3 Weeks Ago

The size of loyalty schemes globally has been valued at $1.94 billion in 2016 and is projected to reach $7.305 billion by the end of 2022.

This represents a growth of 24.73% per annum, as companies desperately seek to attract and retain customers’ attention and their repeat business. Increasing online sales and the impact of technology, as millennials use mobile devices to shop, is helping to stimulate more companies to put additional resources into loyalty programs. But why bother?

Source: Shopify

As the above chart illustrates, if you can retain customers it can lead to a significant increase in revenue. This explains why loyalty schemes are seen as being an important part of the marketing mix for many organizations.

The concept of loyalty programs is thought to go back to the 18th century, with “premium marketing” in America. This was when retailers gave their customers copper coins with their shopping, which could then be used at a later date to make further purchases. However, it was not until 1958, when Green Shield stamps first started to appear in the UK, when those modern loyalty schemes took hold. We have now seen an explosion in the number of loyalty schemes which, in turn, has led to customers being disillusioned and feeling “why bother?”, as it results in them being signed up to a “cornucopia of programs”. However, how often can their loyalty points be redeemed for anything meaningful?

Blockchain technology can help us instead of signing up to dozens of different schemes, a customer can join a network that offers reward points which aren’t just redeemable at one company but are with any business in the loyalty schemes network.

Blockchain technology makes this possible by keeping a record of all of the transactions that can be accessed by the whole network. Instead of having separate accounts for all your airline miles and a wallet overflowing with paper-based cards, which get stamped every time you buy a coffee, a Blockchain platform securely holds and enables the sharing of the data, without breaching data protection legislation. While providing greater security and transparency for customers, for retailers this type of loyalty schemes can also be less expensive to create and maintain. 

Purdue University has developed X-Blockchain, allowing customers to buy goods and services, and be rewarded within a loyalty scheme and receive points. The companies that are part of these loyalty schemes and who pay for the points have access to “shredded data”—meaning any personal or confidential information has been removed. 

Source: Perdue University

Mohammad Rahman, an associate professor at Purdue's Krannert School of Management, and who leads the research team said. "This technology enables two people to confidentially exchange rewards points from perhaps a coffee chain for airline rewards points at a rate that both find acceptable and this is not disclosed to any third party, including our platform." In effect, technology is used to “code data” by removing sensitive information and enables access to the non-private data which is still very valuable for marketers.

Using Blockchain technology in loyalty schemes to collect and store rewards enables customers to redeem their points more easily, and therefore make loyalty schemes more appealing. 

If we are to see Cryptocurrencies being given...

Loyalty Schemes
There has been considerable interest in the potential that Blockchain technology offers the property sector, in being able to tokenise Real Estate and so enable smaller investors to get access to an asset class that has typically been the preserve of institutions and only the very wealthy. 

Instead of offering exposure to the rise and fall of property valuations, a German company called Fundament has received permission from BaFin (the German Financial Market Supervisory Authority) to issue €250 million of bonds, run on the Ethereum Blockchain. The Fundament bonds will be issued in digital form as a token backed by property. This could lead to more property-backed bonds being issued by other firms.

Meanwhile, in Luxemburg, one can now get access to Real Estate from as little as €1,000, via Property Token SA. This is a digital token which uses Smart Contracts whereby rental income from the property will be automatically distributed to investors.

One of the challenges for institutions owning tokens, whether it be giving exposure to direct property or bonds backed by property, is custody. It was therefore intriguing to see that The Royal Mint (the UK Government-owned organisation which is responsible for making coins) was reported to be going to offer custody services for a new type of Blockchain, called Temtum. Although this may be “fake news”, as the source for this is Coin Telegraph whose website states it has removed this story “due to its lack of compliance with our standards of journalistic quality and integrity”

Financial Services
Real Estate
Global warming and the connection between climate change and pollution would appear to be an incontrovertible fact.

Blockchain technology, according to Gold Standard, which is a founding member of the Climate Ledger Initiative, offers three key benefits when monitoring climate control.

