Before you go, check out these stories!

0
Hackernoon logoSustainable Communities Through Digital Economies with Mark Smargon by@Ishan Pandey

Sustainable Communities Through Digital Economies with Mark Smargon

Author profile picture

@Ishan PandeyIshan Pandey

Technology Lawyer working on code and everything law. Founder : Blockchain Research

Companies often wonder how to develop a culture around their products. Struggling to create a feeling of belonging and association is hard and especially for a corporation involved in the business of selling ‘Stuff’. Tokens help create incentives that align the goals and objectives of all the market participants in an ecosystem. Companies are now increasingly looking for ways to develop micro-digital economies to provide a premium experience to users and convert one-time clients to lifelong customers. I sat down with Mark Smargon, CEO at Fuse.io, to talk about creating micro-economies and leveraging the technology to build ever-lasting products. 

Ishan Pandey: Hi, Mark Smargon, welcome to our “Behind the Startup” Series. Please tell us about yourself and the story behind Fuse.io?

Mark Smargon:  Hi Ishan, my background is in e-commerce and my passion is building internet products, which I started doing at an early age, me and my twin brother started an e-commerce provider in Israel which he is currently managing. I started Bitgo.co.il when I heard about Bitcoin the first time and saw how hard it is to buy it in 2013, we also tried to push for Bitcoin payments which was very challenging at the time. As much as I liked Bitcoin, it was hard for me to see it being used in the future as a cash alternative. But I was fascinated with the technology and with several partners we opened Colu which was building the Colored Coins protocol on Bitcoin. Those were the pre-Ethereum days and a new industry was forming around digital assets and we were lucky enough to be early in the game and have hands-on experience with the formation of the standards in this space. Fuse was created on those idea’s but now the technology has reached maturity and a critical mass of adoption when in the past it was mostly intended for developers and was difficult to use. Nowadays you can easily build products that deliver services for new types of audiences. Mainstream audiences can use crypto rails as the backbone infrastructure, and this is the idea Fuse was formed around. That we can use veiled crypto products and put this technology in the hands of millions of users.  And on top of that let local operators earn a nice living by removing current expensive payment rails from the equation.

Ishan Pandey: How can entrepreneurs and businesses turn their communities into potential economies?

Mark Smargon: With Fuse, businesses are able to create, issue, and manage tokens with simple computer skills - no coding knowledge required. We have developed a simple desktop application that allows anyone to launch their own community-based token and decide on the amount, whether it has a locked supply, the symbol and other core features. The operator then uses a series of plugins to create reward mechanisms, participation bonuses and even fiat on-ramp. A customizable wallet is available for download on iOs and Google Play. There even also the possibility to launch a personal-branded if the business or operator wishes! 

Ishan Pandey: How can small businesses leverage digital economies? Further, what regulations should small businesses keep in mind?

Mark Smargon: The first step is to come up with a concept about how a particular token or digital asset can be used between the business and members of the community in order to encourage cooperation and activity. Grocery stores, beauty product retailers and airlines are just a few examples of sectors that have created highly effective loyalty schemes in order to transform business and fast track growth. Nike is another great example, as they have created a scheme which tracks the workout routines of members and rewards them for it. Fuse aims to capture a segment of this industry by allowing businesses to launch schemes everywhere and at little cost.  

The important thing is to provide a pleasurable user experience and ensure that the right incentives are in place for participants to get involved and take advantage. By experimenting with tokens, businesses are entering into the realm of augmented money and transactional experience. The possibilities become endless as consumers and businesses find new ways to interact with each other centered around blockchain-based digital economies. 

For regulation the challenge, in many cases, is that authorities are still catching up with the technology meaning that guidance still needs to be created. It’s also important to recognize that the non-custodial nature of the platform, meaning that businesses do not need to deal with storing money or information, makes it different from traditionally regulated industries. Businesses should nonetheless always be aware and keep upto date with the latest info in whatever jurisdiction they are in, and be mindful of not doing anything that could potentially be harmful to consumers or the general economy.

Ishan Pandey: What advice would you give to startups regarding creating a community from scratch and maintaining it?

