A depiction of Bitcoin, which is not a creator coin in the Rally sense.
Photo by Executium on Unsplash
Whether it’s Bitcoin, the OG of cryptocurrency, Ethereum, which runs the world of smart contracts, Dogecoin, the favorite alt-coin of spacefaring technokings of business, or any of a thousand other altcoins, we can’t seem to get away from crypto.
It’s everywhere.
It’s volatile.
And it’s probably the most misunderstood asset class on the planet.
Hang on to your seat, because it’s all going to get noisier and more complicated. Because soon there might be a million more altcoins, for everyone from Clubhouse speakers to technology analysts to Twitch streamers to Carole Baskin. Yes, that Carole Baskin of Tiger King fame. All built on a Rally infrastructure that is a sidechain to the main Ethereum blockchain and offers ERC-20 tokens that can be converted to Ethereum and then to other forms of currency, like good old fashioned U.S. dollars. (Full disclosure: I have a creator coin on Rally as well, $SMRT.)
But at core, creators coins are very simple.
“Rally is really a network or a project that enables creators or artists or musicians — anybody with a social following — to launch their own economies,” Bremner Morris told me recently on the TechFirst podcast. Morris is the community-appointed CMO and CRO for Rally, and a former Patreon executive.
“And what I mean by that is that each of these artists have an existing community of followers and people who are really excited about what they do. But right now there’s not really a mechanism for those followers to show their support and also to participate in the economy of these artists.”
If you happen wonder what it means to “participate in an artist’s economy,” you’re not alone.
It doesn’t mean buy stuff from them, necessarily, although that could be part of it.
Gamer and Twitch streamer Alliestrasza offers access to tournaments in games like Hearthstone to all $ALLIE coin holders. She’s one of the most successful coin holders to date, and has reportedly created “millions of dollars in value” through her coin and community. Serial entrepreneur and investor Kevin Chou gives startup feedback, founder advice, and retweets to $CHOU coin owners. An art collective offers access to an art-focused Discord server to all $ART coin holders.
“Creator coin feels like the wrong name,” says Gregarious Narain, another entrepreneur with a Rally coin. “I think of them as community coins.”
Author and marketing insider Joe Pulizzi concurs. He’s gone all-in on creator coins, saying in a recent newsletter that he’s on a mission to prove that a community’s entire economy can be run on their coin. That means access, and that means rewards for communities members who create value for others (Pulizzi tips those who share content, for example, in his $TILT coin).
But they can also be used for products or services in a more traditional commercial model.
Some analysts, for instance, charge for briefings. Others charge for physical products.
There isn’t a 1:1 relationship with usual government-issued currency, however. Having spent, for argument’s sake, 100 of a creator coin on a product, you haven’t lost those coins. They’re not used up. They stay in your portfolio, as an asset of sorts, and can increase in value as the community grows. They can be sold, or traded for other creators’ coins.
The $ALLIE coin, for example, is now worth over $57 USD. The $PTM coin, issued by Alaskan musical group Portugal The Man, is worth a fairly astounding $63.64 at this moment.
(Important note: Rally is at pains to say, repeatedly, that purchases of creator coins are not investments and they are not guaranteed to rise. Influencer and creator economies could collapse, and buying creator coins primarily as a store of value is incredibly risky.)
“What I find fascinating about the whole ‘creator economy’ concept is access, says entrepreneur, author, and podcaster Peter Shankman, who has the eponymous $SHANK coin. “I have an audience of well over half a million people. The challenge is keeping them engaged with consistent, quality content. A creator coin allows me to know who in my audience really appreciates what I’m creating, and offers me guidance on what I should create next.”
Listen to the interview behind this story:
“Essentially when you launch a coin, you have your own currency that dictates your economy,” Morris says. “And your fans can participate by buying into your currency, they can hold that currency to have exclusive access to different components of your engagements with them — so that could be exclusive content, that could be private communities, that could be opportunities to buy exclusive merch, as an example — and so fans can participate by holding this coin, but they can also use the coin for transactions. So, paying for goods and services, both physical and digital, and soon NFTs as a component of these economies.”