  • the creation of an immutable transparent ledger

  • trust in peer-to-peer transactions – particularly important in the context of weak regulatory institutions

  • Smart Contracts – applications that can automatically execute the terms specified in a contract on a Blockchain, thereby increasing efficiency and reducing transaction costs.

Indeed, the United Nations Framework Convention on Climate Change stated that it would support a Blockchain platform to make use of the technology’s great potential. This is hoped to lead to better control and reduction of emissions of harmful substances into the atmosphere, and increase the search for funds to finance environmental projects.


The Climate Chain Coalition (CCC), set up in 2017, and now with over 140 members globally, also believes that Blockchain technology can help to track climate change. CCC aims to support stakeholders to embrace Blockchain (along with other technologies e.g. IoT, Big Data), thus stimulating investment, enhance measurement, reporting and verification of climate change. An example of a global climate change initiative is the South Korean - based W-Foundation, which promotes global climate action projects, including compensation of greenhouse gas emissions, by using rewards in Cryptocurrencies. The W-Foundation is supported by the United Nations and is a Blockchain-based gaming App, which encourages people to take action to help reduce greenhouse gas emissions. Every month 20% of the most active users are rewarded with W-Green Pay, (WGP) tokens. 

Other examples are projects being organised by Plastic Bank, which use Blockchain-powered platforms and rewards in the format of Cryptocurrencies, that can be earned by collecting plastic waste. Its first initiative was in Haiti, and Plastic Bank now has similar projects in several other countries around the world. The tokens that are given away for collecting waste plastic can be used to buy fuel for cooking, clothes, food or education vouchers.

Blockchain technology could be used to provide the following benefits to stimulate finance thus helping climate change, according to a report from the Climate Ledger Initiative

  • Reduce bureaucracy and the number of intermediaries and, corresponding transaction costs 

  • Avoid fraud and financial data manipulation 

  • Ensure that climate finance reaches beneficiaries while reducing overheads

  • Improve the legitimacy of climate actions funded 

  • Avoid misreporting and backpedalling from governments and other entities

Blockchain technology could dramatically help to track what steps are being taken to tackle climate change. It could create a secure database available for all to see and assist our understanding of different private and public climate commitments and actions which are being implemented, and what their results could be. By being transparent and secure Blockchain technology could help make the monitoring of climate change more inclusive and sustainable, and so hopefully slow down the impact of global warming!

Environmental Services
A project to use Blockchain technology in the city of Naples, in Italy, has been under development since April 2018 and is nearing completion.

The details can be found in a Facebook post published by one of the members of the ‘Votazioni Napoli Blockchain’ team.

According to the post, the project aimed at creating an electronic voting system in symbiosis with blockchain technology, which, interestingly, excluded the option of online voting to try and prevent rigged votes.

In Virginia, in the USA, a company called FollowMyVote is looking to offer a Blockchain-powered voting package. Adam Ernest, CEO of FollowMyVote said, “There is a common misconception that voting cannot be done online in a secure way. However, the introduction of Blockchain technology is changing the conversation,” FollowMyVote has a system ensuring each vote is recorded only once, and this is permanently recorded onto a Blockchain. Another company working on creating a platform that uses Blockchain technology to replace and/or enhance the current voting methods used today is BitCongress. Both FollowMyVote and BitCongress were cited and written about in a paper produced by Royal Holloway College, part of the University of London, where it looked at the pros and cons of digital voting.

Utah County, in the USA, has confirmed that it will be offering a Blockchain-powered mobile option for those serving in the military, and away on active duty, enabling them to vote in Utah County’s upcoming elections. This initiative follows on from West Virginia and Colorado, both of which had also already introduced voting based on Blockchain technology.

Finding alternative ways to encourage people, especially the young, to vote in certain countries such as the UK and Hungary, is a challenge given their apathetic voting as shown below.  

