A Proven Model for Adoption that Bitcoin Cash Should Use

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Avatar for dave_gutteridge
3 years ago

A while back there was a project called the Bitcoin Cash Fund, where the aim was to raise money to support projects that promote Bitcoin Cash. Help designers and marketers to make infographics and videos and other methods for getting the word out. Note that I'm not talking about the recent Bitcoin Cash Ecosystem Fund being run by Bitcoin.com, which is a much larger project to invest in development as well as promotion. The Bitcoin Cash Fund I'm referring to was a grass roots effort that bubbled up out of discussions on r/btc and maybe elsewhere in mid 2018 or so.

So far as I know, the Bitcoin Cash Fund raised a few tens of thousands of dollars, maybe more, and I think they supported a couple projects. Unfortunately, as I remember it, the people running it got bogged down in trying to develop systems of governance to manage the money fairly. For anyone wanting to apply, it was hard to tell exactly how it worked, and the whole thing fizzled out. Their YouTube channel hasn't been updated in a year or so, and, as I type this, when I try to go to the Bitcoin Cash Fund home page, Firefox tells me it can't connect.

To be honest, I don't think it really would have mattered much if the Bicoin Cash Fund had stuck around. I think it's fine if people want to come up with videos and infographics and other media to explain Bitcoin Cash. But I also think that there are diminishing returns on adding more and more different versions of the same examples and demonstrations.

Assuming for a moment you could do what the Bitcoin Cash Fund did and raise a little money for the purpose of promoting Bitcoin Cash, might there be a more effective way to use that resource? And is there any objective reason to believe in another method?

Fortunately, I think there's a real world case study we can turn to that gives us some guidance. I'm referring to the promotion and adoption of cashless payment systems in Japan. In recent years, Japan suddenly pivoted from a consumer culture that was almost entirely cash based, to using apps with QR codes as a matter of course for every day payment. There are dozens of different companies competing to become the standard every day payment system. I think you can see how this has a lot of similarities to the challenges faced by Bitcoin Cash.

Although there were dozens of companies trying to become the de facto standard, only a few rose to the top, and I think we can learn from one of those leaders, a system called PayPay.

Most people outside of Japan haven't heard of PayPay, so they often get it confused with PayPal. With just that one letter on the end being different, it's easy to get them mixed up. So, just to be clear, I'm not talking about PayPaL, the global payment company you've probably heard of. I'm talking about PayPaY, an electronic cash service only available in Japan.

PayPay is the system backed by Softbank, which you may have heard of outside of Japan. They have a lot of investment money that they throw around, such as their recent investment into WeWork, which doesn't seem to be going very well. With Softbank behind it, PayPay had the benefit of a billion dollars, not figuratively but literally, for the purpose of promotion.

It's easy to imagine anyone could succeed with a billion dollars, but keep in mind most of PayPay's competitors have as just as much money, and as much or more existing infrastructure and brand recognition.

I've never even heard of or seen most of these, but this is how much competition there is for electronic payment in Japan. These are not ordered by popularity, PayPay is listed third from the top, rightmost side.

Among PayPay's competitors were JR East Rail and their Suica card system, which is slightly different than the others because it's an RFID card based payment system. But you have to include them because they compete for the same electronic payment market share. On top of having plenty of money of their own, and government support, many retail stores operate within JR rail stations or on JR land in general, so they have built in synergies to fuel adoption. Almost every store within a certain radius of a JR station accepts Suica.

Of the systems that are closer to PayPay in terms of the technologies involved, there's ID, which might have rebranded as "d-Harai", I'm not sure. It's a little hard to keep up with the market because things are evolving fast. In any case, it's a system backed by Japan's largest cell phone carrier, DoCoMo, who can offer that you can settle payment with your phone bill. They also offer RFID payment if you use one of their phones.

Probably the biggest success after PayPay, though, is Line Pay, the payment system backed by Line, Japan's most popular text messaging app, with 80 million users. Everybody already had the app, it was just a new part of the interface to include a payment system.

It's worth also noting the huge players in this game who have not succeeded, such as Nanaco. Nanaco is backed by 7-11, Japan's largest convenience store chain. They had the option to launch with their payment system being immediately usable in all their existing stores. That's a huge advantage, and yet, they couldn't capitalize on it. Nanaco is around, people use it, but so far as I know, after two or more years of pushing it, you can only use it at 7-11, and maybe a few other places here and there.

