With rising uncertainty around the legal ramifications of token sale or token generation events (ICO), this post aims to offer some perspectives from a tech entrepreneur in hopes of highlighting the purpose and positive competitive advantages of an ICO that are crucial to disrupting healthcare using blockchain. At its core, an ICO is much more than just fundraising. An ICO sparks the process of tokenization of health information that is an important concept to understand. For good projects and genuine startups, an ICO can help grow user base, create a network effect, and stake a position in the blockchain ecosystem during the early phase. For a blockchain startup, an ICO is almost a requirement to be able to build and compete with other blockchain companies.
Today, most of the stories in the media focus too heavily on the crowdfunding characteristic and the ever higher amount of money successfully raised by ICOs. It’s truly sad that not too many people understand or want to discuss why ICOs are a strategic move in the blockchain space. Yes, lots of money is at play, but in many ways the money is not equivalent to traditional fundraising. By using cryptocurrency like Ether, the funds are less accessible compared to traditional means with fiat. $10 million in ETH does not equal $10 million USD. At any given time, the value of ETH can crash and lower the available capital. Likewise, the value can increase to give the startup new leverage to grow. The point is that the company becomes intertwined with the capital that funded it. It lives and dies with the blockchain. This is why it makes more sense to store the funds using the same blockchain you’re building on top. For Emrify, since we are building on Ethereum, funds will be held in ETH. If Emrify gains traction, more transactions will be made on Ethereum, ETH value will increase, which ultimately gives Emrify more capital to keep building. This positive feedback loop is absolutely vital for blockchain startup.
With the imminent transition of Ethereum from Proof of Work to Proof of Stake, blockchain startups can leverage their ownership of a large amount of ETH to have a stake in the network. Remember, in order to work with blockchain, any true startup would need to setup and maintain their own node. This allows them to have a voice and participate in the network. Most will also want to be Miners in order to accumulate Gas to pay for transactions. This is what it means to be a blockchain company. With Proof of Stake, things are set up to favor those with high ETH or high stake in the network. Miners with higher ETH can earn more Gas proportional up to a certain amount (diminishing returns up to ~1000 ETH). Additionally, in the future, Blockchain Governance and network voting rights may also be proportional to ETH amount. As a result, a blockchain startup with at least some sizable amount of ETH is more active and competitive in the network. In effect, the accumulation of ETH via crowdfunding is a critical mechanism to stake the startup within the blockchain in which its platform is dependent.
Launching a startup is hard. Successful funding does not guarantee the success of the startup. Getting users to be excited about your new product and building the community around it represent real challenges and costs. For health, most will readily admit that getting patients to care about their health remains a top priority. Blockchain represents a once in a lifetime opportunity for innovative startups to capture the exuberance around cryptocurrency to build and test new products in a way that cannot be done anywhere else. There have already been multiple examples of this phenomenon that have shown to work. Recently, Airdrop has become a popular method to attract new users to learn and participate in new startups. By giving away a small number of tokens, consumers become curious and willing to visit company websites, join social media channels, post comments, and share with others to help educate the community. Thousands of new users can be reached using Airdrop. This level of engagement rarely exists for current startups today. Airdrop is a game-changing marketing tool. Furthermore, look at what’s happened with SweatCoin. The app allows users to earn coins for contributing their health data. Although users are not actually earning cryptocurrency, having Coin in the name has led to app’s steady rise in popularity on the App Store. This is evidence of the excitement in the space. Users are hungry for more. For a health startup like Emrify who aims to help users own their health data, the demand for health information to be tokenized represents a golden opportunity. Once an individual knows that she can now truly own her health data in the form of HIT token, she has intrinsic motivations to take more responsibility and engage in the network. Tokenization can be the catalyst for health disruptions.
In order to take advantage of the momentum, we must seed the network with a token generation event. The tokenomics of an established global network will create engagement that is desperately needed for health startups to succeed. By having a real immutable token with real monetary value, we will create incentives to have more personal generated health data than ever before.For the first time ever, the equation can be reversed to focus on the patient. The tokenization of health information puts healthcare back into perspective. This is great news for health stakeholders who seek more patient data. Emrify HIT tokens can be used to attract more patients, enhance engagement, and improve outcomes. This is why Emrify will be offering bigger discounts for health stakeholders to purchase HIT tokens during the pre-sale event. As more users collect more HITs, it is important to build an economy that increases the exchange of HITs.
Hopefully, this post has offered some new insights to show everyone that ICOs deserve to be studied more closely. Especially in the case of health startups, we must navigate forward in a way that does not hinder innovations. Blockchain holds a lot of promise for the future and ICO is an integral part of that. With uncontrollable healthcare costs, we simply cannot afford to wait any longer for the tokenization of healthcare to disrupt it. Let’s work together to figure it out.