Source: https://www.statista.com/chart/2117/young-people-who-have-voted-in-a-political-election/

On the other side of the world, a company called Infoaddicts, headed up by Dan Crane, has been using Blockchain technology for elections. It has also been using the technology for community engagement (with a housing association that was being redeveloped in New Zealand), and with a trade association in Australia to elect committee members and pass resolutions. However, it is the work that Infoaddicts has been doing in the corporate sector which is most interesting as, in August 2019, a large publicly quoted company (yet to be disclosed, for confidentiality reasons) is going to run its proxy voting for its Annual General Meeting (AGM) on a Blockchain-powered platform.

If we see more successful case studies of Blockchain technology being used at a corporate or government level, whether it be local or national, there could be a very rapid adoption by other significant institutions.

As the world increasingly becomes more digital, one cannot help feeling that there will be greater demand to be able to vote electronically using mobile devices. If this is the case, then holding votes in a secure and transparent database is surely going to be the default choice - hence the use of Blockchain technology!


Information Security
Information Technology
“Fake News” is a rising problem and, given the huge quantity data being posted on the internet on an hourly basis, organisations are turning to technology solutions as simple human monitoring is not able to cope.

Video footage is dominating the content on the internet, with more videos being posted in 30 days on the internet than the major US television channels have created in the last 30 years! Video content looks set to grow as, by 2021, every second, 17,000 hours of video content will be streamed across the internet, according to Cisco.

There are various initiatives that have been launched. The Wall Street Journal has a project to root out “deep fake news” ahead of the 2020 Presidential elections. The Washington Post in the USA has developed a “visual explainer of manipulated video” to highlight some of the recent fake news stories, including Mark Zuckerberg, Trump and Nancey Pelosi (speaker of the United States House of Representatives). The most recent project trying to address “fake news” is by The New York Times, and it is using Blockchain technology, creating a website called “News Provenance”. The aim is to see if it is possible, using a Blockchain-powered platform, to identify what is fake and what is real media news.

It is hoped that Blockchain technology, which holds data using military-grade cryptography and gives access to the data in a very transparent way, will enable there to be more trust and engagement between citizens and governments, shareholders and companies, and society as a whole. This will hopefully lead to fake news being less prevalent.

Information Security

4 Weeks Ago

In Digital Bytes in May 2019, there was an article about how various Premier League football clubs are introducing tokens as a way to engage with fans.

This idea is now being considered by Club Atlético Peñarol, in Uruguay, that could be used by fans to pay for tickets, as a type of loyalty scheme, as well as getting access to discounted club merchandise.

Also, in South America, two Brazilian football teams, Atlético-PR and Corinthians, have reportedly signed partnerships with Hong Kong-based crypto start-up Inoovi, which recently launched its “IVI” token, specifically for football clubs. Inoovi is looking at offering fans access to Virtual Reality and 360º streaming technology, so allowing fans an experience as if they were actually attending the match.

Meanwhile, in the USA, The Miami Dolphins football team have recently agreed to adopt Litecoin, which has a market capitalisation of over $6 billion, as its official cryptocurrency coin. Charlie Lee, Litecoin’s founder and managing director, said “This collaboration propels Litecoin in front of an audience of millions of people around the world at a time where adoption of cryptocurrencies continues to gain momentum and the ecosystem is able to support real-world use cases in ways previously not possible. We see this as a powerful way to raise awareness and educate people about Litecoin and cryptocurrencies on a tremendous scale.”

These examples of how Cryptocurrencies are being used globally by sporting clubs illustrate how sentiment is turning more positive to this New Asset class, and organisations are understanding how they can use them!


Digital Assets
The USA tech giant Oracle is working with the World Bee Project to develop a Blockchain-powered platform that will offer assurance on the sustainability of honey production.

This will also offer comfort to buyers that the honey is from sustainable sources as it will provide full transparency of the honey-supply chains. This is welcomed by those involved in buying and selling honey due to the recent concerns over fake honey in Australia, as it has been found that some honey has had sugar syrup from cane or corn added.

