Bitcoin was released in 2008 to minimal fanfare outside of a few specific circles. Unless you were a crypto-anarchist or a finance expert or a tech reporter, Bitcoin and its sibling cryptocurrencies are unlikely to have been more than a small blip on your radar until 2017. Of course, since then there’s been barely a day without a news story covering its stratospheric rise. Its increase in value is by now well-documented, nearly hitting the $20,000 in December of 2017 before falling to around $12,000. Countries and metro areas across the globe are anxiously positioning themselves to be the Bitcoin hub of the future, from Slovenia and Malta to Berlin and London.
This explosion of value has created an explosion of interest, with thought leaders and innovators across the business world looking to see how cryptocurrencies and blockchain technology can be used in their industry to transform and disrupt the way we do business. This is certainly true of the co-working market, but there are still nagging questions which about just how viable cryptocurrencies are as currencies that will ultimately determine whether, and how, they will truly change the way co-working works.
The blockchain is the technology that makes it all possible – it’s the digital scaffolding on which cryptocurrencies are built. At root, the blockchain is a combination of different technologies that creates an open, encrypted ledger that records every transaction on the network in such a way as to make it both trustworthy and private. Traditional finance can be trustworthy, but by its very nature it’s not private – the bank knows what you’re buying, when you’re buying it, and from whom you’re buying it from. The important effect of blockchain and the one key to understanding its potential application is that because of its two inherent qualities of trustworthiness and privateness, it allows an internet user to transfer property to another internet user without a third party while ensuring that the transaction is safe, secure, and transparent.,
The uses of this for certain kinds of ecommerce and banking are obvious, but how exactly will it affect co-working?
Dutch co-working company Primalbase have come up with one answer. They held an Initial Coin Offering in 2017 in which they sold Primalbase tokens, a digital currency based on the blockchain which entitle their owner to lifetime membership of the company’s co-working spaces. The owner also has the right to rent or sell their tokens as they see fit. Essentially, it turns members into part-owners of the space, reifying co-working’s belief in community and facilitating peer-to-peer transactions of office space without the need for the potentially onerous oversight and bureaucracy of a third party.
Similarly, Coinspace in the US is using blockchain to foster community relationships in its co-working space. Founded by Solomon Lederer, Coinspace wants to operate as a decentralised democracy; each member participating in the governance and operation of the space through blockchain enabled voting systems that codify decisions and make the process transparent, trustworthy and irreversible. Basically, it’s a blockchain-enabled co-op.
The key lesson to be drawn from both of these projects is that, at least for now, the effect of blockchain technology on co-working has not been transformational disruption but rather the facilitation of certain kinds of relationships. Dmitry Faller, chairman of the board at Primalbase, acknowledges that ‘the entire shared workspaces model and the whole idea of constructing such a workspace does not need to implement blockchain.’ He argues that its real use is not in reinventing the wheel but as a ‘way to provide services and access to the infrastructure.’
Instead, what we are currently seeing are the ways in which blockchain implicitly encourages certain forms of governance and operation and certain forms of relatively democratic relationships. For the moment at least, blockchain’s primary effect has been to make a more co-operative style of co-working management more commercially viable.
But what about cryptocurrencies?
Hypothetically speaking, cryptocurrencies should allow companies to access more customers – the more currencies you accept, the more potential customers will be able to purchase your goods. However, this logic only really works if a currency is somebody’s primary currency; that is if it is the currency through which they get paid, store their worth and use to buy products – apart from a very small pool of individuals and businesses, this cannot currently be said of any cryptocurrency.
If anything, there are several reasons why, as it currently stands, bitcoin and its siblings far more resemble the price of gold or a stock than they do the dollar or pound sterling. Though every currency is susceptible to fluctuation on the open market, the wild volatility of bitcoin is a cause for concern, and combined with its particularly high transaction costs, there is no reason to expect that in the near future there will be any real commercial reason for co-working spaces to accept cryptocurrencies.
While several co-working office spaces have started to accept bitcoin this can by and large be seen as a marketing tool or statement of values rather than a pure business decision. Being one of the few companies in any market to accept Bitcoin is clearly a good way to generate free press coverage, but setting aside for the moment co-working spaces specifically designed for cryptocurrency startups, there is currently little demand for greater acceptance by co-working spaces.
This is not to suggest that in the future the issues that cryptocurrencies currently face may not be overcome. Certainly, if adoption continues at its current pace the amount of money in the system will provide an incentive for companies and innovators to create solutions for some of bitcoin’s present difficulties. But, for the time being at least, cryptocurrencies are not likely to form a central part of co-working companies’ business strategies.
Far more impactful so far has been blockchain technology, which though not as transformative in its effect as it has been on other industries, has already begun to subtly alter the market.
Henry Wisbey-Broom, Head of Public Relations & Communications, Free Office Finder
Image Credit: Geralt / Pixabay