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Governments are seeing huge potential in corporate blockchain applications worldwide
Back five years or so and you'd be hard-pressed to find any blockchain technology 1 approved by the government and many were (and still seem) openly hostile to cryptocurrencies. This position is moving rapidly.
A TV special of an hour broadcast in China last week, extolling the virtues of the blockchain and stating that its value is "ten times higher than the Internet". For me, this is not a country intent on maintaining the ban on cryptocurrencies 2 . And contrary to what many Westerners believe about China's cryptocurrency, I spoke with a number of investors in China, Singapore and Hong Kong who all said that the crypto / blockchain is alive and prosperous in China. From my point of view, China risks re-emerging very soon as a great protagonist in this space.
In addition, the proposed government blockchain initiatives now go into the range, with different objectives such as preventing corruption in public sector finance (Italy), streamlining land registers (the Netherlands) and managing customs controls (South Korea) .
Where governments have openly liquidated the blockchain, they are now seeing potential benefits in its traceability. They have come to understand that it is not necessarily the anonymous, evil underworld that they thought it was. The more they explore the potential, the more use cases they are finding, particularly for blockchain business applications.
And now that they have stuck the tip in the water, I do not think it will take a long time to see them the potential benefits of blockchain-based currency systems, such as "cryptocurrencies". Hardly any large-scale adopter is bigger than a government. So this slow coming of the state ship is potentially a huge development for blockchain technology applications, manufacturers and implementers.
Award programs that belong to the Crypto ecosystem?
Two of the topics that I have covered in this blog are "interoperability" and diversification within the cryptocurrency ecosystem. This week we see another small step forward on both fronts, both in the arena of consumer loyalty programs.
Currently, you can use American Airlines (AA) miles to book a hotel room, so why should not you be able to use them to buy a burger? Or a pair of sunglasses? Every year, American Express (AXP) publishes a prize catalog where you can exchange points for everything from electronics to kitchen gadgets to clothing.
These reward programs are, in many ways, already a kind of "permitted" currency – usable within a closed ecosystem built by each company. But now those ecosystems could become bigger, potentially even approaching the utility of money.
American Express has created a blockchain application that allows its merchants to develop customized Amex reward points programs. Just as you could get air points for booking a rental car (or vice versa), you may now be able to get Amex points for buying a cup of coffee or a sales item that a retailer wants to move from the shelf. More importantly, once you earn them, you may be able to spend them as you like.
Meanwhile, Mastercard (MA) has patented a system that puts coupons on the blockchain. EZ Rent-A-Car is piloting a program to allow members of the prize to exchange their points for bitcoins. Rakuten (OTCPK: RKUNF), the Japanese e-commerce giant, has about $ 9 billion in premiums and is talking about converting them into a "currency" of loyalty convertible in fiat currency
. The points of the Fungible awards offer greater flexibility to consumers, attracting them to the issuer's premium ecosystem. This attracts more traders and increases the rates for the program operator. And in the end, the bigger the program, the more data there will be that the operator will have on consumer habits and buying trends.
There are two access keys here:
First, the more reward points can act as cash (and that's where they seem to be going), more potential value in the issuing company, which whether it's an airline, a retailer or a credit card company.
Secondly, I said before that the cryptocurrency ecosystem is not the winner of everything: it has room for a wide range of digital tokens, with "interoperability" (ie, convertibility) that drives the growth of 39; ecosystem. The new developments on the front of the awards show both points: the growing diversity, with the issuers that feed the adoption, making the digital tokens as convertible as possible.
WHAT DO I ADD MY 2CENTS?
We see some encouraging signs in the direction of the adoption of the crypto-blockchain, through a heterogeneous set of players. But this is really emerging technology . Many of these initiatives will fail, and given that at the moment there is so much attention on this space, many of these failures will be very public.
On the path to the adoption of the crypto-blockchain, it is important to remember the old adage of: crawling, walking, running. As it emerges from the creeping stage, there can be a lot of bumps, bruises, falls and occasional bad head shots.
In my opinion, investors should not be surprised or frightened by recent data from China that most blockchain initiatives are abandoned after 15 months. (That little data point was too much pressure.) After all, 95% of all venture capital start-ups can not provide the expected return on investment. An article on Fortune a few years ago reported a 90% failure rate for corporate "innovation" projects. About 75% of corporate "change initiatives" will fail. The failure rate for IT projects varies between 50% and 70%, depending on who you ask.
Overall, I see very positive signs on the adoption of the corporate blockchain and on the diversification of cryptocurrencies. But the high failure rates in technological innovation are normal. So, avoid falling in love, and do not be too discouraged if the privileged opportunities do not jump out.
I would suggest that you need an active approach to managing opportunities in this space: rigorously examine opportunities to find the ones that may have the best chances of success and longevity. Think about this how to put bumpers on the coffee table and plug-cover over the power outlets.
Editor's Note: This article discusses one or more securities that are not traded in a US exchange. Please be aware of the risks associated with these stocks.
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