Fake honey has proved to be a real challenge in Australia, but an Israeli firm, called Security Matters, has developed a solution using both Blockchain technology and an innovative process that can track honey at the molecular level. Security Matters has created a commercial version of a technology that was developed at a nuclear research facility by the Israeli government. This innovation can introduce a permanent and irremovable marker, or code, to any matter be it gas, liquid, or solid, thus enabling a product to be tracked. To further enhance provenance, Security Matters will record all the details in a Blockchain. This will ensure that every step in the supply chain of the honey is visible and traceable.

Meanwhile, in Brazil, coffee farmers will soon have access to a Cryptocurrency called “coffeecoin”. According to a report on Bloomberg, coffeecoin is being launched by one of Brazil’s biggest arabica-coffee co-operatives, Minasul. The coffeecoin will enable coffee farmers to buy machinery and fertilizer as well as non-farm products like cars and food. 

Coffeecoin is part of Minasul’s strategy to encourage farmers to embrace new technology. As a result, they will be able to sell coffee beans via a mobile phone thus cutting out unnecessary intermediaries and, by using coffeecoins, allow farmers greater transparency of the price of coffee beans.

Coffee beans are the second most traded commodity globally after crude oil, with estimated market size of $100 billion, and this is due to grow by a further 4.7% in 2019! The fact that a Cryptocurrency is being introduced into Brazil (which is the world’s largest producer of coffee) will no doubt mean other major coffee-producing countries, like Vietnam and Columbia, will be looking with interest to see how successful coffeecoin will be in making the coffee market more efficient and how much it helps Brazilian farmers.

If coffeecoin is a success, other commodity producers will probably look to create their own version - “wheatcoin”, “corncoin”, “tobaccocoin”, etc. - which, provided there is sufficient liquidity for these coins, could this then offer an alternative way for commodity traders and investors to get exposure to these commodities?

Potentially, Cryptocurrencies (backed by commodities), which could trade 24/7, could form part of the asset allocation for a global digital currency. Facebook’s Libra is reportedly going to be linked to a selection of just fiat currencies. However, a global currency may prove to be more appealing to different jurisdictions if the digital currency was linked to a variety of different assets, with less reliance on the US$!


Ultrain is a new type of public Blockchain that has been developed in China, demonstrating that China continues to be a world leader in this technology.

The company has an impressive team with Rui Guo, the CEO, being a former technical director at Alibaba Security and also an employee of IBM. Other team members come also from Alibaba, like the co-founder, Ning Li, who was technical director of the Alipay Blockchain team, and Yufeng Shen from AliOS and Google.

Ultrain Blockchain has been designed to be able to handle high volumes of data created by Internet of Things (IoT), while also utilising automated decision-making and employing Smart Contracts via Artificial Intelligence (AI). It claims that it will be able to handle 200,000 Transactions Per Second (TPS), this compares to Ethereum’s 10-20 TPS.

Ultrain issued its token (UGAS) in April 2019, and at one stage it was worth over $31 million. However, despite the recent rally we have seen in the Cryptocurrencies in the last few months, Ultrain is only valued at around $18 million. 

Recently, the Chairman of Asia Pacific for Nasdaq visited Ultrain, which is being widely used in travel, luxury goods, supply chain, sharing economy, medical, retail and media entertainment. It already has a strong global presence with partnerships in over 16 countries. 

This is a Blockchain to keep an eye on, given its very impressive tech team and its relatively high processing speeds (TPS), which is what a number of larger organisations like Nasdaq will require as they integrate Blockchain technology into their own businesses, more and more.


Data Warehousing
The way Cryptocurrencies are treated by different governments varies depending on which jurisdiction you look at.

Facebook’s Libra Digital Currency would appear to have polarised those who are more receptive than others. In India and China, Libra has not had a positive reception, with both governments potentially banning Facebook’s Crypto from being used by their citizens.

There has been mixed news from the USA, with Trump tweeting “I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behaviour, including drug trade and other illegal activity....” Although also in the USA, the Federal Reserve Chairman, Jerome Powell, seemed to contradict Trump.  Powell likened Bitcoin to gold, as a speculative form of value. Powell did not say Bitcoin is like gold, but how some Bitcoin’s users currently treat Bitcoin as if it were! He was stating what his thoughts were. However, it does offer a degree of legitimacy to Bitcoin’s claim to be a digital replacement for gold!

