‘Platform Business’ Opening Up the Era of Crypto

After the success of platform business such as Uber and Airbnb in overseas, Jikbang, Baemin, and Kakao Talk in Korea, founding platform business was famous for a while. Of course, numerous platform business models armed with with creative ideas are advancing to the market.

However, platform business soon started to be seen as the business for students in their 20s. there was an even a case where platform business was excluded in creative start-up contest for university students.

The fatal weakness of platform business is the lack of sustainability. Platform business is similar to fishing. You need to put baits on points where fish pass by and wait until enough fish gather around the baits. For the successful business, you need to have genius to find the perfect fishing point and wait until the fish come. 

The tremendous success of Kakao Talk was possible based on the innovator named Beomsu Kim and funds of 10 billion won. Kakao Talk wouldn’t have survived without Kim’s creative ideas or 10 billion won to maintain the business for 7 years.

The platform’s essence seeks to connect consumer and supplier to maximize the customer convenience. Therefore, it is easy to start up the platform with creative ideas. Different from manufacturing business, real estate brokerage, hotel brokerage, spouse brokerage, and quick delivery service brokerage only require market experience and creative ideas.

However, platform has the weakness of lacking durability due to unstable profit model. Therefore, both service purchaser and service supplier need time to trust on the platform. As a result, the platform cannot make profit until it has the hundreds or millions of targets for exposing the advertisement.

In addition, some people criticize successful platforms. The members pay money and time for using the platform service. Although the members get big data from platform activity, they are not motivated enough to participate in the platform continuously.

Recently created platform businesses are in the stagnant condition. However, the platform trained the people for the era of crypto. The crypto business armed with coins require the best platform. In the platform, the member’s activity is rewarded with coins. When a business has an excellent platform business model, the business can provide service for the people around the world.

Platforms such as steemit (A service where coins are provided for writing posts or recommending posts) which had excellent platform business model with less revenue are gaining more profits by combining with coins. With increased coin reward for participating, the virtuous cycle of increasing members, increasing profit, and increasing coin price is taking a place.  

In the future, combination of platform and coin will allow various excellent businesses. Unfortunately, recent crypto projects failed to come up with differentiated platform business model.

The white paper only suggests the declarative goal of operating shopping, transaction, brokerage, pay, and advertisement platform based on the blockchain technology. The logic behind is that securing fund would automatically active platform, hundreds of members will naturally gather in the platform, and coin price would automatically go up. Such logic contracts the platform learned for several years.

We need to remember the case of portal fever which happened around 2002. Although all online businesses started the portal service at that time, only Naver and Daum survives until now. We should keep in mind that large businesses rich in capitals and technology failed to survived in the portal war.

The coin value increases only when appropriate platform business model exists. Therefore, the investors need to focus more on platform business model.

Now, the exaggeration of crypto project with co-founder and advisor is disappearing and the marketing started learning that blockchain technology has limits in making the business successful or increasing the coin price.

It’s the time for the platforms to compete with crypto platform business model for successful crypto projects.

Professor Hangjun Park of Sehan University (mcqingze@gmail.com)의 기사 더 보기

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