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This story initially appeared on ValueWalk

Netflix, Amazon Prime, Spotify, Disney+, and the listing goes on.  Do you know that Millennials have a median of 17 paid media and entertainment subscriptions every?  Gen Z, Gen X, and even Baby Boomers are usually not to this point behind, with averages of 14, 13, and eight subscriptions every respectively.  This doesn’t even account without spending a dime companies which customers could also be utilizing which might be paid for by watching or clicking by way of advertisements.

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The subscription financial system is rising, and rising quick.  In reality, it has grown over 435% within the final 9 years, and solely choosing up extra steam by way of the impacts of covid-19, and the change in conduct of customers now actively keen to pay for sure issues which have solely turn out to be extra common in recent times (e.g. information, grocery supply, meals supply).  This upward development is anticipated to proceed as Gen Z repeatedly reveals repeatedly that they value access over ownership.

Moreover, it’s simple that cryptocurrency adoption is rising, and with it, the utilization of the blockchain.  Mainstream adoption of crypto has elevated dramatically in current months, with digital funds corporations like PayPal and Sq. permitting crypto purchases and funds by way of their platforms, and with corporations like Tesla and TIME journal adding bitcoin to their balance sheets.  Due to this fact, it’s crucial that not solely do companies want to start out excited about subscription fashions, but additionally the way through which these subscriptions are paid for (fiat cash or cryptocurrency), and how these subscriptions are delivered to the tip person (blockchain).

Benefits Of A Cryptocurrency Subscription Mannequin

Along with having to “adapt to the occasions”, there are a number of advantages that companies can get pleasure from by adopting a cryptocurrency subscription mannequin.  Maybe one of the crucial helpful factors is to have the ability to transact in a world forex – the place one enterprise doesn’t essentially want to fret about trade charges (EUR to USD, USD to CNY, and so forth…).  For individuals who are involved with the volatility of most of the hottest cryptos on the market, do not forget that there are stablecoins available, together with Tether (USDT), and USD Coin (USDC).  Corporations keen to transact with the US Greenback because the underlying consultant forex will discover stability by way of the usage of stablecoins in a cryptocurrency subscription mannequin.

Different advantages embody – ease of doing enterprise (particularly for these industries which cost processors are much less keen to tackle as a result of nature of that enterprise), and immediate settlement (from 1-2 days with a bank card, to minutes on the blockchain).  Relying on the blockchain getting used to conduct the transaction, processing charges can also be decrease.  USDT transactions on the Tron Blockchain at present have a most payment of 10TRX (as of April 13th 2021, 1 TRX = 0.143 USD – As compared, most bank card processing charges price 2.9% + 0.30USD of the transaction price).

With stability, pace, lowered boundaries to entry, and lowered price, why wouldn’t everybody transfer to a cryptocurrency  pushed subscription cost mannequin?

One Huge Unresolved Drawback

Sure – in fact, not all has been rosy and excellent on the earth of cryptocurrency  subscriptions.  One of many greatest challenges to this point has been how precisely to arrange subscription funds – one thing which we take as a right in right this moment’s bank card and auto-pay dominated world.

For the reason that popularization of auto-pay, customers may join a subscription, and let it run indefinitely (“set it and neglect it”).  As a client your self, you’re in all probability accustomed to how this association works – companies lure you in with low month-to-month charges, solely to boost them months later, with out advance warning.  Nevertheless, such an association just isn’t doable on the earth of blockchain – with one of many underlying causes being the means {that a} crypto transaction is carried out versus a bank card/auto-pay transaction.

With crypto denominated transactions, these interactions happen from pockets to pockets.  And so, companies who have to be paid by their prospects should wait for his or her buyer to actively provoke a cost onto the blockchain (pushing funds).  Not like on the earth of bank cards, the place recurring funds and auto-pay may be arrange, this performance doesn’t exist on the earth of crypto.  This characteristic, the place the enterprise is pulling funds from a person’s pockets may probably be harmful – think about if the enterprise inadvertently or purposely determined to tug every part from the pockets!

This want for a person to actively push funds to the enterprise creates a big quantity of friction (inconvenience and trouble) for the client right this moment, discouraging them from even contemplating cryptocurrency for subscription associated companies (and going to the bank card as a substitute), and never permitting each the enterprise and the client to reap the benefits of all the different efficiencies {that a} cryptocurrency primarily based subscription has to supply.

A Answer….

PARSIQ has launched a risk-free, collateral-less answer to tokenize subscriptions within the Software program as a Service (SaaS) market.

Its IQ protocol has fully reimagined how the subscription mannequin is executed, optimizing for the world of cryptocurrencies and the blockchain.  The IQ protocol revolves round two fundamental ideas – Life-Time Worth, and Rentability.

