We recently acknowledged that though it may seem obvious to us at Power Ledger why tokens are needed to facilitate the Ecosystem, it might be less obvious to others. For that reason we have drafted a quick explanation of why POWR tokens are required to have an energy application platform on the blockchain.

Global Interoperability

Power Ledger’s POWR tokens were designed to create a platform of interoperable applications rather than one business model, targeting one market.

If Power Ledger had decided to use blockchain technology merely for a secure, fast and transparent database to settle energy transactions, many limitations would be presented when trying to expand globally. Prior to integrating our ERC20 token — POWR — to our Ecosystem, we only used Sparkz, a token that is pegged to the lowest denomination of the local currency. A brilliant model for ensuring the volatile nature of cryptocurrencies doesn’t impede on revenues earned from selling surplus energy. But Sparkz wouldn’t cut it for an Ecosystem of global energy Applications. How would we convert Sparkz from one country to the next? Would we need a different token per country?

POWR tokens can be transferred across boarders and converted to Sparkz in the local market. Even more importantly, they can be used across Power Leder Platform Applications.

Programmable Money

A good illustration of the interoperability benefits POWR tokens permit can be drawn using our Asset Germination Events (AGEs). There is no role for Sparkz, tokenized electricity transactions, here. By having a ERC20 token, we can allow contribution from around the globe to crowd-fund renewable energy assets. In these events we will give POWR holders precedence.

Instead of creating a medium for institutional investors to capitalize on the rapid decline in cost of renewable energy generation, using POWR, we can ensure buyers of any size or location can benefit from this revolution. No man (or Power Ledger supporter!) will be left behind. The ledger constantly tracks who are holders of the asset and it can never be questioned or changed.

The Chicken Before the Egg

Imagine being one of the first people to use email as a form of communication. The network, ie: an email client and server, wouldn’t have had much value to the end user. Who could they email? How can you create a user base of a network in the very beginning? There is no incentive to be an early adopter.

Blockchain tokens solve just that. Token holders create a network which gives the Platform value, and in return, they receive ownership of the network.

Using a token model, there is now an incentive to be an early adopter or user of the network. In Power Ledger’s case, it allows future users of the Platform to pre-purchase electricity at a discounted rate, as demand drivers may increase the value of POWR. By purchasing in the Token Generation Event (token sale), users could get POWR first before the utility model kicks in.

Decentralized Business Model

Once the Platform is operating, the network-builders get to share in its success. Rather than being a large corporation reaping the benefits, the success of the Platform flows down to the users and the early supporters.

Thats why, at Power Ledger, we refer to ourselves as a movement, instead of a corporation. When the company succeeds, all early supports, application developers and users benefit as well.

Accelerating Growth

As with all startups, it can be difficult to find access to financial capital without giving away valuable equity. By conducting a token sale, future platform application developers (termed Application Hosts in our Ecosystem) and future platform users can now purchase a service or product in advance in order to fund its development and be rewarded by early-on support. This is comparable to pre-ordering a product and paying an upfront deposit to reserve your sale. Tesla Motors used this model to fund the production of their first electric cars, as a $5,000 USD down payment was asked of future car owners to 1) reserve their spot and ensure they received a Tesla first and 2) to give the company the liquidity they needed to manufacture the cars.

In Power Ledger’s case, its less about paying for the development costs, as we have a tried and tested platform, but more about accelerating our rate of growth.

As a first mover in the space, constantly others are making copy-and-paste companies and racing to take market share. Our project roadmap will go on regardless of funding, but the extra liquidity allows for us to fully take advantage of our first mover advantage. Quicker growth also means we can offer our Platform in international markets sooner, to really fulfil on our mission to Democratize Power.