Amid $153bn Crypto Crash, is blockchain technology poised to revolutionize referral marketing?

The total market capitalization of all 1,507 cryptocurrencies has fallen by an astonishing $152bn over the past seven days according to industry website Coinmarketcap. The current total market cap of $388bn was last seen on Thursday Dec. 10, 2017, leading investors to speculate as to when and where prices will bottom out. However, while crypto prices decline, the cases of blockchain technology being used to disrupt traditional business models are steadily increasing. Today we’re looking at whether a company called Plentix could by poised to disrupt the referral marketing economy with its new blockchain-base referral platform.

Despite $153bn being wiped off the value of cryptocurrencies, blockchain technology is finding real-world uses

Blockchain technology is finding real-world uses

Cryptocurrencies may be crashing, but blockchain technology is increasingly finding real-world uses. The Swiss city of Zug has started to register its citizen’s IDs with crypto-addresses on the Ethereum blockchain. As recently reported by Bitcoin Magazine, GRNET, the national research and education network of Greece, is working on a pilot project to verify student diplomas with the Cardano blockchain. According to the project’s official yellow paper, RefToken is built on the Ethereum protocol and aims to create a new marketplace on the blockchain for merchants and affiliates. The latest use for blockchain could be to disrupt the referral marketing economy and this is where Plentix comes in.

What is the referral economy?

Much has changed since serial entrepreneur S.Rosenbaum identified “The birth of the referral economy” in 2014. At the time, Danielle Morrill of Refer.ly was quoted as telling TechCrunch that becoming an affiliate was “difficult”. Fast forward four years and signing up to become an affiliate with the like of Amazon has never been simpler or more straightforward. Becoming part of the referral economy by earning discounts, credit or even cash by referring someone has become similarly simple. According to P. Schmitt et al writing for the Harvard Business Review, customer referral programs can “drive stunning profits”. However, a new company called Plentix believes that its blockchain-based referral network can disrupt and improve upon the current referral landscape significantly.

What is Plentix Offering?

According to their official website, Plentix is aiming to develop a decentralized blockchain-based online referral program. Their platform and application will connect and reward all participants via a new cryptocurrency called ‘Plenty’. Plentix’ vision is to increase the effectiveness of referral marketing for companies and to increase the rewards for customers who refer products or services. Although the Plentix system will require companies, programmers and developers to collaborate extensively behind the scenes, customers will only see the front-end interface, the Plentix app.

How will Plentix Work?

Plentix is aiming to create a similar network aimed at the referral economy. Plentix’s platform will use blockchain technology to store and keep track of referrals and payments. As blockchains are immutable, they are the perfect medium on which to store data that all parties can trust. In an improvement over the current situation where customers may lack faith that their referrals are rewarded, on Plentix’ platform both businesses and customers can enjoy a ‘trust-less’ experience. On one hand, businesses can use the blockchain to verify the authenticity of referrals and customers have the peace of mind of knowing that every referral they make is stored on the blockchain.

Plentix aims to improve customer referral programs by having businesses and users interact with ‘smart contracts’.

As seen in the image below, the referrer (Jess) and the referred (John) both need to have access to the Plentix platform, either through a computer or via the forthcoming Plentix app. The process begins when a business, say Uber, decides to create a referral program through the Plentix platform. Uber can choose which customers it wants to reward and what form the reward should take. Rewards can take the form of either discounts or the new ‘Plenty’ cryptocurrency. As all transactions utilize ‘smart contracts’ on the blockchain.

What are smart contracts and why does Plentix plan to use them?

Smart contracts, sometimes called ‘cryptocontracts’, are a type of computer program first described by Nick Szabo, a computer programmer and scientist, in 1993. They use a cryptographic code to help two parties exchange anything of value. In the case of Plentix, smart contracts will be used to help business exchange money with referrers and referees. As smart contracts are stored on the blockchain, Plentix believes that their platform will make referral programs cheaper to run for businesses and more trustworthy and profitable for customers. For example, current referral programs are difficult for businesses to target correctly and many customers lack faith that their referrals will be rewarded.

Why could blockchain-based referal programs prove popular?

As blockchains are essentially distributed electronic ledgers, the main potential appeal of Plentix’ platform is that all its records are immutable. A huge number of developers can work on the platform while remaining confident that the system will be safe and secure. Referees will gain confidence from knowing that the records on the blockchain cannot be altered while companies will see the potential for avoiding fraud.

How does Plentix plan to make money?

According to their white paper and official website, the Plentix “referral program (uses) smart contracts — with no need for authority, or any controlling business in between”. A legitimate question threrefore is how Plentix plans to make money from their platform. After all, if everything is on the blockchain and is fully automated using smart contracts, why would there need to be a middle-man? Plentix notes that its proposed token ‘PTN’ will be an “asset in the crypto economy” and will experience growth as the network expands. As seen below in a screen capture from their official website, Plentix plans to keep 10 percent of their PTN tokens and benefit from future appreciation in their value.

Besides raising money through a token sale in March, Plentix will benefit from appreciation of their token ‘Plenty’

What is Plentix’ long term potential?

Plentix’ proposed fundraising and token sale in April will see them aim to sell 60 percent of their tokens and distribute these funds as outlined in the above pie chart. However, the most recent example of a government agency expressing concerns over the high failure rate of ICOs was Thailand’s Securities and Exchange Commission (SEC). According to the Bangkok Post, a recent SEC study into ICOs found that just five percent of ICO investments reaped a “high return” while the remaining 95 percent were “deemed a failure”. Any prudent investor would look at Plentix and ask “What would make them stick around after the ICO money runs out?”

To look at the long term potential of Plentix, investors need to carefully study the customer referral economy. Dropbox is among the most featured companies in literature surrounding referral programs. According to an article in Entrepreneur, “35 percent of all (Dropbox) signups now come from the referral program”. Plentix’ goal is to encourage businesses who already use referral programs to switch to using their blockchain-based alternative.

Conclusion

In summary, there is clear potential for a company to disrupt the referral economy with blockchain technology. The key benefits of using smart contracts have the ability to create a better ecosystem for referrers, referees and businesses to work together. For more information, see the official Plnetix website, and read their white paper here.