It wouldn’t be crypto in 2021 if we weren’t also talking about NFTs, right?
The obvious question is: If people buying creator coins keep their purchase and can leverage it as an asset, how do creators actually make money? Because what we don’t have here is a currency like USD where you get a cap from the New York Yankees and they get your $35.
Not exactly, at least.
Creators can “bridge out” as their coin becomes successful. In other words, they can convert some of the value of the initial coins they received as the originator into Ethereum, and then into USD or pesos or Euros. But the way Rally has set it up is that creators can only take limited amounts out. And if they instead decide to keep money in their economy, they have the potential for weekly distributions in $RLY, the common currency between all the creator coins.
In other words: HODL and grow.
Extract, and risk the collapse of your economy.
That’s not entirely accurate, of course. Essentially, the economy is built so that creators can slowly take some of the proceeds of their economies out as a living wage. As a creator salary, in essence.
That’s powerful, Morris says.
It’s multi-platform, and it’s not tied to YouTube’s ad revenue or Substack’s subscription revenue.
“One of the things that we’ve found in working with creators, and especially during my time at Patreon, is that a lot of these creators are not sort of married to one platform — they’re multihyphenate,” he told me. “They might have a Twitter; they might have an Instagram; they might have their own website; they might engage with their community on Discord. And really, these artists want the ability to have a currency and a mechanism for fan participation that moves with them across every single area of their interactions with their fans.”
It’s an interesting idea, to say the least. And a new way of funding and rewarding the emerging creator class.
To accelerate progress, Rally issued tokens for $57 million recently that will fund growth and development. Since Rally is a community organization, every $RLY currency holder is a member, and can help set priorities and strategy: Morris had to present his marketing plan to the community for approval, for instance.
“The community had to go out and vote for my candidacy, and essentially they approve my employment,” Morris says. “And similarly, when we went out and wanted to raise a marketing budget to be able to invest in various different things to broadcast the value of Rally to creators and artists, that marketing budget proposal went to the community and I talked about all the various different areas that the Rally community should invest in marketing. And then there was a vote, and an approval of the budget, and now we can go out and start using those dollars to start telling the story about Rally to a wider network than just the creators who know about it.”
There are just over 100 creators on the platform so far, but Rally plans to add thousands of creators to the platform over time. Ultimately, there could be a million or more coin holders.
NFTs are a priority for development right now, and while there’s been a craze of horrifically bad digital art lately as people rush to be the next millionaire-crypto-artist Beeple, Morris sees real products with real value here.
Including sticking it to that most hated of all intermediaries: the scalper.
“NFTs could represent any form of exclusivity,” he says. “So as an example, some of the artists that are on our platform are talking to us about offering NFTs as tickets to their shows. So if they’re a musician and they’re live-touring, the NFT could be the ticket to their show. And one, it’s exclusive and you can demonstrate that that is the one-of-one ticket, but two, the artist can actually participate in the resale environment of these tickets, which is something that’s always been a challenge for artists. So yeah, there’s a variety of different applications for NFTs, especially when they’re integrated into a creator-specific economy.”
Ultimately, however, the real value of a platform like Rally might be in doing exactly what NBA Top Shot is doing: making crypto — and NFTs — simple and mainstream.
Which brings its own dangers, of course.
As more and more people pour into crypto, “investing” in things they don’t really understand, and potentially treating altcoins like the new Vegas while hoping for a Dogecoin-like-payday, there’s a serious risk of addict-like behavior and overspending. That’s something that, in my mind, a creator-focused platform like Rally should think about and take seriously.
We’ve already seen fintech and stock-buying platforms like Robinhood be complicit in the death of a customer. Other trading platforms need to spend some time and attention on the worst possible cases and invest in mitigating those risks. Purchase limits might be a start, but there’s likely more than can and should be done over time. Rally is a very young product in heavy development, so hopefully some of that $57 million fundraise can go towards ensure that what is intended to be a net positive for creators and their communities also does no harm.
Carole Baskin’s coin, by the way?
$CAT, of course.
Subscribe to TechFirst, or check out a full transcript of our conversation.
