brifs.co Proposal | NCF | 2 of 3

Table of Contents

How brifs. co Solves the Problem

There are 3 components to describe how brifs.co solves the issue of economic loss caused by gift card illiquidity: technical, economic, and user acquisition & retention. These 3 areas are interrelated and often overlap to form a cohesive solution.

The Technical Solution | NEM Blockchain — BaaS

The NEM Foundation has created a platform to help solve problems with smart contracts and blockchain. Some of the problems with competing blockchains are fundamental. The speed and cost of transactions on Bitcoin and Etherium, for example, render them impractical for transactions involving average consumers.

Perhaps most importantly though alternative blockchains lack a plug-n-play software toolset which means that many basic functions dApps commonly need require custom builds. NEM is not only a blockchain, it’s also a smart contract BaaS or blockchain-as-a-service.

Within a trustless exchange, perhaps the single biggest technical challenge is the problem of ‘double spend’. Gift cards on a secondary market are particularly vulnerable to double spending when a seller uses a gift card after they’ve sold it. Using NEM as a Blockchain-as-a-Service, facilitating a trustless exchange can be accomplished in large part by utilizing their ‘Smartasset System’ tool kit.

To overcome the double spend issue, brifs.co will utilize NEM’s Smart Asset System by running a decentralized private/public blockchain. This will make the unique identification number of individual gift cards available only to the seller, until the transaction is completed and to the buyer only after it is completed.

Keeping the unique ID number of the gift cards on a private blockchain is a necessary step because it prevents it from being stolen by anyone viewing the public ledger.





The brifs.co private / public blockchain (built upon NEM’s Smart Asset System):

brifs.

brifs.

co is using NEM’s Namespace and Mosaic features to tokenize the gift card values, as well as to record & manage ownership rights. Before management rights can be established however,co will use NEM’s Multisig feature to conduct funds verification.

brifs.co Multisig requirements for Listing-to-Sale use case:

To do so, brifs.co will use NEM’s inherent API flexibility to ping the closed-loop gift card issuers verification system to establish the first Multisig Key. Once funds are verified with the card issuer via API, the second key will be established along with the smart asset data, whereby the seller will list the asking price and confirm the listing. brifs.co’s key will push the listing live and the smart asset will now be fully formed.

Once purchased, the gift card funds will be re-verified via API and NEM’s multisig feature will facilitate clearing & settlement on the brifs.co public blockchain (with the unique card ID hashed).

The Economic Solution | brifs. co Business Model & Strategy

The main cause of gift cards’ poor liquidity is that, as it stands today, the leading platforms for peer-to-peer gift card sales take 12% - 15% in commissions from all transactions that take place on those platforms. Part of this 12% to 15% is to cover fraud, credit card processing fees, operating expenses, and of course, profit for shareholders.

brifs.

brifs.

**0% Commission** By using the NEM blockchain, those costs can be reduced to such an extent that theco team will not charge any commission or transaction fees. Furthermore, theco team does not seek to profit from transactions whatsoever.

0% transaction costs, and the low-cost/high-trust enabled by using the NEM blockchain to put gift card ownership on a public/private ledger means that gift cards can be fully liquid. The current market for peer-to-peer gift cards is estimated to be between $15 and $20 billion annually in the US alone.

It’s also reasonable to assume, that if seller’s don’t need to lose 12% to 15% on sales of gift cards (on top of the discounted value of the cards themselves) that the market will expand with more buyers and sellers because of this new found liquidity. When we speak of increased liquidity, what makes the prospect of 0% commission so powerful is the phenomenon known as network effects.

Network effects

“Network effects. It’s one of the most important concepts for business in general and especially for tech businesses, as it’s the key dynamic behind many successful software-based companies.” — Anu Hariharan 9

Anu Hariharan

Partner







Simply put, network effects occur when adding additional users to a system, benefits all users of that system. In our case, that system is the gift card marketplace and the users are the buyers and sellers. A classic example of network effects is actually the internet itself. In the internet’s earliest days communication was very simple and there was not much a user of the internet could do besides maybe chat with other internet early adopters.

Fast forward and the potential of the internet is realized, when more and more people join and start participating in online commerce, wikipedia, dating etc.

Allowing people who are already buying and selling gift cards on the secondary market to do so with 0% commissions creates a network effect as well. The market for peer-to-peer gift cards should be set by the market’s buyers and sellers, but the 12% to 15% commissions charged by platforms, where those sales take place, interferes with the true market price (or discount off of the card’s full value).

Using round numbers, let’s say that the buyers and sellers in the broader peer-to-peer gift card market determine that the price for a $100 eBay gift card is $95. When a buyer purchases that card, makes a purchase with it, the buyer instantly saves $5 or 5%. But as it stands today, after paying commission on the transaction to the marketplace ($14.25 or 15% let’s say), the seller only walks away with $80.75 taking nearly a 20% haircut.

