Steven Gleiser - September 18, 2019
If it looks like a duck and quacks like a duck it is not necessarily a duck. BTZ, a rewards token deployed by the Bunz trading app, does many things that a cryptocurrency does. You store it on a digital wallet, people get Bunz rewards for community contributions or through daily airdrops, and it can be used for transactions within the app. This digital currency or reward point scheme has even had a good measure of success in terms of adoption. BTZ is accepted by businesses around its native city of Toronto, providing an example of real-world use of a “cryptocurrency.” The emphasis on the quotes is necessary because as many of its critics point out, it is not decentralized; it doesn’t even work like a cryptocurrency under the hood, at least not yet. However, it is an interesting case to look at, especially as its evolution seems very similar to the evolution of trade.
All trade started through barter: two people with different goods exchanging them for mutual benefit. The same is true for the Bunz Trading Zone, a Facebook group started by a Toronto dweller who has seeking to get a can of pasta sauce in exchange for goods she did not need anymore. The Facebook group quickly grew to tens then hundreds of thousands of members and expanded to other cities. Eventually, with a round of capital and some development the Bunz app was launched and users encouraged to switch to the app. Still, the most important rule was no money.
When the barter system did not suffice, people found another way of trading through proxy: shells, cacao in Yucatan, rice and rice futures in Japan, and metal coins all over the world. Some were only currency (like shells) and others money with inherent value (like gold coins), yet they allowed for people to trade with greater divisibility of goods and value their goods against a common currency. In Bunz, people began using gift cards with monetary value, transit tokens, and other means of exchange to overcome the limits of trading through barter and circumvent the no money policy.
At some point governments and central banks decided to break away from the gold standard. They instituted the use of currency that has value within their territory as legal tender, but is not backed by anything else than just a promise from the government. Arguably, this is where Bunz is now: in April 2018, five years after the Facebook group started, Bunz announced the launch of a digital currency for their app. BTZ (or bits, as they call them), can be used for trading within the app. Users earn BTZ by contributing to the community or through daily airdrops. The parallel between fiat by central banks and BTZ by Bunz appears somewhat obvious, as a central authority determines the supply of a currency that has value only within its territory or app.
In the rest of the world, cypherpunks, crypto proponents, and libertarians are working hard to achieve a scalable decentralized cryptocurrency that is widely accepted. As for Bunz, the CEO had mentioned the intention to decentralize and allow users to take BTZ off the Bunz app back in April 2018.
Whatever the future holds, we still think it is an interesting case of the evolution of trade which could potentially end in a cryptocurrency. Furthermore, along its 5-year history Bunz has succeeded in creating a loyal community and being accepted in over 200 local businesses (granted, sometimes as rewards or discounts).