Blockchain and socio-technical systems – diffusion through hybridization

There are four ways how Blockchain-based companies are, in general, re-creating current applications:
  1. Enhancing current products
  2. Building centralized products with tokens
  3. Re-creating applications in a decentralized way
  4. Innovating new applications
This is a series of posts, in this post I will cover the first approach:

Enhancing current products through hybridization

Startups from that space are working on solutions that can be incorporated into existing „normal“ products. Through that integration, those „normal“ products can be enhanced with features that – in the best case – are only achievable using blockchain technology.
Two examples are AppCoins and Credo.

AppCoins

AppCoins is an app protocol. The idea behind AppCoins is to develop a protocol that can be incorporated into existing apps to allow those to profit from blockchain’s advantages. Concretely, AppCoins wants to incorporate advertising, in-app purchases and app approval.
  • Advertising: Similar to the Basic Attention Token and Synereo AppCoins should be used to reward users for their attention.
  • In-app purchases: Like a lot of other Blockchain startups, AppCoins should allow users to pay in apps using APPC (AppCoins’ token)
  • App approval: AppCoins should be used to rank developers and approve their apps accordingly.

Credo

Credo is the token for the e-mail spam fighting solution BitBounce. With BitBounce one can whitelist e-mail-addresses. Each message that comes from a whitelisted e-mail will get delivered as usual. If the e-mail, however, is not whitelisted, the sender will get an autoreply by BitBounce informing her that her e-mail cannot be delivered and if she wants her e-mail to get through she must pay a fee using Credo.
Credo has been trading since September 2017 (ticker CREDO) and has, among others, Tim Draper as an investor.
With these and other solutions existing (Non-Blockchain) products are enhanced and both, the new and old „worlds“ (i.e. Blockchain and non-Blockchain) are co-existing in a hybrid state. That symbiotic approach is particularly interesting because of three advantages it provides:
  1. Companies which are enhancing existing products are not positioning themselves as competitors and thus aren’t a threat to incumbents. Because incumbents are very powerful, this strategy allows Blockchain startups to work without having to worry that much about competition. This leads to the second advantage.
  2. Because startups must not fight incumbents they have enough time to study the industry and work on bigger products which will eventually end up being direct competitors. Until then, however, those startups are operating under the „competition radar“.
  3. Accustom people slowly to the new „world“: By not confronting users directly with something completely new, startups can slowly accustom people to the new paradigm and incrementally lead them towards the new world.
We have seen such strategies being very successful in the past, especially when dealing with socio-technical systems. Socio-technical systems are systems that consist of the technology per se, the applications and everything around it such as user practices, symbolic meaning, regulations and the wider network of stakeholders.
In „Blockchain and social networks: unbundling, and re-creating the stack“ I explained such systems by the example of Facebook and the car. The car, as part of the socio-technical system, „the transportation system“, started off as an extension of the then prevailing transportation systems. In the beginning, the car was enhancing prevailing means of transportation (e.g. horse-drawn carriages) in areas were those fell short (e.g. not being able to cover long distances). It was only after time and gradually that the car replaced horses completely [1].
If we now consider Blockchain as such a socio-technical system or the technology part of it, with AppCoins and Credo we can see a similar pattern playing out.
Leaving aside the question of whether certain products need a blockchain in the first place, I believe that such a hybrid approach of first being a partner and then a competitor is far more useful than the “lets add Blockchain to an existing business model and fight the Amazons and Facebooks of this world” big bang approach.

Notes

[1] This line of thinking originates form “Technological Transitions And System Innovations: A Co-evolutionary And Socio-technical Analysis” by Frank W. Geels (Amazon)

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