As more retailers understand the benefits of such schemes, and as increasingly such schemes migrate to become digital using mobile phones. Given the growth in e-commerce and the demand for cashless payments, gift cards are increasingly being used. However, it is possible to convert gift cards into Cryptocurrencies like Bitcoin.

Given some gift cards have an expiry date, if you cannot make up your mind about what to buy, you may wish to consider converting your Gift card into Bitcoins. It is now possible to do so using companies like Paxful, who according to Trust pilot, is a credible firm, but as always, exercise caution as there may be people on their platform who could be up to nefarious activities! Allegedly, Paxful was the 4th busiest Bitcoin wallet in 2018, in terms of transactions, doing over 20,000 deals a day. It is possible to change your Crypto to a gift card and then buy an iTunes gift card and then use this to buy a new iPhone or MacBook.

There is no reason why you cannot also convert Cryptocurrencies into gift cards and so solve the dilemma that many merchants do not accept Cryptocurrencies as payment. For more information on you may want to read “How to convert your Amazon gift card to Bitcoin”.

It is also possible to convert you loyalty rewards - air miles or credit card loyalty scheme points into Digital Assets although there seem to be fewer organisations currently offering this option. Searching the internet you will come across “BitMiles” but it would seem that caution is needed, as it has had some poor reviews i.e. according to TopCoinList it could be a scam, so caution is required!

Alternatively, Loylogic, who were established in 2005, has a global network of more than 500 merchants and 2,000 online stores offering millions of products and services that operate loyalty reward schemes. Loylogic themselves, since 2017, offers loyalty rewards to Crypto conversion service.

However, why do merchants bother with loyalty schemes? Well, there is no doubt that being a “Farmer, not a Hunter” i.e. looking after your existing clients and encouraging them to do more business with you as opposed to searching for new customers, is financially a very sound business strategy. In an article in Outbound engine they stated the following:

·         Acquiring a new customer can cost five times more than retaining an existing customer.

·         Increasing customer retention by 5% can increase profits from 25-95%.

·         The success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%.

According to an analysis from Invespcro, existing customers are 51% more likely to try a new product and spend 31% more!

As we see more loyalty schemes digitising, we potentially will see more and more tokens/coins/reward points being given away to customers to attract their attention and build brand loyalty. However, there will be increasing pressure for these rewards to be interoperable i.e. exchangeable and tradable. So, ideally, the air miles Virgin Atlantic gives you to fly with them can be traded for a Starbucks coffee in Singapore!

Interoperability is now much easier to achieve using Blockchain technology, and we are likely to see much greater adoption if Facebook is successful with its “Study project” where it is reported that they intend to give tokens based on the amount of time it users spend using Facebook.

So, it is possible to convert an unused gift card or some of your unloved loyalty reward points into Digital Assets. The landscape is set to see an increase in customers being rewarded and paid more using digital loyalty incentives to encourage them to come back and spend more time and buy more products and services.

This has led to a surge of interest in Bitcoin mining which is being seen as a way around the sanctions and enable Iranians to earn some much-needed foreign exchange. Unfortunately, according to an article in Forbes, Mostafa Rajabi Mashhadi, a spokesman for the Energy Ministry, has been quoted by Iranian news agencies as saying that electricity consumption increased by 7% in the past month alone and he was clear where the blame lay: “A bulk of that unusual increase is because of the activity of bitcoin miners,” he said, adding that their activities are “making the grid unstable and causing problems for other users.”

Due to cheap state-subsidised electricity, it has been reported that Bitcoin miners have been moving to Iran from China, Spain, France, Ukraine, and Armenia.

According to Oxford University researcher Mahsa Alimardani: “Mosques receive free energy in Iran. Iranians have set up Bitcoin miners in them. There’s around 100 here, producing around $260,000 USD a year. This money goes a long way in Iran’s choked sanctioned economy,” 

This type of news will not please those countries who have imposed sanctions on Iran, and if the proceeds of these Mosque based Bitcoin profit are not used correctly, no doubt some religious leaders inside Iran will raise questions. However, it does serve to illustrate how complex and difficult it is to totally control and police digital businesses!

