With the rapid decline in Bitcoin and other cryptocurrencies, attention has been shifting toward Blockchain, the technology that underlies cryptocurrency applications. We have heard a lot about tokens but what are they and what role do they play in the Blockchain story? Special guest, Omar Rahim, CEO of Energi Mine and Lawrence Lerner, CEO of RChain Holdings, joined neXt Curve to discuss the importance of the token in the context of business model design and the creation of new and transformative economic value leveraging Blockchain technology.
On May 8th, 2018, neXt Curve’s Leonard Lee and Lawrence Lerner hosted a webcast discussion with Omar Rahim, CEO of Energi Mine. We first met Omar at the Blockchain Conference held in Barcelona in October of 2017 as Bitcoin was making its meteoric rise and Blockchain experts predicted that ICOs (Initial Coin Offerings) would bring about a revolution in venture fund raising and investment.
Fast forward to May of 2018 – how things have changed. We see hope of a 500,000 USD/BTC by 2020 infamously predicted by John McAfee evaporate like the value of cryptocurrencies across the board since their peak in mid-December of 2017. As the market continues to hold these self-proclaimed crypto gurus to account, crypto and ICO investors find themselves searching for new meaning and purpose in Blockchain and the fundamental value of the tokens they purchased in the ICO craze of the last 10 months.
Introducing Energi Mine – A Token-Based Business Model
What constitutes a potentially viable Blockchain business model? According to Omar, purpose is the cornerstone of a Blockchain business of consequence. “What is the real-world problem that you are trying to solve? Start with that,” stated Omar. Building a compelling business case and value proposition requires deep experience and knowledge of the industry that a Blockchain business is targeting. You can’t lead with technology. As Omar puts it, “We’re not just shoehorning Blockchain into our business as many businesses are doing in this space.”
For Energi Mine, the mission of the venture is to reduce global energy demand, which is the primary pillar of Energi Mine’s business concept and the reason for its existence. To Omar, this idea of benefiting the common good is an important personal motivation. Energi Mine seeks to design and implement an “economic platform” that will foster energy-saving consumer behavior while enabling the democratization of energy trade by connecting citizen energy producers, utilities and brokers to consumer and enterprise end users.
Energi Mine has two other pillars or philosophies that are secondary and technical in nature – automation and Blockchain technology. “If a machine can do something better than a person, let the machine do it,” stated Omar. The automation and optimization of processes and transactions using A.I.-enhanced algorithms and predictive analytics are important layers of capability that reside on top of the Energi Mine Blockchain application, which is the basis of Omar’s vision of a new commercial infrastructure for a new energy economy. Lawrence Lerner agreed. The technology should not come first and can be more difficult to apply than meets the eye.
So why, Blockchain? According to Omar, it can potentially provide transparency that currently does not exist today in the energy industry. However, along with that market transparency comes a need for traditional utility companies to change their business model to survive in the new energy economy. This is the opportunity for Energi Mine and the threat to energy utility firms that don’t address inefficiencies in the current market.
Tokens? Who Cares?
You should care about tokens because if you can’t get your token into circulation your project will die according to Omar and Lawrence. The token is the essential currency for driving the desired behavior and transacting the core and ancillary values that fuel the ecosystem of the Blockchain-enabled business or industry model. But this happens by design – careful, thoughtful design. As Lawrence cited in neXt Curve’s Blockchain and Cryptocurrency discussion earlier in the year, the token must be earnable in a way that incentivizes the desired behavior.
In the case of EnergiToken, that behavior is saving energy. As Omar describes, EnergiToken can be used in a variety of valuable ways that align ecosystem participants to Energi Mine’s grand ambition. Consumers can redeem EnergiTokens earned through energy-saving activities as a reward for cash (fiat) or to pay for energy using the token with a participating energy supplier. Citizen energy producers – those folks who have solar on their roof tops or private solar farms – can use EnergiTokens to transact and supply excess energy directly with consumers or through an Energi Mine exchange in a transparent, on-demand fashion.
Why a Blockchain-based token system? Blockchain applications – if properly designed – can provide a level of transparency and trust that would be challenging and costlier to design and implement through a centralized exchange model. The granular and transparent accounting of energy consumption/demand and supply fosters trust between the parties that participate in the Energi Mine economy.
Tokenization – Reimagining & Reinventing The Economy
Most Blockchain ventures will amount to nothing – a wasted effort and investment. Even those projects with seemingly legitimate ambitions to reimagine and reinvent our industries, our economy and the way we live will struggle to gain footing. Why? As they say, “It’s about the economy, stupid.” That means that viable Blockchain solution designs that aim to disrupt industries need to consider how they will change the economics of their target industries.
According to Lawrence Lerner, “Finding a target customer is not good enough and that is what most Blockchain companies do.” Blockchain projects need to design an ecosystem that attracts and engages all necessary parties in a sustained dynamic of shared benefit. This means thinking of and fostering entity relationships (human and non-human) within the ecosystem design that go beyond the traditional partner, customer and supplier relationships. “You have to sell into more stakeholders with new value propositions that will be foreign to the status quo,” states Lawrence. “To do this effectively,” noted Omar, “expertise and experience with the problem to be solves within the target industry is vital. You need to get participants excited and drive adoption quickly.”
Eventually everything and everyone engaging in the new energy economy will be able to interact with each other. Granular transactions will be conducted by A.I. Energy will be used and source dynamically in an optimized way that will ultimately help Energi Mine reach their goal of codifying and automating energy-saving behaviors. By realizing their vision or a global energy economy reinvented, Energi Mine – with the help of EnergiToken – will hopefully contribute disruptively in saving our planet and humanity from ourselves.
Implications for Business Leaders
The core of a “Blockchain business” is a business. Cryptocurrencies and Blockchain technologies have not change the dynamics of trust in financing and investment. In fact, in the last three month we have seen increasing incidents of fraud across exchanges and among ICOs. There is growing concern that most ICOs are simply scams. It is clear that there are very few Blockchain/cryptocurrency experts. The vast majority or technical and fundamental traders of cryptocurrencies have been wrong. Buyer and investor be very beware. Ironically it seems cryptos and the majority of Blockchain applications are proving themselves untrustworthy.
“Disrupting” an industry is much more difficult that one can imagine or anticipate. A mere token or technology does not bring about the change and adoption of the new way that may seem a theoretical no-brainer. For better or worse many industries such as the transport and logistics industry and energy are slow to adopt digital technologies. Fax, wireline telephones, Windows 95 and paper still dominate these industries. Blockchain entrepreneurs need to carefully assess the readiness of the industry of their disruptive aspirations and vision.
Design your Blockchain business without thinking about Blockchain. Your customers and your ecosystem participants won’t know that it’s Blockchain. They will be engaging with the token that they earn for a desired behavior and trade them for alternative value whether it is money or credits to pay an energy bill. The most important thing for you to focus on is your business model and ecosystem design.
You can listen to the audio replay of our Tokenization: Fueling The Blockchain Business Model webcast by playing the media below or downloading the Podcast available on iTunes. Subscribe to our Podcast channel and keep up to date on the latest insights from neXt Curve.
Audio replay of the Tokenization: Fueling the Blockchain Business Model webcast:
neXt Curve Tokenization: Fueling The Blockchain Business Model (PDF)
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Managing Director, neXt Curve
May 9, 2018
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