Beauty platforms are realizing the power of cryptocurrencies. Virtual currencies like Bitcoin have evolved from being a fringe hobby to a mainstream economy that will reach a total value of $1 trillion this year. Subsequently, beauty platforms are leveraging them and blockchain technology, which is a way of storing a list of digital entries that cannot be easily changed after being created.
It’s a bit of a trend: In the past two weeks alone, beauty platforms have made announcements about using these cryptocurrencies. Opu Labs, a facial recognition technology platform, came out of stealth to talk about its artificial intelligence-powered abilities and its own cryptocurrency called OpuCoin. In the next month, brands will be able to purchase OpuCoin (with real money) to pay users to fill out surveys, and those users will relinquish personal data for this currency. Augmented reality makeup app, Perfect365, which boasts over 100 million users, also announced it has integrated an already existing cryptocurrency called Kin in the last week in order to retain users. These announcements join those of a small cohort of other beauty brands and platforms that are using cryptocurrency, like Cosmochain or Jolyy; even hair-care brand R+Co recently announced you can pay for its products with Bitcoin.
These platforms hopping on the volatile crypto bandwagon are employing an unusual strategy to drive people to use them — they are using the virtual currencies as the equivalent of a new type of rewards program. The catch is that these specific currencies can only be used to purchase virtual products and only within that respective platform, therefore locking people into an earn-and-spend pattern.
“I think in a not-too-distant future everyone will have the equivalent of a PayPal account with different cryptocurrencies — you will have all these different loyalty programs and points [from different brands],” said Richard Reed, COO of Opu Labs.
Opu Labs, which launched in April in Southeast Asia, is a community platform that provides reliable feedback on skin-care products and connects people with dermatologists in the region. However, users from all over the world can still join. The platform asks users to submit photos of their faces on the blockchain, which are then analyzed using artificial intelligence so that dermatologists and brands can use them for research. By submitting photos on the blockchain, Opu Labs can verify that someone is human, but that image is still owned by the user.
In order to gain access to these images, which is a type of user data, Opu Labs has created OpuCoin to incentivize people to relinquish that datum in return for the virtual currency; users can then exchange OpuCoins for goods and services. So far, it has helped Opu Labs scale its user base significantly: after an initial coin offering (ICO) in June — the rough equivalent of an initial public offering — Opu Labs has seen over 120,000 people from over 180 countries join the platform. Opu Labs will offer its services to beauty brands in two weeks and will also expand to dermatologists in the U.S. and Western Europe next year.
“We want to [promote] the idea that blockchain means you own your data and you get to decide if you want to share it or not. The crypto incentive is a way to decide if you want to participate and get discounts and services,” Reed said.
OpuCoin payouts vary depending on the country, Reed said, but are typically the equivalent of $1 or $2 for every task, like a survey someone completes. However, in the future, brands can begin to use the platform for product testing — thus, the amount one gets paid could rise to the equivalent of $100, depending on the brand and the specificity of the data it wants, he said. For example, if La Mer wanted access to a hyper-specific subset of users – a Brazilian woman in her 40s — it could end up paying more, he said.
But, of course, users are eventually going to want to spend their currency – the same as redeeming their rewards. Opu Labs is currently looking at what services they can offer through the dermatologists using the platform, as well as what products can be purchased. (At the moment, no products can be purchased with OpuCoin, but cosmetic services are available.) Since prestige beauty products can easily surpass $50, a user will eventually have to either sell a lot of personal data for something like an eye cream or wait for the value of OpuCoin to increase. The potential for the virtual currency to increase in value, much like an IPO stock, is one reason why so many people may be attracted to the ICO, even though redemption is not yet available in many parts of the world.
“There is this economy that is developing, and we provide a mechanism: We have a marketplace where brands can come in and buy coins; users can [use] their coins or redeem them for purchases,” said Reed.
For a platform like Perfect365, its purpose for integrating cryptocurrency is far more straightforward. The platform wants to increase its user retention and engagement by using crypto to entice its users to take specific actions like downloading hi-resolution photos of their makeup looks to upload onto social media platforms. In turn, the platform — which features Ipsy, Nudestix and Hot Tools as brand partners — can recruit even more brands to pay (in dollars) to advertise on the platform.
To do this, Perfect365 is using Kin, a cryptocurrency created by the messaging app company Kik a year ago, and is only intended to be used within the digital app economy. Other platforms that currently use Kin include gaming engine Unity Technologies and the Kik messenger app. Perfect365 users are able to earn Kin on the Perfect365 platform by answering survey questions and, in the coming months, by creating and sharing makeup looks. Currently, the Kin currency is only available for a test group of Perfect365 Android users in the U.S., India, U.K., Canada and Australia.
Users have the potential to earn 130 Kin once by watching the initial video tutorial, followed by 30 Kin for every survey they take up to four times a day. However, downloading a hi-resolution photo requires 40 Kin, assuring that a user is almost always required to take a survey before reaping their reward.
“You’re creating earned opportunities, but what you’re really trying to do is create spend opportunities,” said Sergio Silva, director of partner success at Kin-creator Kik. “That drives the [crypto] economy.” In other words, if you’re receiving a type of payment for completing a task, you’re going to want to ultimately spend it on the platform and then the cycle continues.
Perfect365 hopes to monetize this spending activity with in-app purchases and by taking the engagement numbers to brand partners who will then want to advertise or sponsor the platform.
“The more active and engaged our users are, the more value we bring to our beauty brand partners,” a Perfect365 spokeswoman said.