It is thought the Netflix documentary will help to inform most people who have no idea about Digital Assets, other than what they have heard about Bitcoin. Unfortunately, most people associate Blockchain, Bitcoin, Ponzi schemes, Money laundering, and other nefarious activities altogether. To be fair this may be due to Bitcoin being used as a choice of currency on the illegal and now closed “Silk road” website.

As Blockchain technology and Digital Assets are being used by governments and multinational corporations, we are all going to be exposed and I suspect using this technology and new asset class more and more.

Blockchain technology is playing an ever-increasing role in Asia, and this was highlighted in a report from LinkedIn. LinkedIn’s report has broken down what they understand to be the three most prevalent skills country by country compared to the average in the APAC region.

As the graphic indicates, Blockchain skills are required in a number of different countries.

LinkedIn analysed the skills listed by its members from the APAC region over the last five years to identify the top 10 rising skills. They found Blockchain to be the fastest growing skill in Singapore and among the top three in China, Japan, Taiwan, South Korea, Hong Kong, and Vietnam. Although this ought to come as no surprise, as a report back in 2017 by Cognizant identified up to 88% of financial businesses in Asia Pacific who believed blockchain to be important to the industry’s future. This was further supported by Global Market Insights in 2018, who predicted that the Blockchain-based industry in Asia Pacific to be worth about $16 billion by 2024, with the healthcare market contributing at least $1.4 billion.

Currently, Singapore is 7th globally out of all the governments measured by the E-Government Development Index (EGDI). The EGDI has been designed as a way to measure how much governments are embracing digital technology to promote access to public services for their citizens. It is thought that Blockchain technology will be able to offer greater transparency and so help fight corruption and fraud.

As an article in Asian Block review summed up: “British politician Lord Acton, “Power tends to corrupt, and absolute power corrupts absolutely.” Therefore, it may be preferable to trust technology instead of people.”

Surely, Ripple has enough on its plate trying to replace the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the platform that has been used by global banks since 1973 to make international payments? Ripple’s token price increased by over 35,000% in 2017, sparking a Cryptocurrency frenzy globally.

While MoneyGram can trace its roots back to the 1940’s, it was not until 2004 that it was trading as a separate entity. Unfortunately, despite its well-known brand internationally, it has been struggling of late as it looks to repay its $902 million of debt. It was also fined $120 million in the USA for failing to stop potential fraudulent payments. In January 2018, it had a $1.2 billion bid from the Chinese company Ant, blocked on the basis that it would enable the Chinese to have too much financial information on US citizens. MoneyGram’s share price has fallen from $17.81 in April 2017, to $1.67 in December 2018, although on the announcement of the investment by Ripple it did rise by 150% to $3.64.

While Ripple claims that it can help MoneyGram improve the efficiency of payments, cutting costs and reducing the time it takes to send money globally, I suspect it is MoneyGram’s existing distribution network that appealed to Ripple…..

Will we see more new Crypto firms buying into more “old money” companies as they look to introduce their new technology into existing customer-bases?

The Japanese equivalent to Amazon, Ratken has announced that it is going to provide the technology to help East Japan railway customers pay digitally, as opposed to using cash.

The Japanese government has been trying to encourage its citizens to use less cash and increase the amount people pay using digital methods to 40%. Currently, 20% of transactions in the Japanese economy are paid digitally, compared to South Korea where 89% of transactions are paid digitally, and in China, the figure is 60%. Indeed, some companies, like Paypal in Japan, have resorted to extreme measures such as giving away 10 billion yen ($91million) to encourage people to move away from cash and go digital.

The Ratken East Japan Initiative is looking to enable 5,000 trains stations and 50,000 buses, as well as 600,000 stores, all to be in a position to accept digital payments.

