There are more similarities in these two industries than you may initially think.
As a senior in college, I was pretty thrilled when my older brother opened up a craft brewery. It seemed to be the best way to grab free beer that also didn’t taste watered down with a hint of artificial corn flavoring. This also allowed me to sell something that was family owned and delicious that I was super passionate about. After shedding off any idea of utilizing my college degree in psychology, I joined the world of craft beer and began to understand the passion that people of all ages showed for the bitter, dark, sweet and/or high ABV liquids. Perhaps the most intriguing thing about craft beer was the sense of community that existed at almost every level of the process from brewery to consumer. To this day, if you walk into a brewery, wholesaler or beer store you’ll find passionate folks who can point you in the right direction when it comes to a delicious craft beer.
Factory = brewery; regional warehouse = shipping company; wholesale = wholesaler/middleman; retail = beer store
As craft beer continued to grow, you found more and more people who were happy to chat your ear off about their favorite craft beer or local brewery. In the United States, it’s hard to go anywhere now and not find a few small, local craft breweries making ales, sours, lagers, juicy IPAs or some combination of all of the above. Crypto seems to be headed the same way, with more and more joining the crypto-revolution.
A Blooming Craft Beer Store
When you walk into a beer store (“bottle shop”) in Raleigh, North Carolina at 5 p.m. on a Thursday, it isn’t quite like walking into any other retail store of any kind. You’ll find rows and sections of shelves full of nearly any type of beer you can imagine. You might meet a lawyer picking up the latest IPA from his favorite local brewery; a truck driver having a pint after a long two weeks on the road; a mom and her child patrolling the dark beer section; a brewer from a large brewery in New England and a beer store owner who was formerly a (fill in the blank) but left that career to pursue his passion of selling craft beer to a variety of loyal customers and friends. Regardless of the career, status, race, or location people would come far and wide for this type of beer store, hunting for the latest in craft beer goodness.
It’s not always easy running these little beer stores though. For example, an abundance of choice for drinkers generally meant that some of the beer on the shelf was dated and thus lost a good bit of flavor. Beer, especially craft beer, has a shelf-life, meaning after about 3-4 months the beer will either lose its flavor or will take on an actual bad taste. This beer is called “skunked beer,” because it smells bad and often tastes worse with age. For bottle shops, this presents a problem for an owner because customers only buy beer from your store if they like what they drink from the store. It’s important that the owner manage what they offer and only sell what people want to help ensure the beer doesn’t sit on the shelf for too long.
The core of the business for this small bottle shop is the customers who visit consistently, and with good faith that the owner will get the best, freshest beer in store for them. As time goes on, the store owner is actually building a community of beer drinkers. They all have their different beliefs in the “best IPA” or the “best barrel-aged beer,” but inherently each customer (re: community member) is a part of the reason this beer store can continue to thrive. Without the customers, the beer goes bad and money stops flowing into the “community,” eventually forcing the beer store to close.
A Growth-Oriented Cryptocurrency Exchange
Today there are dozens, if not hundreds, of cryptocurrency exchanges that have sprung up all over the world. Some exchanges are restricted by regulation and offer only a few cryptocurrencies, while others offer hundreds of different tokens that can be used for a variety of different actions (or none at all!). Logging on to a cryptocurrency exchange with little-to-no education in crypto can be very confusing. If you walked into a craft beer bottle shop having never tasted a beer before, you’d likely feel a similar feeling. Yet, cryptocurrency exchanges have thousands of users and move billions of dollars worth of volume each year, so clearly the industry is at a point where it has reached some significant level or degree of adoption.
Just as the beer store struggles with old beer, the cryptocurrency exchange struggles with bad product being sold as well. As tokens are launched on cryptocurrency exchanges they are often bought and sold for profit, or bought and held as an investment to be sold at a later date. However, if the team behind the token fails to deliver on promises or cannot generate new buyers (re: community members!) for its token, it will struggle on the exchange. For every new user that joins the exchange, if they see low-quality tokens, they’ll be less inclined to buy other tokens from the exchange. Similarly, if customers see old beer in a beer store, they’ll be less inclined to buy other beers from the beer store for risk that they’ll spend money on bad product. Often times beer stores will put these beers on sale as they approach their “sell-by” or “best-by” date, while cryptocurrency exchanges will give away prizes through trading competitions for tokens that need increased trading volume.
The Importance of Community
Within both examples, the product-customer experience becomes the most important for the success of the business. Each business owner generally understands this, and will try to create a community that incentivizes its customers/users to remain loyal to their business.
Beer stores do this through creating clubs that reward users for buying more and more beer at the store. For example, discounts on every six beers purchased, or clever "mug-club" plaques that allow customers to showcase how many different beers they’ve tried to the rest of the beer store community. The beer store owner may host events for new breweries who are just beginning to sell their beer at the store, or will reserve special beers only for the mug-club participants. As time goes on, community members tend to grow tighter as a community and start visiting the beer store to discuss all things beer versus just purchasing the beer and heading home. The beer store patrons start to look forward to participating in the community that they’ve joined, while the beer store is able to continue to grow around these loyal customers.
On the crypto side, the parallels for cryptocurrency exchanges are straightforward, but often understated. Anyone familiar with the Binance BNB token will see the correlation and community that CZ has built around his token. By holding BNB token, you’re able to participate in an IEO (Initial Exchange Offering) on Binance. This is essentially the sale and launch of a new token on the Binance cryptocurrency exchange, and is only possible to take part in if you own the BNB token. By requiring this, Binance is forcing a collection of users to own their BNB token if they want to participate in the new token launch, in the same way a beer store would require you to be a mug club member if you want access to the most sought after beers from the best breweries. This alone is not enough to create a community though, as members generally should feel like they are a part of a group larger than just themselves. In turn, Binance allows BNB to be traded against other cryptocurrency tokens and ensures that liquidity on those pairs is strong, which helps ensure users have access to all products on Binance at the best possible price. Further, by paying for trading fees in BNB token you are able to receive discounts on trading fees. CZ has done an excellent job of creating demand for the BNB token, while also creating a community of users around the token who don’t necessarily interact in the physical world.
Today, the craft beer industry bubble has popped, as year-over-year growth has fallen steadily to numbers that are more accurate to the manufacturing industry. As the industry levels out, the breweries and beer stores that have created a community around craft beer will be the ones that succeed in the long term. As crypto continues to grow by leaps and bounds, it remains a bit easier for cryptocurrency businesses or token projects to succeed even without strong user communities. However, as the market settles and matures, those businesses and projects who have successfully united users around a core community or belief are the ones that will establish themselves in the long run.
I think it’s time for a beer…