CryptoKitties, for anyone who is not familiar, is a virtual game in which players buy, collect, breed, and even sell virtual cats. But the uniqueness of the game is that it is built on the blockchain technology developed by Ethereum. Sales and ownership of each unique pet is validated through this network and no transactions can occur without the participants’ permission. It was launched in in October, 2017 and went viral by December, jamming the Ethereum network.
Since then, it has been spun off and managed to raise $12 million in funding from a combination of high-profile venture capitalists and angel investors. To clarify, cryptokitties are not a cryptocurrency. They are virtual pets bred and collected on an online platform. But the underpinning technology of this game is blockchain.
And here’s the thing: consumers can develop understanding of and comfort with the process by which blockchain is used for transactions, along with the benefits of that technology (security, privacy, immutability, etc.) by playing the game. And as they become comfortable, the opportunity for businesses to use blockchain and cryptocurrencies in the B2C marketplace will increase.
The B2B market is already benefiting from the blockchain
Blockchain technology has been adopted by financial organizations, healthcare providers, insurance enterprises and even by some agricultural companies. The reason is clear. “With blockchain, transactions, records, contracts and other documents are recorded and securely stored,” said Andrew Wong, a former JPM banker who left to join IDCM to pursue his dream of cryptocurrency. “They cannot be changed without permission from all parties involved. The potential for reducing fraud alone makes this technology valuable.”
And the initial blockchain technology has now given rise to decentralized apps (dApps) – the creation of software applications for real-life situations and solutions, and this may be the key to the B2C marketplace.
Why consumers hesitate to use blockchain
Anything new, especially in the world of technology, takes time to make its way to consumer acceptance. And so it is with blockchain. Why? Because it’s tough to understand. And people tend to mistrust what they don’t understand.
A survey conducted by Bitcoin.com revealed that in the largest crypto-market – South Korea – 90% of respondents have heard of bitcoin and understand what it is. However, only 8% know what a blockchain is and understand how it’s related with bitcoin and other cryptocurrencies.
Many consumers may already know that some of the businesses they patronize already use or are at least experimenting with blockchain technology – banks, the travel industry, insurance companies, for example.
But to use it themselves and to actually make purchases using a crypto, is taking a big step into the unknown.
So if you are considering incorporating blockchain technology, you have to tread gradually. Start with an educational campaign to communicate the benefits of using blockchain to your current users. Also, consider polling your target audience about their current awareness of the blockchain technology. Survey Cool lists a number of fee-based focus group survey organization that you can leverage. You can run these periodically and determine the increase in understanding the technology and the willingness of customers to embrace it. And before pushing for a change, consider the B2C niches where blockchain has already made some progress.
Current consumer-based dApps
Gaming (e.g., CryptoKitties) currently has the largest percentage of all dApps (42%). Exchanges come in second with 22%. And, in fact, only 25% of all DApps have more than 100 transactions a week. Over time, however, this will change. And it seems that Ethereum may be the catalyst.
Ethereum is a blockchain-based financial platform, originally designed for smart contracts, using its own cryptocurrency (ether). But it has much larger plans in mind. It has opened up its programming language, Solidity, to developers, as well as its virtual machine. Developers will be able to use these tools to create dApps that will have real-life uses, certainly for consumers.
For example, one recently developed dApp is Golem, which establishes a global market for idle computer use. So, if a consumer’s computer is idle all night, a user in another part of the world can contract for use of that computer during those hours – a part of the new “sharing” economy that consumers are now embracing.
Additionally, companies like Overstock, Expedia, PayPal, Shopify and Microsoft already accept payments with cryptos. The list continues to grow. Consumers who decide to use this method of payment will do so through blockchain and will come to realize that it is not that difficult to do.
Separating out blockchain and cryptos
There does have to be an understanding of the fact that, while blockchain technology support all cryptocurrencies, the opposite is not true.
Many companies are now setting up their own private blockchain platforms, which are used for transactions with their customers, even if those customers are using fiat currencies.
Ultimately, consumers will come to embrace blockchain, just as they did computers, online shopping, cell phones and now smart homes and appliances. These were all at one time unknown and thus untrusted technologies.
Blockchain technology is not going away. While it is still evolving, its early benefits are unmistakable. Practice patience as you move your customers toward it.