Bitcoin-like tech for local businesses launches in Akron

Akron's Blimps bonus currency could drive business, helping with recovery as stores reopen after coronavirus.

The Colu Smart app is customized to discover the city

The Colu Smart app is customized to discover the city.

Image: Colu

Blockchain technology is reaching the mature side of Gartner's hype cycle, where it is both fit for use and people understand how it can be used. One company, Colu, is partnering with cities to establish a local rewards currency that can help local businesses recover from coronavirus.

The technology of local rewards

Think of Colu as your local mall's reward program, but turbocharged by the smartphone. Customers tie their credit card to phone and whenever they shop, they can earn rewards to be used at other local businesses, which helps keep money in the local economy.

Amos Meiri, CEO of Culu, originally based his technology on the blockchain. However, building on top of any existing blockchain allowed the users to pull their rewards out and spend them elsewhere. Blockchain technology is also slow--Bitcoin transactions can take an hour to a day to resolve. They can also be expensive. 

Since January 2020, Bitcoin has cost as much as $6 for a transaction; it currently standards around $1.50. The high water mark of Bitcoin transaction fees was over $50, set less than three years ago.

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That's a lot to pay for a transaction fee to get your hair cut.

For that cost, Bitcoin does provide transactional integrity, and also anonymity, combined with security. That anonymity is certainly not a requirement for local rewards and without it, security becomes as easy as re-using Apple and Google's authentication technology.

Eventually, Colu scrapped the blockchain model, building a simple mobile application tied to the credit and debit card infrastructure. Customers see coins on their mobile app, then redeem them at the store, which has its own balance, and can trade in for actual currency on-demand.

Impossible just a generation ago, the technology seems wonderful. But do we need it?

The economics of local rewards

When people stopped coming into downtown areas to work, they also stopped coming downtown to shop, eat, or even have their hair cut. Even as the stores re-open, habits have changed, from in-person shopping to online. Meiri sees that as a real risk to the vibrancy, even survival of small businesses—and he built a technology to help. In Akron, the currency will be called the "Blimp," inspired by the Goodyear Blimp, built by the company founded and based in Akron, OH. 

The goal is to drive local customers to locally owned and operated businesses, to keep money local. Meiri points out that "If you pay Facebook ads, that money leaves the local economy." Blimps offer customers a reward as high as 15-20% for money spent for minority-owned businesses, or 12% for a downtown business that is recovering.

Triggers, events, and smartphone technology

Using a smartphone provides local governments a few other tools for their toolbox. They can send notifications to their users about new options, or tie rewards to Bluetooth events. Meiri mentions the possibility of putting an IoT device in a city park and rewarding people just for walking by, no transaction required. 

The company has similar programs in Tel Aviv and Haifa, Israel. As Meiri puts it, these sorts of programs need two things to survive: Financial rewards and a sense of contributing to the community. "Cities want to get above the noise, but they just aren't able to. They just don't have the tools to communicate with, and get the attention of, the residents. It's hard to compete with Netflix and Amazon. We're giving them a chance to survive."

The app highlights local businesses and their owners, making the sales more personal. The city can use the same technology to promote a festival, art opening, or even a meeting of the city council. Set to launch in Akron in July, Blimps will be funded by the city, which is spending $60,000 to launch the application.

If the tool can accelerate the recovery, or at least reverse the damage cycle to locally owned businesses, that will be quite a feat. The proof may be in how Akron does over the next year or so.

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