Should Your Business Make Its Own Cryptocurrency?
Businesses of all sizes are finding cryptocurrency useful in ways they never expected.
There are plenty of ways your business can embrace cryptocurrency, but did you know your company can also create its own? Though it sounds like a futuristic long-shot, the creation of specialized cryptocurrencies can help you appeal to potential and existing consumers in a unique way.
Stephane De Baets, whose career has spanned investment banking, hospitality banking, and property investment, created Aspencoin after his company, Elevated Returns, acquired the St. Regis Aspen. De Baets has worked and owned properties all around the globe and sees cryptocurrency as a way to democratize ownership of world-class trophy properties, which are typically controlled, bought, and sold by heavy-hitting investors. He envisions widespread access to ownership as a way to compress the wealth gap, so he released 20 percent of the ownership of the Aspen property to the public at large in an effort to pay dividends to stockholders—80 percent of whom are now taking their dividends in digital currencies.
This translates to customer loyalty.
"I realized when I was talking to our guests, who are coming year after year to stay with us, that in fact they would love to be treated and to feel like they own a piece of the property," he says in an interview with Entrepreneur Europe. By tokenizing a portion of the hotel, he gave Aspencoin holders the opportunity to not only buy and share into the hotel and enjoy the economic benefits of ownership, but be treated like an owner while on the property.
To do that, he says, his company pursues two avenues: The first is based on the number of tokens owned by a person. The holder gets cash back—or a discount—when paying at the St. Regis with Aspencoin. The second has to do with ownership of the property itself. When an Aspencoin holder stays at the St. Regis, they get the VIP treatment.
"That makes you feel like a true owner," he explains.
A growing trend?
De Baets sees himself as a pioneer in this space, but wants to see others branch into it, too. He cautions that entrepreneurs considering their own tokens should be careful to be compliant with regulations, hire a knowledgeable attorney, and pick a solid accountant. Cryptocurrency has been shedding its association with shady dealings over the past few years, but it can still have some stigma attached. Next, you have to understand the technology—really understand it.
"A lot of people talk a lot about blockchain, but you would be surprised how little they know about blockchain," he mused. Educate yourself thoroughly and surround yourself with knowledgeable people before making this leap.
De Baets isn't alone in advocating for this approach, either. Diego Chui, COO of Autonomy, an automation protocol that works as an off-the-shelf solution for Web3 developers, says there are "several benefits that a company may face through creating a cryptocurrency. Through tokenization, a company is able to raise capital for further product development, engage and offer loyalty rewards to members of their community, and overall, increase the project's brand value and attractiveness to the modern day investor."
He pointed to Yuga Labs, which created the now-infamous Bored Ape Yacht Club collection of non-fungible tokens, or NFTs. They released their own token, ApeCoin, he said, and "within a month, it is now the 33rd largest token, with a market cap of $4.5 billion. Through releasing a native token for their ecosystem, Yuga Labs was able to raise a substantial amount of capital and significantly boost their brand value through flipping projects such as Fantom, The Sandbox, and Axie Infinity in market cap."
If you're considering making your own cryptocurrency, just make sure you've thought it through.
"The crypto ecosystem is a noisy space, and many organizations are launching their own cryptocurrencies for the wrong reasons," cautions Atony Zolciak, co-founder of public blockchain Aleph Zero. "What I mean by this is businesses should not think of launching a cryptocurrency solely through the lens of generating revenue. Rather, your decision to launch your own cryptocurrency must be motivated by a specific underlying utility, not an erroneous desire to "get rich quick.' You've built your business by bringing a value-added service or by introducing an interesting product to the market. How would a new system of exchanging value digitally help your partners and customers benefit from your offering even more?"
For Yuga Labs, increased capital has been a benefit. For De Baets and the St. Regis, consumer satisfaction has played a role. Identify what your goal in creating a cryptocurrency is, get educated about the technology, and, if you think it's the right move, tokenize.