Exercising Earning Potential
Sweatcoin’s rationale is that when you look after your health, you benefit society: you are more productive, and you help to save $billions in healthcare. Therefore, your movement has value, and you deserve a share in it.
This share takes the form of purchasing power (goods and services from the market place including Apple Watches, i-phones and fitness classes), donations (to a variety of environmental, humanitarian and animal causes), and other benefits that come from being part of ‘a new global economy of wealth through health’.
So what’s in it for Sweatcoin, and how do they work?
Sweatcoin have developed a verification algorithm that aims to validate steps while removing invalid minor movements – and forms of cheating (yes, some people will always find reasons to put their phones on top of washing machines, or strap it to their dog).
Once verification is complete, the energy from your steps is converted into Sweatcoins. The Step Verification Algorithm takes the steps provided by your device and checks them against other data points like GPS location, speed, and consistency of movement. Among other processes, it aims to match the full range of input data to the patterns of movement. So it is paramount that the Algorithm has access to the location data. In the Beta version of the app, you couldn’t use it unless it was always open in the background – thankfully they have updated this to make it more practical.
In terms of their accuracy, they claim that the average user converts about 65% of the total steps registered by their phone into Sweatcoins. Current limitations include various factors such as the device hardware, GPS settings and variations in physical environment. Every 1,000 steps generates 0.95 Sweatcoins, which can be used in the marketplace with prices ranging from 5 to 20,000 coins.
Sweatcoin primarily make money through their brand partnerships and advertising, as third parties pay to be featured and offer promotions in the marketplace. The exact commission is negotiated between Sweatcoin and each brand. For some companies, particularly those selling fitness products, the arrangement is likely to be more lucrative.
Sweatcoin claim that unlike platforms such as Facebook which offer a free service in exchange for your user data, they do not monetise data through third parties, and claim to ensure protection and privacy. They highlight that as your location data is anonymised and cryptographically protected, they fully comply with GDPR (data protection regulation).
However, some of their brand partnerships have included those with larger healthcare and insurance providers. For example, Sweatcoin announced a partnership with Hannover Re where it provided the global insurance company with health-related data. Although this may be anonymised, user activity is still exchanged for a return in this way. Another deal was struck with the National Health Service (NHS) in the UK to develop an exercise programme for individuals considered at high risk of developing Type 2 diabetes.
Users can also opt-in to watch extra adverts, in order to earn more coins. But this in-app advertising is a far less significant source of revenue than their large-scale partnerships and deals. On top of this, users have to ‘pay’ for the pleasure of having more of their steps counted throughout the day (which are normally capped) – it charges 5% commission from each Sweatcoin generated. While this could be deemed a type of tax on your steps, the founders highlight that it pays for ‘friend invites’ and other bonuses which come from the Sweatcoin bank. And of course, you can also upgrade your account from the ‘free’ to the ‘premium’ subscription, providing fanatics with further features.
Sweat Wallet is an additional app which serves as an extension of the Sweat Economy. Unlike the Sweatcoin app which encourages you to spend, Sweat Wallet encourages you to save. This takes the form of converting your coins into Tokens, and locking them into Growth Jars.
The company advertise that holding SWEAT in the form of Tokens has many benefits:
- It can be staked for yield and rewards – like vouchers and discounts for blue-chip brands including Adidas, Amazon and Nike; Tickets to events: sporting events, and concerts; or Stablecoins (USDT and USDC). This is a return from the operational activities of the business.
- It can be applied to NFTs – they are building a casual, dynamic NFT game in the Sweat Wallet app. It can be used to purchase NFTs for your own personal little gallery or to be traded like Pokemon cards.
- And it can grant access to improved features in the Sweat Wallet App – higher stakers of SWEAT could access premium features, lower transaction fees, and increased daily minting limits.
In 2014, blockchain enthusiast and entrepreneur Oleg Fomenko, along with his business partner Anton Derlyatka, created Sweatcoin with the aim of it becoming a global digital currency backed by the economic value of movement. The Russian founders say they have ambitious long-term visions in which the digital currency will help users to pay bills such as council taxes – simply by going for a walk.