However, in the USA, there is a draft bill to try and prevent large tech firms to launch their own Cryptocurrency. The situation in the US was aptly summarised in a recent article in The Cryptoeconomist: “The current exclusive administrators of monetary policy, whether direct or indirect, do not seem to tolerate competition very well, but their reaction so far still appears to be fragmented and disorganised. However, it cannot be excluded that at some point they will be able to organise themselves and develop effective reactionary measures”
The French are less positive on Libra, with French Finance Minister, Bruno Le Maire, saying during a radio interview that Facebook’s latest foray into Cryptocurrencies “must not happen.” However, the French have confirmed that they are looking to introduce legislation so that companies, which voluntarily abide by standards on capital requirements, consumer protection and pay tax in France, will then receive approval from the regulator. Authorities in France are encouraging the European Union to create European-wide standards for Cryptocurrencies. Indeed, the French are looking at unveiling their own regulations around custody and asset management of digital assets, digital exchanges and Cryptocurrencies. In Singapore, regulators have actively tried to engage and embrace Cryptocurrencies as its Payments Service Act specifically includes Cryptocurrencies and domestic as well as cross-border transfers. In the third-biggest economy in the world (Japan), the view of its regulator the Financial Services Agency (FSA), which oversees Crypto exchanges, is that under current regulations, stablecoins are not considered to be a Cryptocurrency. Indeed, we have already seen one of Japan’s biggest banks, Mizuho, earlier this year launch a stablecoin pegged to the Yen.

The UK seems to be taking a more accommodative approach, with the FCA having pioneered the highly successful “sandbox” which allows regulated companies to, in effect, experiment and trial products and services. The soon-to-be Ex-Chancellor of the Exchequer, Phillip Hammond, confirmed that in his opinion the British government would not stand in the way of Libra.

Turkey plans to be the First Country to Issue Central Bank Cryptocurrency, according to reports from Coinape. Currently,...

FundAdminChain (FAC) is looking to massively reduce the cost of administration in the asset management sector, thus making funds better value for their customers, which ought to improve fund performance at the same time.

FAC is using the open-source Blockchain platform, R3’s Corda, with which FAC would appear to have very close links. The new CEO of FAC, Brian McNulty, was a former managing director at R3. One of the advisors for FAC is the founder of R3, David Rutter, formerly CEO of the electronic broking division of ICAP- the world’s biggest inter-dealer broker. 

FAC, which will be based in London, claims the asset management industry is over $100 trillion. It is building a Blockchain-powered platform giving access to IFAs/distributors, transfer agents, custodians, and other intermediaries, who buy and sell units in a fund, to one common database which has military-grade security. FAC claims that for a fund manager who has £100 billion under management, its platform will save the fund manager over £30 million a year. The cost of registry, depositary, and transactions will be 0.5 basis points as opposed to the current standard 5 basis points, and FAC’s McNulty has confirmed that FAC is in discussion with 25 asset management firms ready to use its platform.

There are other companies also using Blockchain technology to reduce the costs for asset managers such as AMUN, Calstone, and Funds DLT. The potential savings of using Blockchain technology are massive, at $3.4 billion a year, according to Calstone which processes over $170 billion transactions a month.

FundsDLT was developed by Fundsquare, a subsidiary of the Luxembourg Stock Exchange, carried out its first test in 2017, and now boasts a number of fund managers using its platform including Credit Suisse, Banco Best, in Portugal, and AcomeA SGR, in Italy.

Lowering administration costs is very much a focus for fund managers as they continue to be pressurised by regulators to ensure that customers are “being treated fairly”, and because we are seeing new types of fund pricing being introduced:

zero-fee Exchange Traded Funds (ETF) 
low-cost funds with performance fees.