Even Mizuo Bank, Japan's second largest bank and the 18th largest in the world, with plenty of resources, couldn't make their electronic cash system get traction. Ever heard of Jcoin? Pretty much no one in Japan has either.

This game is being played by, and lost by, a lot of really strong contenders. PayPay was never assured success, even with its huge war chest of cash to fuel its ambitions.

All of which is to say that PayPay was in a similar position as Bitcoin Cash is now, where there are countless cryptocurrency projects, and other electronic payment systems, to compete with. And also, some of those competitors came with big advantages such as name recognition or advantageous infrastructure features. Most people outside of crypto enthusiasts probably think of Bitcoin Core when they think of cryptocurrency, and for a long time Ethereum had a monopoly on making tokens.

So how did PayPay overcome similar obstacles to rise to become the most widely used payment app in Japan?

Paypay's strategy was pretty simple and proved to be quite effective. First, they took some of the billion dollars they had, and went to stores and offered them some of that money to finance discounts for customers. How it worked was, let's say you wanted to buy a new phone or laptop. Which, by the way, I did. An electronics shop would offer a 20% discount. The difference in price was made up by PayPay, so for the store, they get full price. But the store sold more product because customers were incentivized to take advantage of the discount.

The 20% cash back was deposited into my PayPay app. So, at first, I didn't have to figure out how to put cash into PayPay, it was just given to me. I had to download the app, and then at the counter, the store would scan a QR code when I made my purchase. An amount equivalent to my discount was now in my PayPay wallet.

The next part is where I think there's some simple but clever strategy. Consumers didn't get access to the money they got from that 20% discount right away. If they did, they might have simply turned around, used that amount to buy something else in the store on that same day or soon after, to ensure they get their full value, and then forget about PayPay.

The amount that consumers earned from the in store promotions was not spendable until about three months or so after. They had a set date, I think the beginning of March 2019, where all PayPay balances would then be usable for purchase. What this meant was that at the end of 2018, when the first initial promotion ended, there were hundreds of millions of dollars worth of PayPay points sitting in consumer's phones. PayPay then went around to merchants everywhere and said, "hey, come March, there are going to be all these customers looking to unload all that money, don't you want to get in on that action?"

Many merchants did. And to just sweeten the deal a little more, PayPay used just a little more of their war chest to offer a little more discount to consumers who started paying with PayPay. These second stage discounts were not as big as the ones when they first put PayPay onto my phone, but still worth it. Especially since I was only paying with money from my previous kickback.

That approach turned out to be a huge win for Paypay. They rocketed up to being one of the top cashless payment systems in Japan.

So, how can Bitcoin Cash learn from PayPay's example?

I think the key learning point, the core of the winning strategy, is that PayPay did not rely, as many of their competitors did, and as the Bitcoin Cash community often seems to, on simply explaining their product. Yes, Bitcoin Cash is easy and cheap and fast. So is everyone else, so what?

I use PayPay almost daily now, and it's not because it's that much better than Line Pay, the other one I frequently use, or any of the two dozen other ones I don't use. I use PayPay because they gave me tangible benefits, things I bought at noticeably cheaper prices, that motivated me to start using it. By the time all their promotions cooled down and I'm now no longer getting significant discounts, using PayPay has just become normal for me.

Bottom line, people like getting stuff, not explanations. PayPay gave away stuff, while competitors tried to show how they were the better service. You can see who won.

Bitcoin Cash is unlikely to have anyone willing to pump a billion dollars into a promotion, but we have seen that people are willing to set up funds of at least a few thousand dollars in order to further adoption. So, the question is, how can that money best be used to emulate the success of PayPay?

I propose the following strategy, inspired in part by PayPay's, but modified to what Bitcoin cash could potentially do. There are some technical aspects to this that might need tweaking, but I'm fairly certain the necessary features all currently exist, it's just a matter of how they're presented in terms of interface.

First, assuming there's an available fund, give some amount of money to a shop that is, or willing to be, Bitcoin Cash friendly. For small shops, it only needs to be in amounts of hundreds of dollars, or maybe a thousand or two at the most.

A wallet would need to have tokens clearly accessible for both users and merchants to access them easily.

Second, set up a token just for that shop. This is where there are all kinds of options, and I think people are likely to come up with a wide variety of creative approaches. I bet before you finish reading this, you'll imagine a few of your own unique ideas. For now, though, to keep it simple for the purpose of explanation, let's imagine a coffee shop. They create a coffee token, where each token is worth one coffee.