Within the conventional subscription mannequin, prospects actively pay their suppliers for the companies which they may devour.  For instance, a buyer pays Netflix one month prematurely for the suitable to stream limitless Netflix content material for the upcoming month.  Or alternatively, a small enterprise pays an annual licensing payment to a monetary software program supplier, for the suitable to a set variety of licenses for use by their staff for the upcoming 12 months.  As mentioned beforehand, this conventional mannequin works effectively on the earth of bank cards and auto-pay, however fails and introduces substantial friction to the person expertise when utilized to the world of blockchain.

PARSIQ’s IQ Protocol has solved this.  With IQ Protocol, companies using this answer will mint tokens to make use of on the blockchain.  These tokens are then assigned a “life-time worth” (which may be measured in numerous models – together with time, amount, weight, and so forth…).  Tokens are launched into {the marketplace}, the place they’re then made out there to prospects of that enterprise.

prospects then have one in every of two choices – they might both purchase the tokens or lease the tokens from the renting pool (which consists of tokens owned by different customers).

Utilizing the idea of Life-Time Worth for a token which is allotted a worth associated to service hours, a token holder would be capable to devour numerous service hours allowable by the token.  The extra tokens held by the token holder, the extra variety of service hours {that a} person would be capable to devour.

Alternatively, prospects who might not need to maintain digital assets on their steadiness sheet might choose to lease tokens as a substitute.  This enables them to nonetheless devour the service, however not have to hold the burden of getting a monetary asset to keep up and maintain monitor of on the corporate books.  On this case, prospects would go to a ‘renting pool’ to lease tokens from token holders.  On the level {that a} rental settlement is established, an expirable model of the unique token is minted and handed to the renter.  Till these tokens expire, they act like the unique token when it comes to having the ability to devour towards the life-time worth of the token.

Instance

From the above, we create an instance.  Intuit creates one billion tokens.  Every token permits a token holder to make use of one license to devour 8 hours value of “Quickbooks Desktop Professional” per day.  On January 1st, buyer “Johnny’s Ice Cream Land” purchases one token and begins utilizing the appliance.  Johnny makes use of Intuit’s software program daily for the complete 12 months (enterprise is sweet on the ice cream store!), and will get actually accustomed to the software program and the way it works.  Nevertheless, on January 1st of the following 12 months, he realizes that he wants an much more superior answer for his rising enterprise.

At the beginning of 12 months two, Johnny decides that he not needs to make use of Intuit’s software program.  Nevertheless, as a substitute of promoting his token again into {the marketplace}, he decides to stake it within the renting pool – permitting different customers of Quickbooks Desktop Professional to devour the companies allowable by the token (and likewise permitting him to earn curiosity (funds) on his digital asset).

Buyer “Tiffany’s cupcakes” has simply opened and is out there for a brand new accounting software program answer.  She doesn’t need to spend the funds needed to carry an Intuit token, and prefers to lease as a substitute.  Tiffany goes to the renting pool and creates an settlement using Johnny’s token for 3 months.  An expirable model of Johnny’s remaining token is minted, and now, utilizing Johnny’s token, Tiffany has the rights to make use of Quickbooks Desktop Professional for the following three months.

Coming into the World of DeFi

If you happen to understood all the above, congratulations – you’re able to enter the world of decentralized finance, and you’re able to enter it figuring out all the advantages that it provides.

DeFi permits for a kind of accessibility that merely has by no means existed earlier than.  On the earth of Internet 2.0, it’s not doable to devour, lease, and pay for digital belongings by the second.  On the earth of blockchain, not solely is that this doable, however it would quickly be normalized using options like PARSIQ’s IQ Protocol.  Moreover, in such a world, a brand new sort of financial system is born, constructed on the backs of beforehand non-tradable, intangible belongings akin to SaaS software program licenses.

This financial system is strengthened by its members – who’re in a position to monetize and proceed to extract worth out of their underlying belongings, even when that worth might not be extractable by them (like in Johnny’s case, by way of the renting swimming pools).  Lastly, constructed on prime of blockchain, these autonomous networks even the taking part in subject for all customers globally – making a form of accessibility that the web was meant for.

Wanting Ahead

Because the world evolves and the end of ownership attracts close to, it’s essential that companies proceed to consider staying updated on their income streams, and likewise adjusting as wanted to fulfill the wants of the following technology.  2021 has not solely re-introduced to the lots the chances that blockchain and cryptocurrency provides, however has additionally introduced in direction of the floor the chances of NFTs and decentralized finance.

Companies of all sizes ought to take word and look a number of years forward into the long run as we enter the world of Internet 3.0.   Are you and your prospects able to expertise how the world broad internet was meant to be?


About Writer

Tom Tirman is co-founder & CEO at PARSIQ. Tom has intensive expertise in enterprise and finance, having labored in each conventional banking establishments and fintech corporations in addition to having been an entrepreneur. Whereas working in administration positions in finance and operations departments, Tom amassed a monitor report of constructing groups floor up and reworking present groups to ship exponential enhancements. Tom holds a legislation diploma from TalTech College. He focuses his enterprise on bringing disruptive next-gen applied sciences to the lots.