Fomenko, prior to Sweatcoin, had been scaling Bloom.fm, a U.K.-based music app, to over 1.3 million downloads. The startup imploded after Gazprom Media, the firm’s sole investor, pulled out after Russia’s invasion of Crimea and he subsequently failed to secure the necessary funding. In the meantime, Derlyatka was working on launching a fitness startup, which as chance would have it never saw the light of day.
Right after Bloom.fm went bust, Fomenko delved deep into blockchain technology research and its possible applications. Depressed by his previous failure, he also got caught up in the viscous cycle of arresting working out altogether. The PR story goes, that after a conversation with his old pal Derlyatka, Fomenko began to wonder whether there was a way to combine blockchain technology, cryptocurrencies, and working out together.
His intuition was, furthermore, supported by data. For example, at the time, 62% of UK citizens were classified obese. The country was spending more than $12 billion every year to curb the effects of its overweight population – a sum that was forecasted to double over the coming decade. They began working on Sweatcoin, before recruiting partners Khmelev and Perushev to join them, and raising a seed round of nearly $1 million to get started.
According to the company’s LinkedIn profile, there are now more than 40 million Sweatcoin members across 42 countries, with the United States representing the largest market. Here, Sweatcoin works with over 300 brands that want to connect with health-conscious audiences. These brands encompass mindfulness apps, coffee companies, insurance companies looking to promote healthier lifestyles, and governments wanting to reduce their healthcare expenditure, amongst many others.
Longer-term, the company is committed to working with local and national governments to help them encourage their citizens to be more physically active. In fact, Anton Derlyatka once noted that their big picture use-case for Sweatcoin was to have the currency comprise some part of personal income tax…
Given its novelty, Sweatcoin still has many kinks to iron out. Aside from the odd dodgy deal with a third party that doesn’t quite hold up on its promise, one of the initial bugbears was that the app only monitored outdoor steps, so if you did a twenty minute run on a treadmill at the gym it wouldn’t be counted. This has now been updated, but the Sweatcoin founders say that there are still too many ways to ‘game the system’.
One thousand steps gets you 0.95 Sweatcoins – and with the average person taking an estimated 3,000 to 4,000 steps a day according to the National Health Service, you would typically get between two to three Sweatcoins. This puts ‘marathon offers’ which can cost 20,000+ Sweatcoins, out of reach for the typical person for several years.
There are also complaints that the app drains phone battery. Sweatcoin offers a battery saver mode which helps to sap less of your battery life but, by making use of this functionality, it warns ‘some steps will be lost’. Primarily a US app, the British version also doesn’t feature hundreds of vendors in its marketplace section, with around 4 options typically offered under the ‘offers for today’ section. And there are always the “hi I’m user_456 and would like to invite you to invest all your Sweatcoins for an immediate 200% return” scammers. The Sweatcoin founders say they have a very strict policy on banning users that try to approach others in this way.
Its evolution and iterations will be a constant work in progress, but the team itself seem to be in it for the long haul. There have been many apps, such as PokemonGo, that have previously launched to encourage people to exercise and explore the outdoors by embracing gamification and other incentives, but the hype rarely lasts. The founders explain that short-term hype is not what they’re after, instead they want to create a sustainable model.
As someone who has taken to walking over using public transport much more since the pandemic lockdowns, and since adopting more autonomy and flexibility over my schedule, Sweatcoin has provided an enjoyable platform through which to loosely track activity, peruse new offers in wellbeing, reconsider the ways in which our definitions of value interact with the wider landscape, and learn more about the practical applications of an interesting emerging space.
So far, I have exchanged my steps for some custom Swedish jewellery from a small start-up to give as gifts, purchased some CBD gummies, and received a discount code for a health-tracking ring that also acts as a discreet alarm clock – a niche find that I’d been thinking about getting for a while… When it comes to the Sweat Wallet, the dopamine addict in me enjoys being encouraged to lock-in for weekly prize draws and dormant dreams.
Given that I use the app as an adjunct to what I’d already be doing anyway, I can’t really say that it’s incentivised me to be more active than I already am. And given that there are far fewer offers than in the US store, neither have I been enticed to invest in purchasing the un-capped subscription. However it has enhanced the process by offering some fun insights and rewards along the way. If it could pay my real-world rent or taxes – things might change.