Blockchain technology: is the app store business ready to be disrupted?
Today when you want to buy content (e.g. books, songs, movies) there are hundreds of alternatives to choose from. But why is it that, when it comes to apps, there are only two options (i.e. Google Play and Apple Store)?
This is a very interesting point if you take consideration that we are talking about a market that is currently worth USD 77 billion. And as things stand for app creators, distributors and OEM’s, there are only two alternatives. So the question is simple: how can blockchain technology disrupt the app store business?
How blockchain technology can address problems with traditional app stores
Blockchain technology has a huge potential because it offers an unprecedented transparent and accessible public ledger that can redesign the way transactions are made. If correctly applied to the app store economy, it can address three major inefficiencies witnessed today:
Areas that Blockchain technology can reduce inefficiencies
Advertising — user acquisition is non-transparent and costly due to all the ad tech middlemen. It then relies on many inefficient middlemen, increasing the cost of user acquisition for app developers, reducing transparency and generating fraudulent transactions. These days only 4% of the app downloads are triggered by advertising;
In-App Billing — a majority of the population still has no access to traditional payment methods. For those that do, and spend money inside apps, developers are frustrated with the cut taken by app stores.
App Approval — Android has a reputation of being unsafe when compared to other operating systems such as iOS. This happens because it is based on inefficient processes related with users’ cybersecurity and apps quality assurance that is currently being handled by each centralised app store with non-transparent flows and policies that affect developers’ and users’ trust.
Blockchain can be an immensely powerful technology, ready to tackle each of the three major inefficiencies mentioned above. So please, let me show you our vision to harness Blockchain into a viable solution to the app market:
Examples of usage of Blockchain in 3 areas
1. Advertising
Today there are more than 2 million apps available in App Store and Google Play. To stand out, developers invest in CPI (Cost Per Installation) campaigns, which are expensive and non-transparent due to all the intermediaries in the process, as the graphic below shows:
We believe that it is possible to cut the middlemen and create a new method to acquire users, one that will make CPI campaigns obsolete. Using a concept that is known as CPAt (Cost Per Attention), we provide a developer the tools to directly reward a user for spending at least 2 minutes inside the app. The users then earn our token, AppCoins, which are stored in their wallets and can be used to buy in-game items, closing the loop.
This is made available thanks to smart contracts, that guarantee that the user spends the required time to earn the AppCoins invested. Then, the app store will register all transactions in the blockchain to guarantee user authenticity. Thanks to this process, we believe that it is possible to avoid fraud, which is responsible for over USD 850 million in losses per year.
2. In-App Purchases
As of today, there are an estimated 2.6 billion smartphones in the world. However, it is worth noting that approximately 2 billion of those users do not have access to the payment methods required for in-app purchases such as a credit card. If we take into consideration our proposal discussed above, then we can reward users using CPAt campaigns and, once they earn the AppCoins token, they will be able to spend them inside their favorite game or app, hence creating a circular economy.
But that is not all. Not only can they top-up their balance with top-up methods that do not require a bank account, but they can also use peer-2-peer transfers to their friends, family and other contacts
Blockchain is at the heart of this solution and our proposition states that, whenever a user makes a purchase inside a game or an app, the developer is rewarded with 85% of the money spent, instead of the usual 70% of the transaction value. A base of over 12,000 developers stated that this value would be the sweet spot of what they feel to be fair.
3. App Approval
The existing app approval process today is complex, being handled by centralized app stores with complex quality assurance flows and non-transparent distribution policies. Aptoide is an example for this situation, having been banned from Google Play for many years now, and having filed complaints with EU regulators.
We believe that, by using blockchain, app approvals will be made universal and more transparent through a developer reputation system. The reputation is tied to the financial transactions on the public ledger and is auditable in the blockchain. A dispute system will be created so that AppCoins’ owners can create rankings for developers and the apps they publish.
Furthermore, thanks to the blockchain technology, the app market can truly be open and decentralised for all the players involved — OEMs included. Our proposition stated that 5% of the value of all the transactions within the new AppCoins Protocol will go to device manufacturers. We believe that they are important stakeholders in the new app economy and as such, they should be rewarded accordingly.
Conclusion
In our opinion, blockchain technology is a tool that will undoubtedly help all sorts of markets and services become open, decentralized and free of monopolies. Our contribution to the app market uses blockchain to create a new, more clear and fair space where developers, manufacturers and OEMs can truly be rewarded and benefit from the app economy, as well as to give users more incentives to invest, use and spent resources on the market.
Additional Info:
Our AppCoins Protocol is the world’s first open source blockchain-based protocol and it was created last year. To raise support from the community, we executed an ICO — Initial Coin Offering last December where we raised USD 17 million. The amount raised is being used to develop the new protocol, for marketing initiatives and to support the App Store Foundation that will coordinate the development of the protocol under an open governance model.
If you think you can contribute or have any constructive feedback, please do let us know. Also, if you would like to stay up to date with our project, feel free to follow us on Twitter / Facebook.
About Aptoide (www.aptoide.com)
Aptoide was founded in 2011 and has its HQ in Europe and offices in Singapore and Shenzhen. With over 35 million monthly active users, 700 thousand apps and 5 billion downloads to date, Aptoide is a community based platform that reinvents the app discovery experience through a social environment, tailored recommendations and the opportunity for users to create and share their own playlist of favourite applications and games.
About AppCoins (https://appcoins.io/)
AppCoins is a new cryptocurrency that all Aptoide users can earn and spend inside app stores. Once the protocol is implemented, AppCoins can be adopted by any app store, regardless of the operating system. The protocol creates a new shared ecosystem among all app stores, powered by the blockchain. AppCoins is to become the new universal language of the global app economy.