Using the money they've been given, the shop sells their token so that a customer discount is built in. For example, the coffee shop sells a set of 6 coffees for the price of 5. The price of the 6th coffee is covered by the fund, so the coffee shop is not losing any money. From their point of view, they've sold six coffees.

If a coffee costs five dollars, and you give the store even just a hundred dollars from the fund, that's twenty potential customers who might take up the offer, which is pretty good value for the money. I'm definitely sure that even twenty new users along would beat the amount of people who have started using BCH because they saw a "BCH accepted here" sticker at a cash register.

Now, the customer can go in and use those tokens back at the shop and redeem them for 6 coffees. Done and done. A little bitcoin cash went round and round a few different wallets, and that's nice, it's all transactions that boosts activity on the network. More importantly, a bunch of consumers now have a BCH wallet on their phone when they otherwise wouldn't have. And they're going to interface with that wallet at least a half dozen times to claim all their coffees, so they're easing into using the wallet. If they go into another store also using the same system, the familiarity with the app gets that much more embedded. It's all about just getting people to use the apps and the system over and over until it's normal.

Imagine that the price of BCH goes up significantly. That means the value of BCH the customer is holding in the form of tokens is worth more than redeeming them for coffees. That's fine, because the customer should be able to exchange for the BCH value of those tokens if they want. Ideally, in their wallet interface, they can "cash out" their tokens for BCH easily, and in the process, they'll be learning a lot about what BCH is by actually dealing with it. Way better than just having someone explaining how it's all so amazing.

The store also wins in that scenario, because if the customer trades away their tokens, then they no longer have them for use at the coffee shop. The coffee shop sold 6 coffees worth of tokens, but didn't actually have to provide all 6 coffees, so all unclaimed tokens now represent pure profit. Everyone's happy.

What if the value of BCH goes down? Well, the customer is fine, because they can still exchange their tokens for coffees, and they're still getting a deal, 6 coffees for the price of 5. And the store is no worse off because they got the value for 6 coffees from the customer and the fund, so it's just business as usual. The store is actually a little better off because these sales might not have happened if the customer hadn't been incentivized by the discount.

This would work way better than just going into a store and convincing them to have a little sticker on their cash register to say "BCH accepted here." Under my proposal, the focus for the consumer is, "get a sixth coffee for free." That's a way bigger incentive to download an app. That's how PayPay won.

Now, the technical details. One is, there needs to be an app that can trade in tokens with an easy enough interface so that a consumer can download the app, and have the store send them their coffee tokens, or whatever, without a lot of fuss. I've seen some apps are set up for handling tokens, but I haven't actually used or experienced that myself, so I'm not sure how user friendly they are. I believe that's mainly just an interface design problem, though.

I don't know if tokens can be minted quite this easily right now, but, in the long run, this is how easy it should be.

The store needs a wallet of some kind with an interface so they can mint their own tokens on demand reasonably simply. It all needs to happen fast enough so that an owner can receive BCH and mint tokens before volatility rears it's ugly head and changes any fiat equivalent values. The value of what the store receives needs to match the discount they will be offering in fiat terms, otherwise they could potentially lose money. Again, I think this is more of an interface problem than anything else.

I'm pretty sure it's standard behavior of tokens that you can restrain who has the ability to mint coins, so that only the store can mint their own coins. You wouldn't want people making their own coffee coins.

Tokens could expire, like reward points, to ensure the store gets the business it's trying to generate within good time. However, unlike standard reward points, if they expire, the customer is still left with the value of the BCH contained in the token. Ideally, expired tokens automatically dissolve into BCH. In that scenario, the store wins again, because they sold a coffee they didn't have to provide. But also in this case the customer at least doesn't lose as bad as they might with a normal point reward system. An expired paper point card simply becomes worthless. Expired BCH tokens become BCH, and the consumer could still conceivably win in the long run if the price of BCH at some future time beats what they bought the tokens for.

Probably the biggest issue is ensuring that the store is actually offering the deals they were funded to provide, and not just taking in Bitcoin Cash and keeping that money. However, although you might be able to work out some tracking of the tokens on the blockchain to see what's going on, I don't think this is really a technology problem. It's more about vetting and trusting the store. Most BCH enthusiasts who convince a store to accept BCH have at least some personal connection.

And hey, we're probably only talking a few hundred dollars per campaign for any one store, so, it's a little too low level for anyone to really get into some kind of con game. If a store does takes some funding, but it's unclear if they're actually distributing tokens in a fair manner, then they lose out on potential future funding. A good way to set up funding a store would be to release amounts in increments, where they get a new amount upon successfully distributing past amounts.

