcoin is a user-owned platform that brings market demand for Bitcoin together with the self-interest of miners, which is to turn an operating profit from their hardware and electricity.
That use case has not escaped the hawkeye of entrepreneurs who quickly realised that cryptocurrency, like traditional currency, rises and falls on practicality because usage comes down to transactions. And in the era of smartphones, what everyone wanted was a beautiful mobile wallet.
Fast-forward to late 2019 and that consumer wish has come true. Securely holding cryptocurrency has never been easier (OpSec / CompSec professionals endure gut-wrenching pain over this sentence — secure private key storage, strong OpSec mindset and sensible practices are not mainstream, yet) and mobile wallets in the shape of native apps are growing rapidly.
So you are a wallet app, and you are in everyone’s pockets, closer to their money than anything else, what are you? A platform into anything that can be attached to money. And with cryptocurrency, anything can be turned into digital value.
So your wallet is a platform. What do you do with it?
The most compelling use case I see is an underexplored venue that has typically been served by Telecom giants: public service networks, or more precisely, public telecommunications service networks.
Projects like Helium and Emrit, Magic and Althea, and even FOAM are making forays into this megacorp field. Decentralized internet access has been a dream (and reality in some locales) of many a hacker, many a hacker community.
Yet the trends that drive the mainstream cannot be denied: an explosion of small, internet-enabled devices like Scooters, arguably Smart Doorbells, Wearables and public infrastructure are taxing our wireless broadband infrastructure, which only TelCos seem to be capitalized enough to solve.
What if we put the TelCo business model on its head? What if we paid users to run the network that many IoT devices already depend upon or use? LoRaWAN, NarrowBand and other standards are all embedded in countless generic baseband chips that are part of many devices.
Emrit and Helium are arguably the only projects I have seen so far that approach that have the completeness of vision to actually attempt that feat: to put telecommunication nodes in people’s homes and reward them for it.
Emrit in particular goes one step further and includes the bootstrapping of the initial network in its incentive design by offering the required hardware for free and instead taking a cut of the user’s revenues for a limited time.
By tying in an asset (a telco node) and a mobile wallet app to manage it, Emrit is the first project to be in a position to take over an entire market in an invisible way — and then use that penetration to take other markets!
May I have your attention, please
By binding user attention through their financial self-interest, Emrit can bootstrap a global node network that can directly serve any IoT device while completely sidestepping the TelCo competition. If Emrit achieves a good mobile experience, they can position themselves as a gateway not just into cryptocurrency and its use cases but as a platform for offering users any kind of service: marketplaces, travel opportunities, financial servies even in the traditional world. The access to a financially actively engaged consumer is the true killer app behind Emrit. Ad space would be at a huge premium, partners would be storming the castle only to overbid themselves for seconds of screentime on user smartphones.
Personally, I expect Emrit at some point to notice the gold mine they are sitting on — and the potential conflict of interest. If Emrit can grow to be a household name like SodaStream then the temptation to gamify their end users without any accountability is high — unless they make the sensible design choice of giving decentralized control to the global user base.