Founder and CEO of TripCandy
Founder and CEO of TripCandy
Since 2017, cryptocurrency startups have raised over $20 billion via ICOs (initial coin offering), showing great potential for blockchain-based tokens in the business world. However, despite their exponential growth and benefits, cryptocurrencies remain widely misunderstood. The general public seems to confuse cryptocurrency with payment systems and have the perception that crypto investments are extremely risky.
At the same time, the US and EU now say that it’s only a matter of time before our fiat currencies (what we think of as traditional money) go fully digital. This runs parallel with claims from financial analysts convinced that blockchain implementation is the first step towards creating digital versions of existing government-backed currencies.
Crypto is advancing fast, but is it fast enough to replace fiat soon? As the founder and CEO of TripCandy, a company that is among the few spearheading the transition in the travel industry, I think it’s only matter a matter of years before it does. Here’s why.
Whoa. Back Up. Start Over. What’s a Token?A Beginner’s Guide to NFTs and Cryptoart
First, let’s get our terminology straight: fiat money is what we traditionally use to acquire goods and services — the Dollar, Euro, Yen, and so on. On the other hand, cryptocurrencies and tokens are assets that come in a digital format. Cryptocurrency is blockchain’s native asset and tokens are a platform built on an existing blockchain.
Digital assets have many advantages over fiat currencies, including transaction security, high levels of transparency and the elimination of intermediaries like banks or brokers. With blockchain technology you can follow the money trail all the way back to when it was created and since it works on a decentralized network, it can’t be affected by government rulings.
Possessing an NFT is similar to owning a one-of-a-kind trading card.
To better understand the distinction between fiat currency and digital assets, let’s take the example of having a million dollars. If you have that amount in fiat money, its true value will change if the federal government continues printing money based on fluctuations in inflation. Central banks (and the people who run them) can put more money into circulation which can raise inflation and make fiat money lose value over time.
Cryptocurrencies have a limited supply. There will only ever be so many “coins” of each cryptocurrency in the market (be it Bitcoin, Ethereum, or any other coin), which means their value actually goes up as demand for that cryptocurrency increases. Let’s say you have a million of the imaginary cryptocurrency XYZ out of the billion XYZ that will ever exist. Once all the possible XYZ are in circulation, people who want to invest in this crypto will be willing to pay more for it than what you paid initially, as its supply will become more scarce.
Tokens are part of the same equation as cryptocurrencies but with one difference. They represent a subset of cryptocurrency used in specific projects like in gaming.
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For example, Axie Infinity is a popular video game in southeast Asia that awards AXS tokens to its players for completing various tasks and actively building the Axie Universe. AXS tokens have garnered a broad enough user base that each token is now worth over $100, and some people in countries like the Philippines and Indonesia actually earn their living playing the game.
At TripCandy, we’ve also developed our very own token: Candy. Users earn Candy when they book through TripCandy as a kind of cash back reward. When coming up with the idea, we decided that a token would be a better reward than money or points because money loses value with time, and people easily forget about the point system. Alternatively, tokens like Candy become an actual investment because they will gain value as TripCandy gets more bookings.
Don’t get your tinsel in a tangle; understanding tokens isn’t too hard. There are two kinds of tokens: crypto tokens that come in the form of exchange or currency (like the AXS example mentioned above) and the other is a token tied to a digital asset — a non-fungible token (NFT). Possessing an NFT is similar to owning a one-of-a-kind trading card. If you trade the card for another similar card, you won’t have the same card; it would be completely different.
Tokens derive their value from four factors:
Tokens are helpful for optimizing or improving a process, such as helping users enhance payments or track specific goods or services in a way that’s more accurate, efficient and cheaper than traditional methods.
Take the music industry, for instance: In the pasts, artists had to be represented by a record label to make any money but often the label would keep the rights and profit from any royalties. With NFTs, independent musicians can sell songs or albums directly to their listeners and keep all the revenue for themselves.
One of the most important aspects that gives a token value is the number of people or businesses willing to use and accept that token as payment. Between July and August 2021, NFT trading activity doubled, reaching 280,000 buyers and sellers monthly. Increased adoption leads to more stability and credibility.
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Elon Musk’s tweets earned a lot of hype and brand awareness that helped boost tokens’ demand but they also provoked adverse reactions to the technology. How can one person’s tweets send an entire industry into a surge or tailspin? Because tokens are such a new concept, the percentage of people who trade NFTs and cryptocurrencies is still very small (even though social media can lead you to think otherwise), so any activity or news affects value significantly. Eventually, as more funds start to come in, the market will become more stable.
There are a set number of tokens available. NFTs are one-of-a-kind and currency tokens have a limited number. Over time, both types can become more valuable as demand increases, like if you owned a Picasso or a piece from a limited-edition fashion release. With fiat money, the opposite happens. In 1938 you could buy a house with $3,900. Now? Try half a million dollars (or more).
More people and companies use tokens every day, and the trend is only accelerating. For example, Recur, a fintech company based in Miami, enables NFT transactions by buying, collecting and reselling NFTs. Catalog sells one-of-a-kind records as NFTs. Each musician decides what to include in the record, from publishing rights to an autograph; this dynamic reimagines the music industry.
On a more mainstream level, Burger King recently presented a loyalty program based on NFTs. The “Keep it Real Meals” campaign consists of celebrities creating their ideal Burger King meals and customers playing games where they earn NFT collectibles, which they can trade for a tangible reward in their restaurant.
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Digital assets bring new perspectives and possibilities into the business world that every company should explore or risk being left behind. It’s hard to pinpoint an exact time frame before cryptocurrencies and digital assets transactions are the norm. However, the technology adoption curve shows the gap between launch and massive acceptance is getting shorter and shorter, so it could be less than ten years before your old leather wallet is put to rest and all your money is safe and sound in a blockchain ledger.
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Founder and CEO of TripCandy