Expanding the Pie

Buyers are aware that sellers don’t get the full $95, but what if sellers did get the full sale price? Buyers would have leverage to change the market price for $100 eBay gift cards to $90, as an example. Afterall, $90 is much better than the $80.75 sellers were getting before. Now those buyers are saving $10 or 10% and sellers only take a $10 or 10% haircut. The prospect of saving 10% attracts even more buyers for whom 5% wasn’t worth the trouble. This also attracts more sellers that are comfortable taking a 10% haircut, but were not okay with losing almost 20%.

This virtuous cycle is network effects in action. This is a paradigm so much better than the status quo, that in addition to gaining market share, brifs.co will actually expand the market for peer-to-peer gift cards. While getting an increasingly larger slice of the peer-to-peer gift card market pie, we see ourselves as the baker, who makes the pie even larger.

BRIF Token

The brifs.co platform will use its own cryptoasset, the BRIF token, to make this all possible. The BRIF token will be fixed in supply and market dynamics of cryptoasset exchanges and brifs.co user demand will determine the price of the BRIF at any given time. While the cost of the BRIF will fluctuate, it’s of little consequence to the gift card transactions on brifs.co because all of the sales are pegged to the dollar.

This means that if BRIF tokens cost 1 penny each or $100 dollars each, it makes no difference to the buyers because they simply buy the BRIF at market rates at the time of purchase and then use them to buy the dollar-pegged gift cards. Same for the seller. If they sell a gift card for $50 on brifs.co, then they get $50 in BRIF, which they can then sell on an exchange for $50. Whether that $50 is 5,000 BRIF or 0.5 BRIF is immaterial to them; it’s still $50.

0% Commission is a Strategy

The team at brifs.co is not creating a commission-free gift card marketplace for the purpose of enriching its founders. We’re creating a 0% commission marketplace because it should exist.

People should be able to do whatever they like with things of value that they own and that is part of what makes the blockchain so exciting as an enabler of that. We just want to realize that potential in one relatively small area of the economy and that is why we do what we do they way we do it; however, 0% commission is also a business strategy.

10X Better

“Uber built a multi-billion dollar business by using mobile to create a 10x better product than the incumbent (taxis), and did so at a lower price. The “and” ‘lower price [sic]’,… is everything.” — Sarah Tavel 10

Sarah Tavel

General Partner







There is a rule of thumb in startups which states that if you are going to try and compete with incumbents, then you’ll need to offer a solution that is 10x (or ten times better) than the best in that category.

In marketplaces like Amazon, eBay, Google Adwords, and so on, the first company to make a great solution generally gets most of the buyers and sellers onto their platforms. This is called a winner-take-most outcome. To beat the incumbents in a marketplace business, you’ll need to win over many buyers and sellers to be able to compete at all, and that is very very difficult, unless your business is far and beyond better than what the incumbents are offering.

We think that going from 12% to 15% commision to 0% commission is the exact type of thing that can take on incumbents and be the winner that takes most. We believe that 0% is 10x better than 12% to 15%; although mathematically the improvement is technically “undefined” (heh).







Critical Mass Builds a Moat

If brifs.co gets significant market share by offering a 10x better solution, then according to the winner-take-most thought model, this can be expected to create a vacuum whereby brifs.co surpasses a tipping point and becomes the place to buy and sell gift cards. This tipping point is known as critical mass.

Having a critical mass of buyers and sellers is what makes Facebook remain the dominant player in social media (and social media advertising). Critical Mass is what makes Google the predominant place people go to find information online (and the accompanying search ad revenue). This dominance acts like a moat around Facebook and Google, which can protect their businesses from newcomers that wish to compete.





0% is the Ultimate Moat

“Some of the greatest and most enduring technology companies are defended by powerful moats. For example, Microsoft, Google, and Facebook all have moats built on economies of scale and network effects.”— Jerry Chen 11

Jerry Chen

Partner



There is another benefit to charging 0% commission. Once a marketplace becomes dominant in their field, there is no fuel for newcomer marketplaces to get off of the ground. There’s no reason to start a new marketplace to compete, if there is no profit for which to compete.

Other teams may try, but they will find it very difficult to compete against a marketplace with a critical mass of buyers and sellers and without the ability to profit from transactions.

brifs.co Business Model

There is a practical matter of how brifs.co can sustain itself, even with it’s extremely low operating costs without extracting value from transactions. We have 2 main streams of revenue to “keep the lights on” so to speak.