On the topic of tracking, though, with this system in place, you would be able to actively see how many people actually used the tokens, giving you at least some idea of how much adoption might have been generated. I realize there are ways in which this system could be gamed or the metrics might not have direct correlations. It's not perfect, but it's something. As opposed to making an infographic or video that goes out onto the net, and there's no way at all to objectively measure if it's had any impact.

A system like this could even potentially work without anyone backing it with a fund. There's a place I go to for lunch, and a while back, they offered me a package of 10 lunches for the price of 9. Or was it the price of 8? I forget, but I did buy into it. Anyway, My guess is that they did the math, and perhaps the reduced profit on 10 lunches was worth the cash flow of having 8 or 9 sales right this moment. Or maybe it was a loss leader type of promotion. I don't know enough about the economics of that kind of business to guess at what the ultimate benefit is. But in any case, that kind of offer seems to be viable.

But, in terms of promoting Bitcoin Cash, some kind of financial incentive for the store is probably necessary, because otherwise, why should the store use BCH tokens and not, say, a paper card and an ink stamp? That's what the store I bought the lunches from did. If the store is going to use BCH as the basis of their points and rewards and promotions, in the short term, the Bitcoin Cash community has to make it more appealing than other options. Immediately financially appealing, not just appealing in terms of enthusiastic explanations.

Bottom line, if we're serious about wanting people to start using Bitcoin Cash, we need to recognize that describing BCH in ever more clear terms and pretty graphics only goes so far. If you want people to get excited, we need to offer up some kind of tangible incentive. It's a strategy that's been tried, and worked, and we should learn from it.

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Avatar for dave_gutteridge
3 years ago

Comments

Never heard of PayPay before. Totally unaware of the payment processors market in Japan, but really surprised to see that many. Is all for the best, many countries are in the middle age comparatively regarding digital payment massiveness and acceptance.

$ 0.00
3 years ago

Nice one

$ 0.00
3 years ago

Since we don't have a billion dollars to spend, this case study seems irrelevant at best. We need to learn from cases where there was not a huge amount of money available to grease the rails, not try to do things that would appear to require large funding but with almost no funding.

Also BCH is not just a payment system. It is a new currency. Therefore, trying to mimic the adoption of payment systems is a one-dimensional example to follow.

Interesting but ultimately I have seen many case studies like this and I find that there are many intermediate steps to be worked out before funds would be wisely invested into anything remotely similar to this.

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3 years ago

You seem to have not read the article. It very clearly describes how amounts in the range of hundred dollars could be used to promote BCH to great effect.

$ 0.00
3 years ago

I certainly did read it and you missed at least one of my points entirely.

I will restate: Trying to adapt a strategy that is outside our budget for our budget is going to be a lot less fruitful than simply starting off with a strategy designed from day one to take into account our low budget.

I hope that is now clear.

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3 years ago

Whose budget are you referring to? The Bitcoin Cash Fund I mentioned raised tens of thousands of dollars, which would be more than sufficient to make this proposal a roaring success.

$ 0.00
3 years ago

This strategy was successful when it used a billion dollars so I don't see the argument for why it would work with a radically smaller amount of money, and particularly in a different context entirely.

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3 years ago

A billion dollars is only necessary if you want to get tens of millions of users within a period of half a year, which is what PayPay used their money for.

My proposal can, in theory, on-board people to BCH at a cost of about five dollars per user, maybe more, maybe less. You may disagree, but I think that's worth it.

$ 0.10
3 years ago

You assume that a billion-dollar strategy can be scaled down many orders of magnitude and remain successful. This is where you ventured onto shaky ground.

In the developing world, 5 USD per-person is unlikely to be viable because 3-5USD is an absolute minimum airdrop to get people's attention. You need infra behind that, such as salespeople, hardware, education, marketing, support, etc.

In the early stages, I would not budget less than $200 per-person for the first say 5,000 to 10,000. After that, scale could reduce the per-person costs.

But just giving people cash is not a solution because intra-nationally there is little incentive for users to reload in BCH due to volatility. International flows are the center of any path forward.

Further, there has to be an ongoing educational program because BCH is not just a simple payment system but a whole new currency, which raises many many questions, doubts and challenges for mainstream people.