Given the growth in Chinese tourists (7.5 million in 2017), shops and restaurants are also looking to be able to accept cashless payments. These tourists are more likely to want to pay digitally, as in China only 40% of transactions are paid for by cash. Alipay and WeChat have had huge success in converting the Chinese population to pay digitally, so Chinese people typically to do not carry around large amounts of cash.

To meet this demand from merchants to go digital J-Coin, which is a new digital currency payment platform, has been launched in Japan by Mizuho Bank in conjunction with 60 other financial institutions.

Being able to pay digitally cannot come too soon for Japan as it welcomes the World Rugby Cup this autumn and then the Olympics in 2020. It is expected both sporting spectacles will attract a huge number of foreigner visitors, many of whom will prefer not to use cash simply because it is more convenient to pay digitally.

The US pharmaceutical industry is worth over $450billion p.a., according to the independent statistical data company, Statista.

The US Drug Supply-Chain Act, which was announced back in 2013, is due to come into force in 2023, and the FDA is looking at how Blockchain technology can be harnessed to provide greater transparency and also evaluate methods to enhance the safety and security of the drug supply chain. According to the FDA Pilot Program website, “FDA’s DSCSA Pilot Project Program is intended to assist drug supply chain stakeholders, including FDA, in developing the electronic, interoperable system that will identify and trace certain prescription drugs as they are distributed within the United States.”

The intention is to reduce the time taken to track and trace stocks of pharmaceutical drugs and monitor the drugs’ integrity i.e. ensure they are kept at the right temperature. It is hoped that the results of the project will be made available by the end of 2019.

This is yet another example of where governmental bodies (in this case the FDA) are actively working with commercial organisations, using Blockchain technology to meet common goals and requirements. If this project is successful it will enable greater transparency, while improving the efficiency of the pharmaceutical drug sector.

So, why is this the case? Well, Binance - which is one of the world’s biggest Crypto exchange - has a turnover of over $1.5 billion worth of Digital Assets a day, and just announced (despite only 15% of its turnover coming from the USA) that as of September 2019, it will offer a separate Digital Asset exchange for US investors and another exchange for non-US investors. Therefore, it would appear that it is unlikely in the near future that it is going to be possible to have one global exchange that anyone, regardless of where they live, can trade on.

However, with a G20 meeting being held on June 28th  2019 in Osaka, Japan, Crypto-exchanges are on the agenda. Maybe we will see some clearer guidance being given about how Crypto exchanges are to be regulated going forward.

The Financial Action Task Force (FAFT), which is an intergovernmental body established in 1989, and which focuses on money laundering and terrorist financing, will be presenting its recommendations on how Crypto-exchanges ought to be regulated before the G20 meeting. Although, given the traceability and transparency that Blockchain technology offers and the fact that you can, in effect, programme-in checks and balances, could make FAFT obsolete! Such checks are impossible with the current largely paper-based analogue systems and platforms that we currently use, but will FAFT see it this way?

A Blockchain platform offers the promise of greater transparency of supplies while not compromising the privacy of users.

While medical cannabis has been legal since 2001 in Canada, using cannabis for recreational purposes was only legalised in 2018. According to government data, 5.4 million Canadians have bought cannabis since October 2018, and 600,000 have done so for the first time. However, the Canadian government is insisting that companies keep a monthly record on how much marijuana they have grown, harvested, sold, destroyed, used for research purposes or lost to theft. 

Cannabis sales are expected to reach over Can$7 billion next year and given the various data hacks and cyber-attacks the Canadian government are looking at how a Blockchain-powered platform can help both the private and public sector maintain confidence and reporting in this recently legalised industry. Canada is one of the first governments to legalise recreational use of cannabis, so no doubt other countries are monitoring the pros and cons in order to decide if they legalise cannabis for recreational use too!