In 2019, in a report from Deloitte on the asset management sector, State Street Global Advisors’ and Investment Company Institute’s data estimated that, globally, ETFs could grow to $25 trillion by the end of 2025, up from $4.8 trillion in 2018! This growth is partly being driven by the advent of “zero-fee” ETFs, which means that asset managers have a massive incentive to crush costs as they are, in effect, subsidising some funds in order to attract additional assets under management. 

Deloitte, in its report, also highlighted Allianz Global Investors have been one of the early adopters of a performance-based fee model in the United Kingdom. Investors are charged a base fee of 20 basis points and an incentive fee of 20% of any performance over the fund’s stated benchmark.

Another way that Blockchain technology is being used in the asset management sector is the tokenisation of funds, which Deloitte summarised as: “Tokenisation allows the creation of a new financial system- one that is more democratic, more efficient and vaster than anything we have seen”

Tokenisation of an existing fund enables it to be more relevant and suitable for younger fund buyers i.e. generation X and millennials, who...

Asset Management
Investment Funds

A Month Ago

Blockstack has been given the green light from the Securities Exchange Commission (SEC), in America, to proceed with its Initial Coin Offerings (ICOs) under the Reg A+ regulations.

Reg A+ is as an alternative to an Initial Public Offering (IPOs), allowing businesses that have a shorter trading history a way to raise capital, with fewer disclosure requirements than a typical IPO. Many of these mini-IPOs have not performed well and some have been dogged by concerns over fraud, prompting both Nasdaq and the New York Stock Exchange (NSE) to raise their listing requirements for Reg A+ companies.

However, Blockstack is being heralded as the first approval from the SEC since it started it’s “crackdown” on Cryptocurrencies, in particular, ICOs, as many of the ICOs were perceived as being securities by the regulator. This is significant as it sets a precedent for other firms that wish to raise capital in the USA using Reg A+ regulations i.e. obtaining investments from non accredited investors – the general public. Blockstack has used the SEC approval, and in doing so, has raised $28 million via the sale of its digital token. Approval from the SEC did not come without a significant cost for Blockstack, as it spent $2 million to get approval for its ICO.

Blockstack’s achievement to gain permission from the SEC could prove to be an inflexion point for Cryptocurrencies, but investors will still need to be vigilant. However, are we now going to see other firms using this route to raise capital and get listed on Nasdaq or the NSE, as opposed to the various new Digital Asset exchanges currently being established?


Digital Assets
If Libra is widely used for payments, cross-border payments in particular, would it be able to function like money?

With the announcement of Libra, Facebook’s new Digital Currency, it was reported in The South China Morning Post that Wang Xin - a director of the People’s Bank of China (PBOC) – said recently at an academic conference hosted by Peking University’s Institute of Digital Finance “If [Libra] is widely used for payments, cross-border payments in particular, would it be able to function like money and accordingly have a large influence on monetary policy, financial stability and the international monetary system?” China was one of the first countries to look at Digital Currencies back in 2015. Indeed China has enjoyed huge success replacing cash as its economy goes digital. Wepay (owned by Tencent) recorded 460 billion annual transactions in 2018, while Alipay (owned by Alibaba) recorded 197.5 billion transactions.

The widespread use of Alipay has created Yu’e Bao (Chinese for secret treasure), the world’s largest money market fund at $150 billion in size! Merchants use Alibaba’s fully digital C2C and B2C platforms which connect consumers and businesses while providing logistics, payments, and credit facilities. This means that merchants often decide to leave, in effect, their cash flow in Alipay’s Yu’e Bao’s fund.

Possibly, given the fact that daily life for many Chinese people is conduction without using cash, the PBOC does not wish to lose control and see a foreign Digital Currency, especially one backed by non-Chinese fiat currencies such as Facebook, gain too much traction in the Chinese economy. The PBOC, after receiving approval from the State Council, has been working with market institutions on creating a central bank digital currency, according to Wang Xin. However, there have been no public announcements of progress.

Cai Weide, a Chinese professor of Blockchain and crypto, who has worked around the world said “China was “lagging behind and that they should not underestimate the importance of Libra, an invention that, is (one of the) major financial technology reforms in the past 500 years”. 