Mark Smargon: If businesses have ideas on how a token-based digital ecosystem could be built within their community then the best thing to do is test it out. Ethereum has become by far the most used platform for token economy experimentation and yet the platform was only launched 5 years ago with real community adoption only beginning 3 years ago with the ICO craze. Creative entrepreneurs in this space are essentially making it up as they go along and coming up with awesome ideas how to leverage tokens and digital economies. Communities often need nurturing in guidance in the early stages, something which the team at Fuse is here to help with. 

Ishan Pandey: How can startups on-board community members to respective micro-digital economies?

Mark Smargon: It’s hard to imagine how much of what has happened in the world of cryptocurrencies and tokenization would have been possible without the invention of the smartphone. It’s the easiest way for people to interact with wallets and other token-based tools. This is why creating a mobile wallet for non-crypto users was a top priority for us. Users are on-boarded by simply scanning a QR code which takes them straight into the respective community allowing them to begin transacting with other community members immediately. 

Ishan Pandey: What techniques should companies use to retain customers, and how can these strategies be optimized?

Mark Smargon: Getting feedback from customers and analysing usage flows is no doubt the best way to retain customers over time. The digital asset belongs to the community and their input is invaluable in helping it become valuable. Users will often come up with new ways for the token to potentially be used and it's up to the business to make decisions  along with its community about which new ideas to adopt in order to keep growing the ecosystem. 

Ishan Pandey: Are there any real instances of digital token economies uplifting people out of poverty?

Mark Smargon: There are a lot of great examples of how digital token-based economies built on the Fuse network are providing income to those in need. 

GoodDollar, for example, is a community designed to provide UBI (universal basic income) to people. Supporters wishing to help others are able to stake the G$ which is used to generate financial returns using various DeFi (decentralized finance) platforms such as Compound.  These returns are used to help people in need but also allow supporters to get funds pledged back to them over time. 

Another is WikiBank which allows supporters to provide donations to those who need it in Seville spain. Donations are provided in the form of tokenized vouchers which people can spend using their smartphone at participating stores to obtain fresh products and groceries. 

 These two use cases have attracted much attention and many more operators are interested in implementing similar use cases. But we see a slow process where more and more people are getting out of poverty by using new technology which enables more inclusion and social mobility.

Ishan Pandey: To what extent can digital communities scale? 

Mark Smargon: Thanks to the open-source nature of blockchain technology, digital communities can scale exponentially. We’re able to reach users and allow them to transact in ways which legacy banking infrastructure could not due to the red tape and costs involved. One limiting factor might be the electronic devices which allow these interactions to happen but smartphone penetration is already approaching half the world's population and will continue to evolve allowing for easy adoption as time goes on.

Ishan Pandey: What trends and challenges do you see in the blockchain industry for the year 2021?

Mark Smargon: We have seen huge institutional interest and adoption of blockchain in the last couple of years with leading banks like JP Morgan changing their stance and taking on crypto companies like Coinbase as clients. MicroStrategy, is another example of a public listed company which exchanged $400 million from its balance sheet into Bitcoin as a hedge against the current economic downturn and dollar weakness. 

I expect this trend to continue in 2021 as the mainstream takes notice of the shift happening and begins to look under the hood at the technology and the possibilities it provides. We’ll also see an increasingly positive attitude from states and intergovernmental organizations as they look to see how the technology can be leveraged to deal with many of the societal and economic problems we are facing right now, whilst of course drawing the line at things that are clearly unacceptable. 

It’s really amazing to see the amount of development happening in the space. Blockchain teams are delivering great products as more integrations and services are added every day. And I’m excited to watch how defi will grow beyond ethereum and beyond yield farming into actual real world use-cases. 

Regulation will no doubt remain a challenge as authorities grapple with applying principles used on legacy systems to this new and constantly evolving technology.

The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence by asking the right questions and equipping readers with better opinions to make informed decisions. The material does not constitute any investment, financial, or legal advice. Please do your research before investing in any digital assets or tokens, etc. The writer does not have any vested interest in the company. Interviewer - Ishan Pandey

Tags

Become a Hackolyte

Level up your reading game by joining Hacker Noon now!