The general stance in Russia towards Digital Currencies seems to be softening, as it had been very anti these assets. It was only just last week in Russia the Central Bank admitted that it would consider using a Cryptocurrency, backed by gold, for international settlements. Russia currently holds over $492 billion of gold which, if Digitised, some could be used to settle outstanding international debts and be a way around the economic sanctions Russia is subject to.

More and more governments are looking at Digital Currencies as a way to create more transparency, so minimising their “black economy” and, by using Smart Contracts, they could offer the potential to introduce an automatic collection of taxes - which would be faster and potentially more efficient for revenue authorities. 

Interestingly, Russia has a lot to gain from embracing Digital Assets as it is a big producer of commodities. These assets typically only trade for a few hours a day and only 5 days a week. A Digital Asset pegged to different commodities could help reduce the volatility of these commodities, and provide an alternative way for Russian companies to raise capital, so getting around the aforementioned sanctions. In Germany, BSAF’s new electric car battery factory, which has been built to use commodities such as palladium and produced by Nornickel (the huge Russian commodity miner), would potentially benefit from Digital Assets. This has not been lost on Nornickel as it has been discussing with Swiss regulators the idea of establishing a digital platform to offer tokens based on palladium and nickel. 

According to reports in Bloomberg, Vladimir Potanin, the Russian billionaire and CEO of Nornickle, is interested in creating new Cryptocurrency backed by palladium.

These Digital Assets could allow Nornickel to raise capital and potentially avoid sanctions.

Anything that can reduce the costs of trading in commodities has to be welcomed, and such Digital Assets could offer an interesting New Asset class for investors, as well as creating potentially greater liquidity and low commodity volatility for existing institutions.

Indeed there had been some reports, in February 2019, that Russia would develop an oil-backed Cryptocurrency. 

More recently, on the back of the announcement from Facebook about its new Libra Digital currency, Russia has said that it will not legalise Libra. In an interview with local radio station Kommersant FM, Anatoly Aksakov, Chairman of the Russian State Duma Committee on Financial Markets, said “With regard to the use of Facebook cryptocurrency as a payment instrument in Russia at this stage – my opinion is that. in our country, it will be banned.” 

Unfortunately, recent reports that the biggest ever hack of a Cryptocurrency exchange on  Coincheck, in Japan, (where it lost $530 million in January 2018) will not endear any regulators, including Russia, to Cryptocurrencies.

Nevertheless, Russia’s Agency of Far East for Investments and Exports is reported to be looking at creating a Cryptocurrency hub in the Chinese Russian border, on an island called Bolshoy Ussuriysky. This island falls under the national border of both Russia and China! Has Bolshoy Island been chosen for its location, as the Chinese may also be looking to see how they can use Cryptocurrencies in the Chinese economy?

He spoke about a number of projects BP are involved in, that use Blockchain technology.

Continuing with the theme of “Collaborative capitalism”(i.e like LVMH for luxury goods and Maersk’s Tradlens for the shipping industry), BP has invested and helped develop a Blockchain-powered, commodity trading platform, called Vakt. The Vakt platform, according to Business Insider, addresses two fundamental challenges:

1. It “slashes” the paperwork when trading commodities, so saving costs and making the process much more efficient.

2. As data and information are more accessible and transparent, commodity traders find it harder to have access to unique proprietary information, so trading profit margins are smaller. Therefore, traders are searching for more efficient ways to gather data and trade.

The Vakt platform has been trialled in the North Sea by a syndication of producers, who are responsible for over 80% of North Sea’s Brent crude oil production. It has been such a success, generating efficiency savings of 30% to 40% using Blockchain technology, that BP is now looking to deploy the Vakt platform to other regions around the world.

