It is on a daily basis that new digital currencies emerge. Nevertheless, according to the research by NAFI (National Agency of Financial Research) think tank, a mere one percent of Russian nationals is aware of the options of such currencies’ use. Invest Foresight has therefore decided to find out what may be bought with digital money and whether that is advantageous at all.
The first ever purchase of physical goods with a cryptocurrency took place on May 22, 2010 in Florida, USA, when Laslo Hanyecz, a programmer living there, paid BTC 10,000 for two pizzas. At Bitcoin’s current rate that would be over 50 million USD.
Over seven years of its existence, Bitcoin has gained great popularity, and not among the most forward-minded IT professionals only. One can exchange Bitcoins for rubles, for example, to then spend the fiat money one is accustomed to, or to convert Bitcoins into any other digital currency. Most of cryptocurrency wallets would only require a mouse click for that. In Russia, Bitcoins are accepted in Valenok restaurant in Moscow and in some Subway restaurants. At https://btcphone.ru/ webpage Bitcoins can be used to pay for mobile communication services. Last summer, М9 Development started selling country houses in Radost settlement in Istra County in the West of Moscow Region.
It should be noted that even though with Bitcoins one can buy plenty of quite material goods from both entities and individuals, this most well known currency is primarily used to pay for mobile communication, Internet, online games and social media options, or, alternatively, is kept as an investment. (By the way, Bitcoin gained few hundred dollars in its value while this very article was written.)
What Altcoins can buy
In addition to the increasingly popular Bitcoin, there are thousands of other cryptocurrencies named Altcoins. As evidenced by Coinmarketcap digital currencies market tracker, the top ten most popular digital currencies are Bitcoin, Ethereum, Ripple, Bitcoin Cash, Iota, Litecoin, Neo, Nem, Dash and Ethereum Classic. Those Altcoins are not intended for every day purchases, at least for now.
“It’s probably too early to pretend that Ethereum and other Bitcoin’s competitors are absolutely vital to pay for traditional commodities and services that will be unobtainable otherwise. When buying bread and butter, it is still more sensible to use rubles”, Leonid Delitsin, Finam Group of Companies analyst, says. “The only economically advantageous purchase with Ethereum is maybe tokens of the companies currently going into ICOs, or initial coin offerings, which are analogous to regular exchange offerings but are denominated in cryptocurrencies. In this area, Ethereum may well compete with Bitcoin. To cite an example, during a recent ICO of Russia’s AB-Chain, 85% of tokens were paid for with Ethereum while just 15% with Bitcoins. In that case it was advantageous to use personally mined digital money to avoid exchange rate losses when converting rubles or dollars into cryptocurrencies. Thus purchased tokens grant their holders some compensation in the future in a form of goods or services of the issuing company”.
Cryptocurrency for every business
An ordinary consumer may need a cryptocurrency, too, as blockchain is now becoming the new basis for ordinary loyalty programs. There were some media reports on intention of Burger King chain to start accepting Bitcoins in the near future, but that is not quite the case.
«For each Whopper bought, we will award Whoppercoins”, media office of the company explained. “Once a customer collects enough Whoppercoins, in a special mobile application market that customer will be able to use the Whoppercoins to pay for the products on our menu – and collect them at the cash desk. Any customer will have the right to dispose of the Whoppercoins at his or her own discretion by selling them or giving as gift to whoever. We now get requests for buying Whoppercoins from Russia and from all over the world, and the number of such requests is so great that we expect it will not be a merely image building project, but a means of brand loyalty strengthening. As for other digital currencies, our approach is very simple, and we are ready to accept any such currency once it is allowed by the laws of the Russian Federation”.
In this case, Altcoins turn to be a simply trendy name for ordinary bonus points.
LavkaLavka farming cooperative has just completed advance sale of its own cryptocurrency, Biocoins. With Biocoins one can buy food at LavkaLavka chain. Biocoins will also be accepted by Double B cafes, UAZ (Ulyanovsk Automobile Plant), Mark & Lev farmer cooperative running healthy food shops and restaurants, Moscow organic food Obed bez Zabot store and Zhitz private winery. All in all, the project has got about 50 partners.
The fundamental distinction between a blockchain loyalty program and a conventional program is a limit on issue of a digital currency. If the Savings Bank’s Thanks points may be infinite, a blockchain envisages a strictly limited number of tokens which can not be smaller or bigger. Hence the more partners a project (Bitcoin, for instance) has, the higher is the market value of its cryptocurrency. This way loyalty program points turn into savings.
Blockchain further potential
Blockchain as basis for loyalty programs is gaining popularity. A similar but a broader system of cryptocurrency use is offered by Bitcoen project. As Vyacheslav Semenchuk, one of the project initiators, stressed, Bitcoen may be used as payment means.
At the same time, “Bitcoen as a pure loyalty program may be also employed for sorting out ordinary routine matters”.
There may be different cryptocurrencies. One may issue one’s own coin under a cover of a fictitious project and trade it at an exchange, but the authorities intend to force such players out of the market in the near future. Still, whether authorities like cryptocurrencies (such as Bitcoin or Ethereum) or not, these currencies have become investments already.
Nevertheless, loyalty programs tokens are cryptocurrencies most promising for the end user. In view of the market analysts, Biocoins, Whoppercoins, Bitcoens and other cryptoinstruments linked to products and services of everyday demand will be commonly used in a short while.
“Everything which is not forbidden is allowed”, Boris Akimov, LavkaLavka majority shareholder, says. “We will certainly act within legislation, but so far, our project does not collide with it in any manner. If there are new laws, we’ll make adjustments”.
By Mila Kretova