GLOBAL: Rakuten, the Japan-based e-commerce firm, has announced Rakuten Coin, a cryptocurrency designed to enhance and extend its existing loyalty system, in a sign the company is attempting to become a first-mover in a potentially lucrative space.
Speaking at Mobile World Congress in Barcelona, Rakuten’s CEO Hiroshi Mikitani spoke in broad terms about a “borderless” currency, according to TechCrunch. At present, the company has not given a launch date.
In 2016, the company acquired Bitnet, a Bitcoin wallet startup, in order to bring in-house blockchain capabilities in terms of both technology and future applications. It is thought that Rakuten Coin is the product of that acquisition.
Cryptocurrency and blockchain are current buzzwords, with categories from financial services to media viewing distributed ledgers as the possible answer to many of modern businesses’ questions.
But so far action has been mostly tentative, which makes Rakuten’s move especially interesting. The fact that Rakuten’s core e-commerce product operates across borders suggests that the program is intended to spur international transactions by cutting out exchange rates.
Consultants from Oliver Wyman, writing in Harvard Business Review last year, noted the value of companies entering the space first. “Participating in the initial structuring of commercial agreements and partnerships will be essential to protecting critical loyalty program components, including currency value, customer data and relationships, and transaction costs,” the authors said.
With a total loyalty program value of $9.1bn of points since it launched in 2003, Rakuten rewards customers each time they buy on the platform. Combining Super Points, as the firm terms them, with a distributed ledger is the route to unlocking that value, the company believes.
“People want special items that you can’t get anywhere else,” a spokesperson told TechCrunch, adding that they had already observed a cohort interested in buying across regions.
Engagement prior to it entering the mainstream holds significant rewards if analyst predictions prove correct. As blockchain systems are, by their very nature, complex, individual developers will most likely fall away to either large players’ off the peg services, as with many AI applications, or into consortia.
The latter could reflect some of Rakuten’s ambitions in this direction. “Basically, our concept is to recreate the network of retailers and merchants,” Mikitani told MWC. “We do not want to disconnect [them from their customers] but function as a catalyst. That is our philosophy: how to empower society not just provide more convenience.”
Earlier in February, Unilever announced the beginnings of a partnership with IBM to establish blockchain-based trust in digital media buying, in another signifier of where blockchain technology is headed.
Sourced from TechCrunch, Harvard Business Review, IBM/Unilever; additional content by WARC staff