The first is charging sellers withdrawal fees, IF they chose not to be paid in BRIF. Some seller will opt to be paid in Bitcoin and USD and for that they will incur a 2% fee. Undoubtedly some percentage of folks, for whatever reason, would rather get 98% of their sale proceeds in BTC or USD than 100% in BRIF, and that is fine with us, as it will help support the marketplace as a whole.

The second and most compelling source of revenue for brifs.co is from advertising. As we accomplish our goal of building a successful dApp, we can expect to receive interest from companies in the blockchain space who would like to reach a similar audience as the one we have created. But that is small in comparison to the revenue possibilities once brifs.co reaches a broad audience of retail shoppers. If we can achieve that, then keeping the lights on will not be a problem.

Retail Retargeting

Retargeting ads trigger when you visit a product page online; a pair of Levi’s jeans for example, but do not make a purchase. Afterwards, you are shown ads for that exact pair of jeans on other websites. These are known as retargeting ads. They are particularly effective with consumer goods, so if brifs.co is the place where a significant number of retail shoppers go online, then retargeting would be a viable source of ad revenue for the company.

Targeted In-App Ads

Have you ever Googled “Home Depot” (as an example) only to have the first search result show an ad for Lowe’s? Both Home Depot and Lowe’s compete to show ads for web searches for “Home Depot” as does Ace Hardware, Harbor Freight Tools, and so on. A similar dynamic will exist for advertising space on brifs.co desktop and mobile apps. However, rather than being based on the search query, which would harm the user experience, ads could be displayed based on users’ brifs.co consumption patterns.

Brand Promotions

Similar to targeted ads, which are shown to users based on the category or the brand they are looking to purchase, brand promotions would be shown on brifs.co brand pages, which list a gift cards that a particular brand has for sale. Imagine Walmart, for instance, buying ad space from brifs.co to advertise their free 2-day shipping policy which is designed to compete with Amazon, as seen in the images below.

Walmart’s brifs.co Page (without ads)

Walmart’s brifs.co Page (ad included)

Monetization Summary

The significance of a 0% commission marketplace is several fold. It’s the belief that gift cards should be freely transferable and secure; that unobstructed liquidity is the natural state of gift cards on the blockchain. 0% commission is also belief that by enabling this natural state for gift cards to be exchanged, BRIF tokens will become broadly adopted by consumers as a way to save money on nearly everything that they buy.

We believe that 0% commission is what wins the market and what brings crypto into the everyday lives of average consumers, many of them for the first time. 0% commission is what makes cryptocurrency, specifically BRIF and it’s exchange pairs, usable for nearly all forms of consumer purchases. All of a sudden, by using Ethereum or Bitcoin to buy BRIF, in essence you’ll be able to use Ethereum or Bitcoin to buy almost anything, and save money while you do it.

If those assumptions are correct, then the significance of a 0% commission peer-to-peer gift card marketplace, built on the NEM blockchain, extends far beyond the gift cards themselves. It not only makes gift cards a bigger market, it makes crypto a bigger market. If brifs.co can have even a small impact on those markets, then BRIF can expect to see wide adoption and the revenue flow from non-BRIF withdrawals, and advertising revenue will certainly be able to sustain the 0% commission marketplace through the foreseeable future and beyond.

The User Acquisition & Retention Solution | brifs. co Usability

As indicated in the business model sections, having a better mousetrap is what drives user growth. In software, marketing is important, but having a solid value proposition and an easy-to-use product is the only thing that can create category winners.

We are in the process of designing user flows in the form of animated gifs to walk interested parties through the processes of buying, selling and redeeming gift cards sold on our BRIF powered blockchain gift card marketplace, as well as how to easily buy and sell BRIF tokens. These user flows will be added to a subsequent version of this document.

Users will be able to store gift cards and BRIF in their brifs.co account/wallet. Also, users will be able to buy BRIF natively from within our mobile and desktop apps. The process of making purchases using gift cards bought on the brifs.co platform will be seamless. So too will be the process of selling BRIF on a cryptoasset exchange.

Good product is key, but marketing is still very important, and fortunately the brifs.co team has a successful track record of scaling tech startups by leveraging industry leading acquisition strategies and world class UI/UX design. The team has had experience with doing the right inputs in this regard, which have resulted in outcomes in the tens of millions in revenue for other tech startups, we’ve previously worked with. The inputs are all anyone can control and fortunately they are one of our core skill sets. As a team, we are very comfortable in this arena.

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Works Cited

9. Andreessen Horowitz, Anu Hariharan, All about Network Effects, 2016-03-07

10. Medium, Sarah Tavel, How to build an enduring, multi-billion dollar business, 2016-02-15

11. Greylock Partners, Jerry Chen, The New Moats, Why Systems of Intelligence™ are the Next Defensible Business Model, 2017-04-24