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Two Digital Currency Trends Worth Paying Attention to in 2014

Posted on Saturday, 1st February 2014 @ 08:13 AM by Text Size A | A | A

Two Digital Currency Trends Worth Paying Attention to in 2014

For many folks 2013 was their first exposure to digital currency. Bitcoin’s gesticulating valuation and tepid relationship with regulators kept digital currency stapled to the top of news outlets around the globe.

2013 proved that a clever meme (Dogecoin) or celebrity name (Coinye) is all you need to create a new digital financial ecosystem. Although Bitcoin is undoubtedly the gorilla in the room, 2014 will see a troop of monkeys join the party.

Much the same way the app ecosystem launched in 2007 with a handful of options followed by years of exponential growth, the digital currency ecosystem stands at under 100 noted currencies.

Services like Coingen allow you to mint and distribute your own currency for less than a nose-bleed ticket to a Canucks game. Coingen has significant flaws, but there are other platforms in the works that will allow new coins to be minted and backed by actual value.

By the end of Q2, there will be 1,000 digital currencies in the marketplace, none of them owned or controlled by any central authority. If governments and regulators are struggling to understand and corral one digital currency, how will they harness a thousand?

Similar to the app ecosystem, there will be few winners and many copycats that fail to gain traction. Currency success will parallel apps with winning entrants determined not only by their technical chops but also by their marketing prowess. Bitcoin’s creator, Satoshi Nakamoto, being anonymous may prove to be one of the cleverest marketing plays of the decade enticingly shrouding Bitcoin in a veil of mystery.

I believe there will be two overarching “alt” currency trends in the coming 12 months: branded currencies and currencies that augment Bitcoins mining process as “proof-of-work.”

Branded Currencies

When the technical problems of launching a coin are mitigated, the most challenging aspect of launching a successful currency becomes marketing and distribution. Who has better distribution channels than brands?

Projects like Humint will add value to brands by minting coins that increase their customer engagement, augment their loyalty programs and allow branded currencies to be traded seamlessly.

The consumer gets a loyalty program that is not a walled garden. The company gets a coin that can create value out of the marketing channels that already exist. Its a win on both ends.

2014 will see brands continue to jump on the digital currency bandwagon with the most forward looking brands minting their own coins.

Augmenting “Proof of Work”

With Bitcoin you earn coins through a process called mining. Mining means that you have purchased and powered hardware that solves Bitcoin math problems. If you solve the problem you may be rewarded with a coin.

But what if you didn’t have to solve math problems to earn coins? What if you solved environmental, economic or social problems? How would you prove that you have solved those problems so you could be rewarded for your work?

Solarcoin is an undertaking in this space. Although Solarcoin reserves a portion of its coins to be earned by traditional mining, the vast majority of coins are deployed to people and organizations that have 3rd party confirmation of the amount of solar energy they have harnessed. The more sun you collect, the more Solarcoins you earn.

Solarcoin is a digital currency, and thus can be frictionlessly traded for other digital currencies, like Bitcoin. The end result is that extra solar panel put on your roof, could pay for your daily non-fat, extra-hot latte.

Pulling it together

If you accept the paradigm that coins can be rewarded for anything that is measurable then further opportunities emerge.

For example, if we merged “proof of work”, the quantified self movement and branded currencies.

Imagine if the calories you burned on your Nike Plus counted as proof of work and allowed you to earn NikeCoin which you exchanged for Bitcoin that you used to buy Gyft cards at GameStop and traded that for an Xbox game your nephew wanted.

You jogged to GameStop, reloaded your gift card with Bitcoins and walked out with the latest Halo tucked under your arm. Think about how much value that circuit adds to our health care system. A case could be made for a government to back a coin that encourages a healthy lifestyle and reduces strain on the health care system.

2014 will see significant changes in the digital currency ecosystem, one of them may be a Gorilla in a room crowded by monkeys.

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Source - http://www.techvibes.com/blog/digital-currency-trends-2014-01-24

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