Absolutely essential we all learn from the past so we can evolve our strategies.

https://read.cash/@georgedonnelly/merchant-adoption-is-pointless-without-regular-growing-inflows-8e8446d2

$ 0.00
3 years ago

A five dollar coffee offer to a regular consumer is a completely different scenario from an airdrop among existing cryptocurrency enthusiasts. And I have no idea how terms like "international flows" have any meaning in this context.

Thanks for your thoughts, but I think this is where we should part ways. I'm content to see if my proposal can work. By all means go out and develop your own strategies, and best of luck to you, I sincerely hope yo can help push some adoption.

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3 years ago

Your proposal is an airdrop. It has nothing to do with cryptocurrency enthusiasts.

I encourage you to explore what international flows mean, because it is essential to locate adoption efforts in the larger context.

If my comments are irritating to you, you can block me. Until then, I will continue to read your posts and comment as I deem appropriate.

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3 years ago

do it, im pretty sure this would get funded if done right

$ 0.00
3 years ago

I would love to. I am not a coder, but I'm already playing around with making some UX design. If anyone wants to help with some of the technical back end, then I'd love to hear from them.

$ 0.00
3 years ago

Very informative dear, I learn so many things. And don't forget to visit my profile once... https://read.cash/@Jisan21/the-exception-is-world-personality-warren-buffett-the-inspiration-for-us-cf0f6f7f

$ 0.00
3 years ago

Tokens can also expire, like reward points, so that the store tries to generate in a good time but he gets the business. However, in contrast to the standard reward points, if they expire, the customer still leaves the value of the BCHT in the token. Ideally, expired tokens are automatically split in BCH. In that scene, the store wins again, because they sold a coffee they didn't supply.But also in this case the customer will not lose at least as badly as they can with the general point reward system. An expired paper point card simply becomes useless. Expired BCH tokens have become BCH and the customer can win in the long run if the price of the BCH tokens buys what they bought at some point in the future

$ 0.00
3 years ago

Good one

$ 0.00
3 years ago

I think some of it was already working way back then.

$ 0.00
3 years ago

Great idea overall. I get the impression you intentionally tried to avoid being technical, but there's one part where I think you might need to be technical:

Tokens could expire, like reward points, to ensure the store gets the business it's trying to generate within good time. However, unlike standard reward points, if they expire, the customer is still left with the value of the BCH contained in the token. Ideally, expired tokens automatically dissolve into BCH. In that scenario, the store wins again, because they sold a coffee they didn't have to provide. But also in this case the customer at least doesn't lose as bad as they might with a normal point reward system. An expired paper point card simply becomes worthless. Expired BCH tokens become BCH, and the consumer could still conceivably win in the long run if the price of BCH at some future time beats what they bought the tokens for.

Everything else made enough sense to me, but I see problems with this piece of it. For instance, the tokens are likely to eventually be regulated like gift cards, at which point they potentially can't expire. Regardless, at first glance, even if they can expire, the BCH doesn't exist twice, so the BCH was already paid to the store and no longer exists for the customer. Based on this, where does the BCH the tokens "dissolve into" come from? If the BCH had been "converted into" tokens, then the store wouldn't benefit until/unless those tokens were used, possibly after inflation makes the product more expensive (even against a stable BCH). Further, in such a case, what is to stop a user from buying 6 tokens for the cost of 5 and letting them expire to gain BCH with no benefit to the store? Do let me know if I've missed something, but IMO, the whole idea is potentially useful even without expiring tokens.

$ 0.00
3 years ago

Thanks for your comment. You raise some points that are worth thinking through. I don't claim to be an expert economist, so I am definitely open to the possibility that I have made some error somewhere in how it all works.

I am also not a lawyer, but a quick Google search tells me that gift cards can expire (in the US) five years after they are made, coupons can expire but can be donated to groups that still can use them somehow, and point cards can expire. Where I am in Japan, I don't know the exact law, but the point cards in my wallet right now all have expiration dates.

So, while I'm sure you're right that legal regulation could become a factor, I don't see evidence that there are obvious deal breakers. I think in this case that regulation is something to be mindful of, not fearful of.

The other part you mention about the BCH values being traded does sometimes confuse me a bit when I think through the steps, but I've gone through it many times now, and it seems to work out.

The token is issued with the fiat value worth of BCH. So, at the time of issue, the 5 dollar coffee token has 5 dollars of BCH contained in it. That is BCH the store is giving in exchange for fiat, and then getting back later in return for a coffee.

