Rakuten rolls out cryptocurrency for loyalty program
Rakuten, the Japanese e-commerce giant that last month partnered with Walmart on grocery delivery, is planning to introduce a digital currency called Rakuten Coin that shoppers can collect from its loyalty program, per TechCrunch. The cryptocurrency builds on its existing Super Points program while using blockchain technology that is the basis for digital currencies like bitcoin and ethereum.
Rakuten CEO Hiroshi “Mickey” Mikitani announced the digital coin at Mobile World Congress in Barcelona, where he described Rakuten Coin as a “borderless” currency. The company wants to test out the possibility of generating transactions with shoppers internationally while eliminating exchange rate fees or other limitations from government-backed tender.
Rakuten has awarded more than 1 trillion Super Points since the program was launched 15 years ago, which is equivalent to $9.1 billion. The idea with the cryptocurrency is to give shoppers more ways of applying loyalty points for more purchases.
Rakuten, which has 44,000 merchants selling goods on its platform in Japan, may be able to set up its own digital economy that trades in its cryptocurrency. The company needs to maintain a stable supply of digital coins with a steady value for them to gain consumer acceptance. As bitcoin and other “alt coins” have demonstrated, their value can swing wildly within minutes, making them difficult to use as a medium of exchange. Increasing fees and processing time for bitcoin resulted in Stripe recently ending support for the cryptocurrency.
Rakuten is among the companies that are developing ways to grant digital coins to customers or communities that perform certain actions, such as shopping, monitoring social media for fake news or maintaining a ledger of transactions. As the first cryptocurrency, bitcoin started with the idea that people who would be willing to use their computers to perform complex mathematical problems and to keep a record of transactions would gradually be rewarded with a limited number of digital coins. Those coins would be a store of value and enable transactions that didn’t have to be processed through the banking system.
Kik, the messaging app with 15 million users, has demonstrated one way that a loyalty program can evolve into a cryptocurrency. The company had created Kik Points in 2014 to test out if people would spend them on digital stickers to put into their text message. Kik last year introduced a cryptocurrency in an initial coin offering that raised $100 million. The idea was to create a self-sustaining messaging app economy that doesn’t depend on advertising, especially given the dominance of Google and Facebook in digital marketing. One of the ways that Kik users can earn coins, which it calls Kin, is by creating apps or content that other Kik users want to buy, per Fast Company.
There is speculation that Amazon may be interested in creating a cryptocurrency that its users could earn and spend through its e-commerce platform. The company last year secured three new domain names related to cryptocurrency, amazonethereum.com, amazoncryptocurrency.com and amazoncryptocurrencies.com. Amazon Pay VP Patrick Gauthier last fall said the company didn’t have plans to accept cryptocurrency because of a lack of demand, per CNBC.