How can virtual currencies and

smart contracts support a

pay-per-wash business model?
The #Blockchain4Good Challenge
THE OPPORTUNITY
Blockchain promises radical new opportunities to revamp the way we
live, work, and consume as a global community.

Distributed ledger technologies and the technologies they support,

including cryptocurrencies and smart contracts, could be particularly
instrumental in supporting product-as-a-service business models
(PaaS).

In PaaS models, service providers retain ownership of products and are

incentivised to create value by offering high-quality, durable products
that can be easily upgraded, repaired, refurbished and taken back at
the end of their useful life – ultimately bridging the circularity gap.

These models, however, face unique financial challenges that emerging

technologies could help alleviate.

This is an important opportunity to tap into.

KEY CHALLENGES

While early-stage startups all face similar challenges in terms of access

to capital and scaling, a distinctive and key characteristic for PaaS
business models is the need to consider the entire life-cycle of a
resource from “pre-use” to “post-use” phases. Some of the key financial
challenges these startups have to face include:

Higher upfront capital requirements. As products are loaned

instead of sold, payback periods – the time required to recover the
initial cost on an investment – are often longer, creating higher upfront
capital requirements for providers.

Higher transaction costs, as payments follow every use cycle (e.g.

every washing cycle on a washing machine or every km driven on a
car), and customer relationships are based on contracts with flexible
payment schemes that require credit checks, receivables management,
and all the administrative burden that follows.

Complex flows. Finally, these business models operate within highly

complex material, information, and money flows, as a large number of
(chain) partners are involved in the process.
THE CASE STUDY

Because of these challenges, Bundles – a pay-per-wash company –

currently uses a 'hybrid use model', where the user pays per washing
cycle on top of a fixed monthly fee. Ideally, however, Bundles would
offer its customers a greater variety of prices for the use of short-
versus long-, cold- versus warm wash programmes, or the ability to
differentiate between sustainable or unsustainable, loyal or flexible
users.

Learn more about how Bundles uses IoT to support its business model
here.
GOALS OF THIS CHALLENGE

Circle Economy and Sustainable Finance Lab initiated a Community of

Practice to implement Bundles’ pay-per-wash proposition on a
blockchain (DLT) system consisting of a virtual currency that allows
for micro-payments and smart contracts for pay-per-use models.

This online challenge complements the Community of Practice and

aims to open up the debate to a global audience in order to identify
key opportunity areas for virtual currencies, micropayments, smart
contracts, and other blockchain applications to increase the viability of
such a pay-per-wash business model.

Key learnings from both the challenge and the Community of Practice
will be combined and shared in an open-source whitepaper to inform
entrepreneurs and financial institutions, and to inspire and support
new and existing pay-per-use business models.

As the challenge progresses, Circle Economy, Sustainable Finance Lab,

and other partners in the Community of Practice are also eager to
explore future partnership opportunities with participants
around the world.

Learn more about why you should contribute here >

WHO SHOULD BE INVOLVED?
We are looking for insights, ideas, and thoughts from:

● (Aspiring) PaaS entrepreneurs with first-hand experience with

products-as-a-service business models. What challenges have
you experienced in getting your idea off the ground? How could
your business model benefit from such a system?

● Financial institutions, investors, banks, accelerators, and other

organisations and individuals interested in exploring PaaS
business models. What data and information would help
mitigate the risks you see in investing in such business models?

● Auditors, legislators, and other individuals with legal expertise.

How do current laws (in the Netherlands or elsewhere) support
(or fail to support) pay-per-use business models? What about
the legal framework around blockchain?

● Manufacturers of consumer appliances around the world

● Academics interested in any of the above topics!

Get the contribution guide
Or jump right in