Personally, I don't think it's a problem if the customer immediately exchanges those tokens for BCH, they've accomplished no more than buying BCH from anywhere else. I don't see any obvious advantage. The store is no worse off because they've sold the BCH for market value.

Does that answer your concern?

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3 years ago

I am also not a lawyer, but a quick Google search tells me that gift cards can expire (in the US) five years after they are made

I'm not a lawyer, either, but several years ago, California passed a law saying they couldn't expire. New York may have done the same. If some federal law superceded the state laws, I'm not aware of it, but I have no clue where that 5 year number would come from. Perhaps there is federal regulation for a universal debit card posing as a gift card (those are common here now), but I'm referring to store branded gift cards (because a coffee token from store A won't necessarily get you a coffee at store B).

The token is issued with the fiat value worth of BCH. So, at the time of issue, the 5 dollar coffee token has 5 dollars of BCH contained in it. That is BCH the store is giving in exchange for fiat, and then getting back later in return for a coffee.

This is all well and good. The concern is I assume the store wants the BCH when they sell the token, not when the customer buys the coffee. Effectively, the store has sold a token worth one coffee in exchange for BCH that they now own. So if the token is refundable upon expiration, who is paying the refund? To clarify, perhaps it is different in Japan, but in the US, when a gift card expires, the money is gone (again, referring to store gift cards, not universal debit cards posing as gift cards).

Personally, I don't think it's a problem if the customer immediately exchanges those tokens for BCH, they've accomplished no more than buying BCH from anywhere else. I don't see any obvious advantage. The store is no worse off because they've sold the BCH for market value.

I agree that selling the token would not have an effect on the store (like a gift card, the token could be sold or given away, so a different customer can get the coffee, that's fine). My only concern was that if the BCH is locked up with the token so that the store doesn't get it until/unless the token is redeemed, then there is no benefit to the store and they might as well sell a gift card instead (unless regulations in other countries work the way you are proposing the token works).

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3 years ago

The store has to create a token with the BCH amount stored inside it. So, the hypothetical coffee store mints a coffee coin with 5 dollars worth of BCH. Whe customer buys it, the store has 5 fiat dollars, the customer has 5 dollars worth of BCH. When the customer gives back the token, the store gets their 5 dollars worth of BCH back, but has to now provide a five dollar coffee.

The whole transaction is just buying a coffee with extra steps. In a way, it's like the customer is putting a sticker on a five dollar bill that says, "I promise to buy a coffee with this."

Does that make it clear?

You're right that there is no particular benefit to the store beyond using a normal paper stamp card. But that's where the hypothetical BCH fund comes into play. They make it worth while by providing cash incentives for the store to use this system as opposed to any other. The same way PayPay beat competitors offering the exact same service by marketing their product with tangible consumer gains.

The whole point is not necessarily to demonstrate a business model that is better than stamp cards, it's to establish a marketing model that gets people using BCH and used to it.

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3 years ago

The whole transaction is just buying a coffee with extra steps. In a way, it's like the customer is putting a sticker on a five dollar bill that says, "I promise to buy a coffee with this."

Like @nyusternie, I also thought specifically about BCH being exchanged for SLP tokens instead of dollars being exchanged for BCH. Clearly what you describe would be a whole new implementation of a different type of token. It is interesting, and if expiration is possible it might solve any potential inflation concerns a store could have (customer spends $5 for coffee coin worth $5 but doesn't exchange it until coffee costs $6, is it a coffee token, or a gift card value?). I'm not sure how to get stores excited about it since it doesn't lock the customer in like a gift card, but I guess maybe you're saying they get $5 fiat and pay $4 fiat to send $5 BCH to the customer, meaning they've grossed a dollar on the exchange. I think the token might muddy things, though, especially with the BCH exchange rate being volatile.

$ 0.00
3 years ago

Like @nyusternie, I think you're too focused on the fundamental business model, and not on the marketing aspect.

This isn't about trying to make some kind of exchange circumstance where everyone involved gets a better deal from the use of BCH as opposed to any other currency or point card system, or whatever else. (Though if you can think of one, more power to you!)

My goal, and motivation for writing the article, is to develop a marketing strategy to get people used to using BCH in an environment when there are plenty of options besides BCH that are equally capable in every respect. I believe that, the key to pushing adoption in terms of marketing is not in relying on technological features or finding exotic niches to fill, but in simply giving people deals so that they get stuff. People like getting stuff.

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3 years ago

I think you're too focused on the fundamental business model, and not on the marketing aspect.