Gray also stated at the conference that BP has also established a company called Strala, which enables the energy created in one location to be transferred to somewhere else. Using the new Apple App, if you (as the customer/user) had solar panels in the country, it is now possible to have the energy that you use in your flat in a city, paid for from the energy your solar panels are generating. Could this encourage large power users, such as big office blocks, to invest in wind and solar farms and help the UK meet its recently announced target to be carbon-free by 2050? However, imagine the potential impact if someone in central Paris, or Edinburgh, or Berlin could buy electricity direct from a wind power or solar farmer in a remote desert location in Africa! We are not far from this being a reality, and using a Digital Currency as a form of payment with Smart Contracts on a Blockchain-powered platform like Strala would minimise the paperwork, human errors, reconciliation, and intervention - all in a very transparent manner!

A third way BP uses Blockchain technology is that it is working on a project that will measure the hydrocarbon emissions from the well-head of a gas field to the end user. Julian Gray explained that, in the USA, there is increasing pressure from users to be able to prove their carbon footprint. Historically, gas production and distribution networks had not been that efficient. Therefore, if BP proves that it is able to provide zero-leaking gas supplies, it can charge more for the gas, but the customer will be sure that the supply network has no leakage i.e. the gas they are buying is more environmentally-friendly.  

As big organisations start to use Blockchain technology more and more, different use-cases are being found. The world’s petroleum and car companies are desperate to reinvent themselves, so are investing heavily to find ways to be more ecologically and environmentally friendly!

Facebook is looking to establish a foundation to oversee the governance, by selling positions to 100 different organisations which will be on the governing body, which itself, will oversee the Digital Asset. According to Blockcrypto, the initial members will all pay $10million and include:  Mastercard, PayPal, PayU, Stripe, Visa Inc., Booking Holdings, eBay, Calibra, Farfetch, Lyft, MercadoLibre, Spotify, Uber, Iliad SA, Vodafone, Anchorage, Bison Trails, Coinbase, Xapo, Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures, Creative Destruction Lab, Kiva, Mercy Corps, and Women's World Banking.

Interestingly, the majority of the above-proposed members have millions of users already as customers. Presumably, one of the conditions of being a member is that Libra will be accepted and usable by the customers of the governing board members, so further increasing the adoption and acceptance of this new Digital Currency. It is notable that the organisations that are missing are Airbnb, with over 150 million members globally, no airlines, no retailers, no car companies, no Fast Moving Consumer Goods companies (FMCF) - Unilever, Procter & Gamble, Colgate, and no oil companies (with their thousands of petrol stations all over the world!)

Unsurprisingly, there are also no banks since Facebook’s coin will potentially take revenue from them if it is a success - nor are  Amazon, Apple, Nike, Alibaba, or Google have agreed to fund Facebook and pay $10million each, they all are watching how Libra is embraced by consumers and regulators before they launch their own Digital currency.

I suspect that the vice president of Amazon, Patrick Gaulthier, will regret what he recently  said: “Amazon would only consider discussing the creation of its own Cryptocurrency like Facebook’s Libra in several years’ time”

The ability to be able to buy and sell goods globally (without the need to use banks) and so undercut the current costs and charges levied by financial institutions, potentially make Digital Currencies very attractive, especially if you have a global brand - with 2.4 billion customers- like Facebook. By pegging Libra to a basket of currencies, as opposed to just the US $, ought to make this Digital Asset even more attractive.

In a message to investors, RBC managing director Mark Mahaney wrote: “We believe this may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams.” He goes on to say that “himself and the rest of the RBC team suspect that Facebook will integrate Libra into payments, e-commerce, apps, and gaming. With the Libra launch around the corner, RBC is placing a $250 price tag on Facebook’s stock”.

Facebook, according to the Guardian newspaper “is looking at paying users fractions of a coin for activities such as viewing ads and interacting with content related to online shopping, in a system similar to the loyalty schemes run by retailers.”

I do not think we should underestimate this last comment from the Guardian as, in effect, Facebook, which has for years used its customers’ data without paying them, and then sold it to advertisers, could now start paying clients to be more engaged.

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