Big brands like Facebook and Starbucks are going to take crypto to the next level, and they could leave ICO projects in the dust

Tracy
Bryant, right, and Roland Smith, center, Starbucks employees,
watch as a manager Justin Chapple makes an espresso at a
Starbucks in New York.
AP Photo/Seth
Wenig

• Crypto took off at the end of 2017, with bitcoin
  hitting $20,000 at the end of December. 
• In this oped, Bruce Elliott, president of ICOx
  Innovations, argues that big brands are just entering the
  space. This 
  is what’s going to take the
  nascent market to the next level, not ICO
  projects. 

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If you would have asked me in January – when we helped Kodak
launch KodakOne and KodackCoin – if both Starbucks and Facebook
would let the world know this year that they have their eyes on
cryptocurrency, I would’ve said, “Not likely.”

But here we are, six months later, and
Facebook has reportedly engaged in conversations with blockchain
projects including Stellar and is expanding its
team focused on the much-hyped technology. And
Starbucks recently announced a partnership with Bakkt, a new
Intercontinental Exchange company whose mission is to create “an
open and regulated global ecosystem for digital
assets.”

So while we’re not quite there with mainstream adoption of
cryptocurrency, Facebook’s and Starbucks’ leadership into the
space is a milestone. We will see more household names exploring
and entering cryptocurrency, looking for new models of customer
engagement leveraging their brand equity in powerful new ways.

Now some of these big-brand cryptocurrency plays have been
nothing more than publicity stunts – like the tartly cynical Long
Island Iced Tea-Long Blockchain stunt that now has the Security
and Exchange Commission’s attention. But there is a growing cadre
of the legacy brands we all recognize that are figuring out how
to angle their way into cryptocurrency and blockchain.

Why? They recognize that brands are exactly what’s missing from
the exploding space. That’s the “Why.” How about the “Why now?”

Two reasons: bigger brands are almost always slower in adopting
new technology, both because they tend to be risk averse and also
because they naturally move slower. But also the cryptocurrency
roller coaster has reached a point at which big brands are
starting to recognize a mutually beneficial path forward. Many
crypto projects will soon need access to larger audiences for
wide adoption, and big brands, staring eroding brand loyalty or
existential scandal the face, have the chance to hook themselves
on to the new-tech media darling.

Returning to the KodakOne example, we helped this time-tested
brand announce a blockchain platform and cryptocurrency when
there were 10 other image-rights management ICOs going on. But
the legacy brand won out – at least in terms of attention, as a
simple news audit of the past 12 months affirms. KodakOne is
taking the ball and running with it.

Soon, user-generated photos taken in six major U.S. stadiums will
be instantly loaded to the KodakOne blockchain, with the prospect
of the photographers getting paid instantly (in KodakCoins) for
usage. But the even more drool-worthy part of this integration is
that these same sports fans will be able use KodakCoins to buy
in- stadium soda, chips, hot dogs, beer and merchandise. As it’s
estimated that 55 million Americans will use its mobile app to
pay for their coffee before the end of this year. Couple that
large of a community with a brand of its strength, and Starbucks
has the potential to go beyond its existing business model,
creating a new economy model for engagement.

When looking at Facebook, crypto inside the social network could
create, for instance, a highly efficient global peer-to-peer
payments model similar to that proposed by the largest ICO ever,
Telegram, or Asian competitor WeChat Pay.

It could also be used as part of a new-style loyalty program, or
even as the basis for an adjacent economy – for example, the
subscription economy or authentic verified-news economy. Bear in
mind this is all happening amidst some pretty drastic changes
we’re seeing in the young ICO market. To separate themselves from
the many scams, legitimate companies are doing the hard work up
front – capital raising, platform development, early customer
adoption – and then going to the public for an ICO raise.

With the components of a true economy already in place, these
tokens circulate according to traditional supply-and-demand
models. I understand that big brands entering cryptocurrency may
sound like anathema to some crypto enthusiasts. But I would also
think these skeptics would rather let market forces than their
own biases determine how cryptocurrency can best be applied in
our great, big world. After all, big brands won’t be able to just
slide into cryptocurrency without working for it.

Many will be romanced by the prospects of non-dilutive financing,
speed of outsourced innovation and riding the hype wave, but only
the clever brands who understand their power to connect
communities will emerge winners. Like startups, many ICOs will
struggle to achieve critical mass in customer adoption – and
will, therefore, fail. The crypto economies that are powered by
well designed cryptocurrencies and token economic models (like
the Image Economy for KodakOne) leverage both the power of brands
and the power of blockchain. Will that also be Starbucks and
Facebook? Ask me in six months.

Bruce Elliott is president of ICOx Innovations, which helps
established organizations grow their businesses through the use
of blockchain technology and cryptocurrencies. He is a 25-year
e-commerce veteran who has held senior leadership roles in
privately held and listed companies in online payments, gaming,
venture capital, and trust and corporate service sectors in North
America and Europe.

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