You may be right, but...

in simply giving people deals so that they get stuff. People like getting stuff.

small businesses that might be most likely to use this model will only do so based on the decision of their owners, that also happen to be people who also presumably like getting stuff. The PayPay strategy certainly incentivized the business and the customer (the business immediately sold something for income, the customer got a discount).

$ 0.00
3 years ago

I think the model still works for the businesses. It generates sales they would not have had otherwise.

Also, insofar as they can store BCH in tokens that are marked for future sales, it can be a hedge against volatility. I think there's plenty of incentive for everyone involved. Enough so that I'm absolutely willing and able to give it a try and see how it works, provided I can get the right tools to enable it.

$ 0.00
3 years ago

The store has to create a token with the BCH amount stored inside it. So, the hypothetical coffee store mints a coffee coin with 5 dollars worth of BCH. Whe customer buys it, the store has 5 fiat dollars, the customer has 5 dollars worth of BCH..

I don't think you have a clear understanding of how SLP tokens work. what you describe here is merchants selling BCH to customers with an SLP token attached to it (and depending on the wallet the customer may not even see the token); to then hold on to that BCH to be transferred back to the merchant upon redemption of the token..

from a technical, economic (and perhaps legal) perspective, that makes no sense..

i would suggest adjusting your model so that the "customer" is the one responsible for securing the BCH and when they pay with their BCH will receive an SLP token, generated by the merchant, that can then be redeemed for a FREE coffee upon reaching a certain threshold (eg. 5 tokens)

$ 0.00
3 years ago

I think we're going to have to simply agree to disagree on the potential legality issue, as I think non-lawyers talking about what's actually legal is assured to miss the mark.

But more importantly, I think my model still stands economically. If the customer is given the responsibility of securing the BCH, then this will never happen, because the whole problem to be solved is that customers don't have any to start with.

$ 0.00
3 years ago

agree to disagree on the potential legality issue

sure

If the customer is given the responsibility of securing the BCH, then this will never happen

but that's the "problem" to solve .. (as a merchant) why bother using crypto for loyalty cards when there are much "better" ways?

the savings benefits of crypto won't be realized if you "force" crypto into the equation .. imo, the savings (to the customer) would have to be enough to incentivize them to secure the crypto themselves

$ 0.00
3 years ago

I think you've drilled down so deep into looking at the economics, you might have lost sight of the goal.

I'm not saying this system is a grand new business model that Bitcoin Cash can do and others can't. I'm saying it's a MARKETING tool that gets people using BCH.

The point is, if people are going to raise funds for advertising, which has been done, then this kind of tangible reward to the consumer method would be more cost effective and bear more results than any other I've seen tried so far.

$ 0.00
3 years ago

I think you've drilled down so deep into looking at the economics, you might have lost sight of the goal.

perhaps, lol


regardless, you may want to take a look at https://bchpizza.org/; they have a very clever model for fundraising individual (merchants, business types and regions) that could be applied to your idea

$ 0.00
3 years ago

Thanks for the link! I'll check it out. The more I think about this idea, the more I'd like to try and get it actually launched. I have stores that I know would help me beta test it, so if I can just get the right apps and interfaces, this could be a go.

$ 0.10
3 years ago

probably the first step is to have SLP support added to one of these

https://www.bitcoin.com/bitcoin-cash-register/

https://anypayinc.com/

https://gocrypto.com/

shouldnt be that difficult. Also i would contact the guys at https://www.hp.cash/, they seem to be doing some very similar thing in japan already.

$ 0.00
3 years ago

Thanks for those link, particularly to Honeypay. They seem to be doing almost exactly what I'm talking about, but are looking for funding to progress it.

$ 0.00
3 years ago

i also dont see much benefit for the coffee tokens to be backed by bch. And it complicates things considerably. Why not just have the customer buy the store tokens with fiat?

Also i would suggest it to be general store credit (disney dollars, starbucks bucks, mcdonald coins) rather than credit for specific products.

$ 0.00
3 years ago

If the tokens are not bound by amounts of BCH equivalent to the fiat prices of the products being sold, then you lose the advantage of retaining value when the tokens expire, or being able to cash out if you decide to not go to that store anymore.

You could make it about store credit, sure. Or anything else. My coffee tokens are just an example. I think it's up to the store to do what they like best. The possibilities are only limited by one's imagination.

