As the next generation of membership finds your association, so, too, does the next generation of cryptocurrency. Enter creator coins, a consumer-driven currency with the potential to boost member engagement and investment while empowering associations towards more independence from traditional financial structures.
But what does all this mean for you?
What are creator coins?
Creator coins are a form of cryptocurrency. Cryptocurrency is a digital form of currency that can be used to replace traditional currency. Traditional currencies are becoming more cumbersome as technology evolves. Wire transfers and credit cards are becoming outdated, and middlemen and brokers typically take a chunk of each transaction.
Creator coins are developed by individuals or businesses as a way to directly benefit both the individual/business and its supporters without a broker or a big fee. These can be purchased with traditional currency (e.g., dollars or credit) or with other types of cryptocurrency.
They are called creator coins because each individual or business can essentially create their own currency. They are used specifically in the organization or (best-case scenario) across organizations that take cryptocurrency.
The history of creator coins
Creators and entrepreneurs have long struggled to fund their endeavors. From hawking merch online to setting up GoFundMe accounts, finding a way to keep cash flowing in the direction of the vision has been problematic.
As an option, programs like Patreon and Substack allowed supporters to directly pay creators for access to specialized content. Creators could also get paid based on channel subscriptions and video views on YouTube and other social media platforms.
The problem with these types of systems is that the creators are still not in control. Each of these services, though valuable in their own way, control how much a creator gets. Patreon and Substack take a percentage of each subscription, and social media algorithms control how many people view a page.
Understanding this challenge, Rally launched Creator Coin in 2020, changing the way that creative people interact with fans and supporters. Instead of purchasing a t-shirt, an artwork, or a download – with a cut going to a streaming service or a manufacturer – creator coins allow supporters to invest in people and businesses directly. Custom-branded currencies give supporters access to exclusive content, private communities, and other benefits.
Creator coins can be given in exchange for referrals, purchased directly and traded, or can function in much the same way as points earned on a reward credit card. These points can be exchanged for cashback or other products. Reward cards are designed to build loyalty and create customers who are enthusiastic about the program. The same is true for creator coins.
Creator coins vs. NFT
There is a lot of confusion surrounding the difference between creator coins and NFT (non-fungible tokens).
The easiest way to differentiate between the two is this: while NFTs are unique, creator coins can have the same value as other items.
In one sense, creator coins function like airline points or a traditional dollar. You can buy additional airline miles for a set price, and you can trade a dollar for four quarters or ten dimes – anything with equal value.
An NFT is more like digital ownership of something, a bit like buying a piece of art or the original master recording of a song. And with an NFT, you have a digital record that you own it.
How creator coins rely on Ethereum
Blockchain is like a digital ledger of transactions. When cryptocurrency, like a creator coin, gets traded, the trade is checked and added to the network in a block with a unique code called a hash.
This block also holds the hash of the previous trade and is then connected to other blocks. Thus, the blockchain is created. Each hash is ordered in a specific way to create a digital record of transactions that is nearly impossible to change or alter.
Ethereum is not only home to its own cryptocurrency (Ether) but is also the decentralized, open-source blockchain support for creator coins (among other cryptocurrencies). The network validates blocks every 12 seconds (Bitcoin evaluates every ten minutes), which means transactions are secure and nearly instantaneous.
The potential for creator coins to build (or bring together existing) communities
Author and marketing insider Joe Pulizzi believes creator coins are misnamed.
“(Community coin) builds community in the same way that gathering people together build community. Consider what it looks like when associations have meetings,” he said. “Members share stories, update each other on what they are doing, ask for help, and share advice. Creator coins do the same thing.”
When your members gain access to this new form of cryptocurrency, they are invited to participate more fully in your association. Depending on how you structure your program, creator coins can be traded for things like:
- Access to one-on-one trainings
- Perks during annual meetings
- Special courses and content
Creator coins reward the most active and supportive members of an association. They also build a source of capital that is independent of any other monetary system or social platform.
Creator coins are not considered in the same category as stocks. Yet, creating your association’s own digital currency is a bit like diversifying your assets – both human and financial.
What a membership organization needs to know today
First, it’s important to note again that creator coins are not like investing in the stock market. There is no guarantee that value is going to go up – and no reassurance that it won’t go down either.
But what is crucial is that there are other benefits to creator coins for associations. As Pulizzi, who established his own creator coin through The Tilt, puts it, “(With creator coins, there are) more people getting involved. This helps organizations feel like (they) can go out and do more things with that involvement, create more events, do more webinars. (Associations) can put that appreciation in overall value within their networks to work and give more back to the community.”
Second, jumping headlong into creator coins may not be the move for anyone at this point. It’s good to keep an eye on developments in cryptocurrency, as it seems the world is moving away from traditional fiat money (with a value assigned by a government) and towards digital currencies with a user-defined value.
While you investigate the possible benefits of creator coins for your organization, take the time to answer some critical questions:
- How would you implement them, and how would they work?
- Are there levels to your creator coins, and what are they?
- What is the potential benefit of more invested association members?
Creator coins are a type of “social money” that is still in its infancy. It most likely isn’t going anywhere, and it will evolve and change as more people begin to investigate the potential value.
Should my association offer creator coins?
Creator coins require both a micro and a macro approach. According to Pulizzi, “if creator coins can help feed loyalty and retention, even in a small part, it's probably worth doing, at least in a small case basis.”
This micro approach focuses on the immediate benefit to the association as members invest (literally and figuratively) in the organization. Whether you are a new association or have been growing and evolving for decades, building buzz around creator coins and the benefits they can afford members might be the shot in the arm your organization needs.
But it’s crucial to consider how creator coins (and any type of cryptocurrency) might benefit your association in the long term. Will creator coins add value to your membership over time, or is it something that creates a lot of excitement at first and then fizzles out?
If your members are enthusiastic about the idea of becoming more invested in the association, creator coins might be a good move. But a tepid response might be a sign that the timing is not good, or you need to spend more time on education.
Associations with a solid and engaged membership that is enthusiastic might start slowly. Consider offering creator coins as a reward for referring new members, signing up for newsletters, or other actions that grow the association.
The bottom line
Creator coins could help associations differentiate themselves. Membership organizations that test the waters of creator coins with their members are seen as forward-thinking and innovative. These characteristics are incredibly important as the next generation of membership enrolls.
If you are considering exploring the world of cryptocurrency, begin at the beginning. Offering creator coins to members starts with education. Let members know what they are, how they work, and what the potential benefits are first. Ask members for feedback, and then move forward (or hold off) as seems appropriate.
July 12, 2021