Simple Steps for Customer Bootstrapping

According to Jeff Dorman, Chief Investment Officer US-based, companies will want to issue their very own tokens right after they’ve bought some Bitcoin (BTC), which may be coming sooner than we think blockchain- and crypto-focused investment advisor Arca.

“Once companies start purchasing bitcoin, it’s only a matter of time before they start issuing their own tokens too,” stated Dorman in a December 7 blog post. 

“Digital assets issued by companies are proving to be the greatest capital formation and customer bootstrapping tool ever created.”

And we’re nearer to this certainty than one may believe, he replied, offering two of the current instances:

  • Airbnb’s filing for their upcoming initial public offering said that the company’s achievement would also depend on their ability to adapt to emerging technologies “such as tokenization, cryptocurrencies, new authentication technologies,” etc.;
  • Venture capital firm Benchmark-backed, community-based app Supergreat compensates their reviewers by paying them in “supercoins,” creating a cycle of engagement – but these can’t be moved out of the app ecosystem.

Neither Airbnb nor Supergreat doesn’t technically require a blockchain to have their tokens, but having digital assets instead of a coin that functions only within a specific ecosystem, would make the asset fungible with other assets outside that ecosystem, thus making them “more valuable, more discoverable, and would lead to further growth,” argued Dorman. He added that “Loyalty points work. Liquid digital asset “pass-thru” tokens which function as both loyalty points and quasi-equity work better.”

Besides corporations, university endowments are already investing in the world’s number one crypto, continued the CIO, “so perhaps the first University token is close to coming to market too.”

According to him, parents may decide to purchase these coins for future educational credits. If the school is in high demand, these tokens could be traded on the open market, should the child decide not to attend that specific university.

Dorman concluded that “both companies and endowments are prime candidates to give investors direct exposure to their future liabilities rather than being forced to invest in areas they don’t understand or care about as a proxy.”

The post quotes Merrill Lynch financial advisor as telling Arca that “this may be how people think about “saving” for the future.” Financial advisors do “is bridge the gap between assets/cash flow now, to future liabilities (house and retirement needs), by investing in equity and fixed income which in theory should go up over a specific time period.

If we knew the exact cost now for the future liability? If Health Care could be paid for up front in the form of a digital asset, or vacations, or housing expenses? This could change the formula,” the advisor was quoted as saying, with Dorman adding that it’s precisely digital assets that are changing this formula.

Meantime, some companies are already completing this first step – purchasing bitcoin. Dorman hence touched on the argument that “bitcoin may be the perfect corporate treasury asset, for now.”

He professed a question of whether it makes sense to hold bitcoin as a cash replacement, stating that several companies, most prominently Square and Microstrategy, “seem to think so,” given their recent investments in BTC. But why hold cash then at all, especially in this “relic” that is the current market infrastructure?

“Any company with a huge cash war chest is inefficiently using that capital, and is certainly primed for activism,” said Dorman, but “March 2020 [market crash] taught us that maybe keeping a large “rainy day” fund is warranted instead of buying back stock and waiting for government bailouts.”

Perhaps, he argued, buying bitcoin right now “really is the best solution to this mystery ” as it “increases transaction flexibility, keeps pace with inflation, keeps activist investors at bay, and provides a cushion should there be a during the next crisis.” 

Concurrently, there may be some “more appropriate tokens for treasury management purposes in the future depending on the company’s goals.”

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