$ 0.00
3 years ago

if your target backing is 100%, then almost immediately the value of the BCH would go higher than the token, making everyone just melt the tokens and you end up sponsoring BCH price speculators. So you might target 50% backing lets say. That means when the tokens expire you retain only a fraction of the value anyway and i would be certainly pissed that the tokens have expiration. Also it is technically harder to do expiration, you might end up needing distinct tokens for every year. Also it is technically impossible currently to have the tokens backed by BCH in a trustless way.

$ 0.00
3 years ago

Why not just have the customer buy the store tokens with fiat?

this works too! 👍

$ 0.00
3 years ago

That is basically what's happening. However, as mentioned above, if the token value is arbitrary, then the customer loses the benefit of cashing out their tokens for BCH if they choose.

$ 0.00
3 years ago

then the customer loses the benefit of cashing out their tokens for BCH if they choose

customers will probably want to cashout in fiat, not BCH

$ 0.00
3 years ago

Sure, that's probably true. But consider that most point card systems that use paper cards and ink stamps give you absolutely nothing if you decide to not use it. So, a user probably prefers fiat to BCH, but I'm willing to bet they prefer BCH over nothing.

$ 0.00
3 years ago

@dave_gutteridge, the point is it is technically impossible currently to have the tokens backed by BCH in a trustless way. That means to melt the tokens the users would need to go back to the merchant to do it, same way as with the paper cards. (or some 3rd party needs to have a website runnig to run the token system, same as these guys do it https://psfoundation.cash/)

$ 0.00
3 years ago

Fair enough. I was unaware that tokens can't melt without the aid of the source that minted them. Hopefully that can change, as I think that would help make tokens a lot more usable.

$ 0.00
3 years ago

That was the point my other reply was trying to make when I suggested you'd need a new type of token where I was originally assuming you were using an SLP token. I dropped it there, but knowing you didn't understand it, I'm glad you do now.

$ 0.00
3 years ago

Thanks gaving for valuable information . I like this artical.

$ 0.00
3 years ago

https://slpvh.github.io/hamingja/

Check it out. Those store-encumbered tokens were implemented in a hackathon over a year ago. At least some parts of what you are talking about have been proven to work technically.

$ 0.10
3 years ago

There doesn't seem to be anything at that link except an email address. In any case, if someone is making tokens that can be used as I'm proposing, then great!

$ 0.00
3 years ago

Press the button to the right. It's not obvious at first.

$ 0.00
3 years ago

I went back and scrolled through, and I'm sorry to say that while I hope for the best for the project in principle, that site is a user interface disaster in terms of communicating what they are trying to do. They could be sitting on a fantastic project, so I hope they can find a more straightforward approach to promoting it.

Also, I don't know if the name "Hamingja" has some significance in some other language, but in English, I think that will be incredibly hard to market to people.

$ 0.00
3 years ago

Do you always shit on 2 day hackathon projects? Since they proved the technique, I guess they would be willing to help out with the idea still if anyone approaches them.

$ 0.00
3 years ago

is hamingja related to honeypay(https://www.hp.cash/)?

$ 0.00
3 years ago

No they are two completely different teams. Also the ignite/hamingja was only worked on at the hackathon.

$ 0.00
3 years ago

Nice skills

$ 0.00
3 years ago

Brilliant writing skills

$ 0.00
3 years ago

Well written. Bitcoin cash has been help many people during their bad times. Well done man. Keep it up.

$ 0.00
3 years ago

Tl:dr ?

$ 0.00
3 years ago

it's actually a pretty good article. The idea of loyalty tokens is pretty old, but there are some interesting details here. We need a wallet with tokens as 1st class citizens and a POS app that can mint, sell, cashback and receive tokens. Flowee Pay/POS ? :)

$ 0.00
3 years ago

Contributions welcome :)

$ 0.00
3 years ago

I'm not sure if you've got a bot downvoting you or if someone thought that was a request for money instead of a request for code, but I'm under the impression it was a request for code. You're welcome to confirm.

$ 0.00
3 years ago

My post absolutely was about non-monetairy contributions.

The two projects @tula_s talks about will take quite some effort to make the UX well done, the more hands working on it the better. I'd much prefer people donating time than people donating money.

$ 0.00
3 years ago

im happy to contribute time regarding UX, but no time for coding unfortunately

$ 0.00
3 years ago

I'll add you to the beta-testers team :)

$ 0.00
3 years ago

Incentivize business to incentivize customers to use BCH instead of paying people to promote BCH.

$ 0.50
3 years ago