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Do Industries Need Cryptocurrencies?

It’s probable that 2018 will be a watershed year for blockchain and cryptocurrencies. 2017 saw the breakout of this new technology from the small community of programmers and “geeks” into a much wider audience of people, looking for financial opportunities and willing to support various disruptive Blockchain concepts. 2018 will likely see the acceptance by specific industries of cryptocurrencies created for that industry.

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Ripple (XRP) is probably the most visible example of this trend. It was specifically engineered to address problems the banking industry has with international transfers. Dentacoin was designed to do the same thing for the global dental industry. Of course, some argue that Bitcoin could be just as easily used for either purpose. Those making this argument are ignoring some of the basic rules of business and cryptocurrencies.

Business 101: Control Costs

The first lesson of business is to learn how to control costs. Any industry that operates in more than one country has cost of exchanging currencies. Promoters of the Euro knew this and argued that it would smooth “currency transfers within and outside the EU and reduce(s) the costs of such transfers”. The same is true for international banking and the global dental industry.

Adopting an industry-wide cryptocurrency makes it easier for any provider in the industry, from dentists to manufacturers, to price their goods and services. A single monetary unit also allows customers in the industry, both patients and dentists, to shop more easily for the most competitive price. This will drive costs down and increase the overall efficiency of the entire industry.

Bitcoin cannot provide this benefit. Although it meets the criteria of an international currency, it is not widely accepted. The technical problems with the speed of posting transactions, the ongoing volatility of the market price and the high transaction fees all hinder universal adoption. There are other reasons that will be discussed later that show why Bitcoin is unsuitable for use as a global dental currency.

Business 102: Serve the Customer

The second lesson of business is that you do not take care of your customers, someone else will. This is why Dentacoin is going to be successful. The global dental industry has done a horrible job taking care of the oral health of the world’s population so far. 90% or more of the total spent on dental services is wasted on fixing problems that could have easily been prevented.

There are many customers in the global dental industry, including people who need to find a dentist. These individuals are served by the Trusted Review Platform, a blockchain based compilation of reviews funded by Dentacoin. Customers also include dental practices that want to attract new patients and who buy supplies from producers in other countries.

Allowing patients to earn Dentacoin by posting reviews or by using other applications promotes the goal of improving global dental health in a direct, tangible way. It does this much more effectively than payments in Bitcoin or other cryptocurrencies for a variety of reasons, including meeting the third most important rule of business.

Business 103: Build the Brand

Creating “brand awareness” is critical to the success of a business or any organization. Customers come to recognize the brand and associate it with great qualities. Logos and marketing slogans are an important component of accomplishing this goal. Dentacoin is engineered to become the global brand for quality dental care, equipment and supplies.

It will accomplish this goal by providing benefits for every member of the global dental health community. In fact, it will actually help create a global community, breaking down national barriers to access. A sticker announcing “Dentacoin accepted here” will one day be the universally accepted sign that the goods or services provided are recognized by the global dental community as the best the industry has to offer.

Bitcoin can’t do this. Its mission is to become a universal currency. The community it seeks to build is more diverse and varied than the one envisioned by Dentacoin. Just like a national fiat currency helps define a nation, the use of an industry-specific cryptocurrency like Dentacoin can help define an industry.

Cryptocurrency blogs and exchange analytics are still almost exclusively focused on the movement of market prices. This is likely to change over the coming year as the value of blockchain makes itself felt across the entire global business community.

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Coinbase’s Decentralized Exchange Acquisition Is a Shortcut to List ERC20 Tokens

As reported here on May 24, the world’s biggest cryptocurrency brokerage and trading platform, Coinbase, acquired decentralized cryptocurrency exchange Paradex. Intent to Add Tokens In an official announcement, Coinbase CEO Brian Armstrong stated that the acquisition of Paradex was part of a larger Coinbase initiative to expand globally and serve customers outside of the US. “The move not only reinforces Coinbase’s commitment to investing in decentralized infrastructure and participating in the nascent world of wallet-to-wallet trading, but also our focus on the international crypto trader. After making some product enhancements, we’ll initially offer this experience to customers outside the U.S., and eventually to U.S. customers,” said Armstrong. Moreover, Armstrong emphasized that GDAX, short for Global Digital Asset Exchange, which has been Coinbase’s leading flagship cryptocurrency exchange, will rebrand to Coinbase Pro to offer professional trading tools and services for advanced traders. Armstrong added: “Switching to the name Coinbase Pro is a recognition that the individual active trader requires a product completely dedicated to their specific needs.” The announcements from Armstrong and President Asiff Hirji described Paradex as a relay platform, rather than a decentralized cryptocurrency exchange. Even the Paradex development team presented itself as a decentralized relayer in its official announcement, stating, “One year ago this month, we set out to build the best decentralized relayer that empowers users with self-custodianship.” The decision of Coinbase and Paradex to categorize the Paradex platform as a relayer was likely done to avoid scrutiny from the U.S. Securities and Exchange Commission (SEC), which previously emphasized that in order to list ERC20 tokens or initial coin offering (ICO) projects, US-based exchanges must first receive a license and approval from the SEC. According to Armstrong, the Paradex decentralized digital asset relayer will only be available to customers outside of the US in the short-term until local exchanges can reach consensus with the SEC on handling tokens. The acquisition and integration of Paradex into the main infrastructure of GDAX and rebranding the exchange to Coinbase Pro can be considered a shortcut which Coinbase took to list ERC20 tokens ahead of other trading platforms in the US. Legally, local exchanges are not allowed to list tokens that have conducted ICOs, because if the tokens turn out to be categorized as securities, the exchanges face conflict with the SEC and other financial authorities. On May 23, the Paradex development team stated that its relayer would not be available until the integration of the Paradex relayer into the Coinbase infrastructure is completed. If Paradex merges with Coinbase Pro, it is likely that existing Coinbase users outside of the US will be able to seamlessly trade tokens in a peer-to-peer manner. US Customers Will Have to Wait In an interview with CNBC, the Coinbase team stated that it will have to implement changes for compliance purposes before opening Paradex and decentralized token trading to US-based users. The acquisition of Paradex by Coinbase demonstrates the company’s confidence in its ability to circumvent legal barriers to eventually enable decentralized token trading in the US. Depending on the stance of the SEC, cryptocurrency exchanges in the US may not be able to support tokens in the conventional way of directly listing them as trading pairs on their centralized platforms. Coinbase’s decision to essentially acquire the development team behind Paradex and merge it with its professional cryptocurrency trading platform could be an unorthodox method of allowing users in the US to trade additional tokens.

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