Rakuten Pilots Blockchain-Enabled Products Evolutions to Platforms

Rakuten Pilots Blockchain-Enabled Products Evolutions to Platforms

Few weeks ago, I wrote on how 9Mobile could grow its user base by adopting the use of cryptocurrency in its loyalty program which would possibly attract young people with the excitement of getting coins/tokens:

Here is one: create a blockchain/cryptocurrency-based loyalty program where any customer could accrue a cryptocurrency by recharging airtime. I would call that cryptocurrency Nyja. People, if companies can wake up and issue Initial Coin Offering [“an unregulated means by which funds are raised for a new cryptocurrency venture”], which means they are making themselves central banks, I am very confident that any company can create a cryptocurrency-based loyalty program.

Interestingly, Rakuten, a Japan-based ecommerce company, is doing just that. The firm has added cryptocurrency as parts of the elements of its loyalty program. Essentially, the cryptocurrency would seat on top of the company’s loyalty point system thereby giving Rakuten all the powers to run it the way it wants.

Back in 2016, Amazon’s Japanese rival Rakuten acquired Bitnet, a bitcoin wallet startup that it had previously invested in, to help it work on blockchain technology and applications. Today, one of the first fruits of that deal has come to light. The company is planning a new cryptocurrency called Rakuten Coin — built on blockchain technology and the company’s existing loyalty program, Rakuten Super Points — which it plans to use to encourage loyalty services globally and to help customers to buy goods across different Rakuten services and markets.

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Even before Rakuten has launched Rakuten Coin, it’s notable and interesting to see a major e-commerce company — which has billions of users globally and reported $8.8 billion in revenues in 2017 — coming out with a move into how it might use cryptocurrency on its platform

By tying this Coin to its point system, the company can easily devalue the “currency”, removing any risk which could come if it had pegged it to Bitcoin or Ether. This is certainly a better way of implementing cryptocurrency-anchored loyalty program: you want everything to happen internally with all exogenous risks removed.

The goal in this game is to build a platform, and not just a product. A well-managed loyalty program makes platforms possible. Any web business needs a platform to thrive. A loyalty program which can be distributively managed with blockchain would be a great trajectory to get that duality of products and platforms quicker and faster. This is what Africa really needs as we work to reduce frictions in markets while building businesses with platform-capabilities. You build moats when you have those at scale. And we need them [application of blockchain] over the trading of cryptocurrency which I expect to have only marginal lasting value.

Product applications are wired with predefined logic which means they do only what you want them to do and nothing more. Myspace built a social connection app and nothing more. But in platforms, you do not have “hard-wired” logic states making it easier to reconfigure the ecosystems for different uses. Here, Facebook engineered a platform which makes it possible that it can do whatever comes in future. Once that happens, you see amazing scalability driven by network effects: a virtuoso circle where as more people use a digital product, the product gets more data which is used to improve the customer experience, and that improved quality attracts more users.

Any digital product that does not have the duality element will struggle especially in consumer market: you need the product and the platform as one to make progress these days. You need to build platforms because they have the elasticity to evolve with your business logic. Products are static and fade quickly as markets change. Platforms can grow without bounds, anchoring new opportunities on top. The business logic of integration, process and decision making are best handled on platforms over products in the internet space. With platforms, you have CUSTOMERS; products deliver consumers.

 

 


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