Why FamilyPoints chose NEM
In this article, we talk about FamilyPoints’ services and how blockchain helps us deliver those features. We evaluate available blockchain implementations and choose one that fits us best.
First appeared on medium
What is the single most important thing blockchain brings to the table? Trust. Distributed ledger technology is transparent and immutable. Trust is one of the most precious things in the world and the parenting market, in particular, suffers the most from the lack of trust as compared to other industries. Parents are constantly concerned about the products and services they consume for their children — baby food, toys, clothing, education and more. Trust in the quality of baby powder, milk, a toy, or even a nanny helps to protect a child’s health, both physically and mentally.
Focusing on the Chinese market first, we know what dangers parents face daily:
- toxic milk
- poor quality of toys
- the inadequate behavior of nannies, teachers, and nurses
(read more about it on our website)
That is why we built the platform and the company to solve the biggest concerns for parents. Blockchain technology is our innovative way of protecting parents from harmful choices by qualifying the best products and services for maximum benefit.
We are building a community of parents. Each new parent goes through similar experiences in raising a child. A community of parents greatly supports each other in this process. The most important community effect is combined feedback where parents share about information about products, services, and manufacturers. Feedback and reviews are our core feature.
However, the idea of collective reviews have been discredited. We have all witnessed big e-commerce websites full of reviews which cannot be trusted. There are several ways for creating fake or biased reviews:
- a merchant makes fake purchases from himself (thus paying a commission to the e-commerce website), skips the actual delivery process, and leaves a 5-star review as if it were a legitimate purchase; or
- a merchant directly asks customers to leave a positive review and offers them coupons to do so.
E-commerce websites do not fight against that because it would decrease their profits. (links, proof?) Nowadays fake review is a problem and we offer a solution — the community.
What the FamilyPoints platform does differently is it writes all customer activity to an open ledger which cannot be modified. Smart contracts analyze all gathered data to weight each parent based on their activity and can assign them a “rating” (or importance).
This open ledger protects the community from fake accounts. It is relatively easy to detect customers with suspicious behavior. Real (active) parents behave very differently — they buy different products in multiple purchases, they leave comments, upvotes, and consume other services. To imitate a real customer and gain stronger weighting on the platform is a time consuming and an expensive endeavour for a manufacturer, thus making their subterfuge worthless.
Each review left by a customer on the platform is weighted based on how influential the customer is. Similar to the concept of “Proof of Importance”, we qualify reviews based on the author’s importance. Importance is calculated with our open algorithm (smart contract) which uses many signals (stored in the ledger) including frequency of purchasing products and services, upvotes from other parents, contribution to the community, and more.
Active parents bring value to the community and the community further encourages them with upvotes.
Features that Require Blockchain
Let’s look at FamilyPoints platform for more details. What is it and how does it use blockchain?
The platform combines the parenting community, e-commerce, and educational content in a single place.
We need a place which is “append-only” storage of immutable data. This is important because immutability brings trust. Even we as developers cannot change it. Different kinds of activities must be tracked, contain no personal information, and be available for anyone who wishes to view them.
A smart contract is an opensourced algorithm which reads data from the ledger and evaluates each community member individually. It assigns a weight to him based on his activity patterns.
An upvote is a way of transferring trust (weight) from one community member to another. Inspired by Steemit, we bring the idea of upvotes to the parenting industry.
Rewarding points that customers get after a purchase is not only used for purchasing services, but also a mean of transferring trust for content. When people “upvote” — they actually send a few points to the content’s author. It has much more meaning than a simple “like”. Points are the glue which unites the community and promotes not just the best products, but also the best content on the platform.
When a community member writes a review, it must be securely stored and protected from modification. The ledger of reviews is something new and we are one of the first e-commerce companies which use blockchain to protect content authenticity. As we mentioned above, fake reviews are a problem and the blockchain ledger helps us prevent this.
The business model of the FamilyPoints platform is all about minimizing product margins and returning those savings back to parents in the form of reward points. These points can be accumulated and spent on educational services within the platform.
The points are also a tool for marketing products and services on the platform. The manufacturers which offer bigger rewards for purchasing their products gain more attention from customers. The ecosystem of points is mutually beneficial for both customers and merchants.
The reward points are an asset that must be securely managed. The blockchain ledger powered with smart contracts is a perfect solution for the case.
The reward points system greatly reduces the barrier to entry for parenting and baby educational services. This kind of education is usually very expensive and sometimes not considered at all by parents.
Service providers on the platform may accept points as a means of payment and use it for further marketing. Points become a way of bringing the different stakeholders in the e-commerce industry together and the glue that keeps them together is a trustful ledger.
Comparing Multiple Blockchain Providers
We evaluated several options available on the market:
Each of these options has its own vision, traction, community, and real-world use-cases. Keeping in mind that blockchain technology is still in its early stages, we preferred to choose a blockchain provider based on vision and community rather than on particular technology features. Technology will undoubtedly continue to evolve, but what matters now is how fast we can start using it and how quickly we can get help from the community in case of any concerns or problems.
When we considered IOTA blockchain, we noticed that it mostly focuses on its own platform and products rather than on wide enterprise adoption. The vision of the protocol is to glue together 3rd party blockchains and IoT — something that does not fit our business model particularly well.
Ethereum and HyperLedger(HL) both look promising. They could have been good choices for us if neither required special skills to start using them. Ethereum requires learning solidity (or paying for consulting) and it does not offer off-chain smart contracts. It makes a lot of sense to avoid deploying smart contracts directly on the blockchain because you cannot quickly change them. The nature of business models means they change from time to time and therefore, smart contracts must change with them.
HyperLedger (the Fabric project in particular) is a joint enterprise effort aiming at big enterprise integrations. It has many interesting features and abilities. When we started exploring this option, it quickly appeared that there were many things to learn and practice before we could start using it effectively.
NEM attracted us with the lowest barrier to entry, a friendly community, and a comprehensive list of features. Since we approached NEM representatives for initial discussions, we have made large strides in working with them.
While evaluating NEM, we were inspired by how quickly we could start using the blockchain. NEM offers HTTP API as a way of interacting with a blockchain. The expertise of building apps which consume external services via API is huge. The market for developers who can work with APIs is vast and the time to build an app is declining. In a way, blockchain becomes just another service your app works with (Blockchain-as-a-service).
Combined with relevant features like multisig accounts, mosaics, and messages, it was obvious that we had to choose NEM as our blockchain implementation provider.
Any company that wants to start using blockchain must consider these things:
- Time to ship / Development barrier to entry
How fast can your team actually ship value to your customers? Do they need new skills to develop? If you have to teach a new technology from scratch — it will take time and money, something that may lead to people leaving you for more interesting gigs.
- Limited market for developers
To fully utilize the technology one needs to spend a decent amount of time to learn, practice, and master it. While there are people who have done that, it is not easy to find and attract new developers. People with experience in blockchain are expensive, rare, and liable to leave for a better deal.
- Mutable smart contracts
Business is evolving and business models change constantly. Your business logic must adapt to the pace of the world. Not being able to change your smart contract is not an option in many cases. Blockchain implementation should help you serve value and adapt to changes.
- Multiple assets
If your company has multiple assets, you don’t want to maintain multiple ledgers. Blockchain implementation must support using the same single ledger for storing multiple types of assets.