There is no guarantee that Libra’s Facebook will succeed, but the ‘genie is out of the bottle’ causing many organisations and governments to take Digital Assets more seriously, as they begin to understand the challenges and opportunities these Digital Assets offer!


Digital Assets
Yes, which is the fourth biggest bank in India, has just helped raise fresh capital for a natural resource company, called Vedanta Ltd, and it is the first time in Asia that Blockchain technology has been used to issue corporate paper (CP).

Arun Kumar, Group CFO, Vedanta Group, said, “Vedanta will benefit from the digitized and simplified workflow which shortens the laborious process running into hours to just a few minutes and complete transparency that this platform offers to all stakeholders.”

Usually not backed by any form of collateral, CP is an unsecured money market-instrument issued in the form of a promissory note. The issuance of CP in India is substantially down, partially due to a lack of confidence and transparency in the banking sector. India’s banks were exposed in the last few years to the issuing thousands of fraudulent “Letter of Understandings” (LoUs), which triggered a liquidity panic across the market. People started looking for transparent and secure platforms for the issuance of LoUs and CPs. It is thought that Blockchain technology could help provide a solution. Blockchain can assist in the issuance of CPs, helping to reduce the turnaround time for issuance and redemption, while also increasing transparency for all participants, so boosting confidence.

The business of providing energy is rapidly evolving as the sector has to adjust to legislation to reduce carbon by decentralising, and we are seeing a rise of micro-generation suppliers entering the market.

Increasingly, we are seeing new business models being developed to hold, manage, and process data by implementing technologies such as Machine Learning, Blockchain, and Artificial Intelligence. With ever more data and the roll-out of smart meters, the “Internet of Energy” is slowly becoming a reality, increasing the need for data management even further.
In 2017, Cryptocurrencies fuelled interest in Blockchain technology, with many start-ups and pilot projects being funded by Initial Coin Offerings (ICOs), which seemed to be being launched on an almost daily basis! In the energy sector alone, there were over 150 projects using Blockchain, according to SolarPlaza, which it highlighted in a ‘Comprehensive Guide of Companies involved in Blockchain & Energy’. 
If you look at Google Trends to see the interest in terms of searches since December 2017, “Blockchain Energy” has fallen from 100 to 26,  so clearly, the hype has gone. However, we are still seeing a number of projects in the energy sector being developed in different parts of the world.
In France, Grenoble Ecole de Management conducted a survey to ask 112 experts from industry, science, and public administration in France about the role of Blockchain technology in the French energy sector. It wanted to understand how these experts thought Blockchain would be used in the next five years. Peer-to-peer energy trading and electric vehicle charging and sharing were the most popular choices.
Digisol, based in France, is a project designed with an objective to enable the sharing of solar energy between two apartments within the same building.
Meanwhile, in Japan, an Australian company has been using Blockchain technology to enable solar initiatives and working to expand the renewable energy market in Japan. Perth-based Power Ledger has announced a partnership with Japan’s Sharing Energy Company. Power Ledger is providing a Blockchain-based tokenised energy trading platform while Sharing Energy is a provider of solar installations and equipment.
According to Solar Market Insight, the USA installed 2.7 gigawatts (GW) of solar PV capacity in the first quarter of 2019. This brings the total amount of solar power installed capacity to 67 GW, which is enough to power 12.7 million homes. Furthermore, it is estimated that PV installations will double in the next five years, which will assist in reducing the impact of power generation on climate change. However, it presents some real challenges for power management and the electricity grid in the USA. In California, for example, solar farms have previously had to shut down on sunny days because the grid in the state was unable to handle the amount of solar energy being generated.
In 2012, Germany experienced industrial companies sustaining damages due to the instability of its electricity grid due to unprecedented solar and wind fluctuations. In Australia, there were major state-wide blackouts in 2016 for the same reasons.
This week a company called LO3 successfully gained funding from Royal Dutch Shell and Japanese giant Sumitomo Corporation Group. LO3 is looking at using Blockchain technology to track energy supplies, allowing users to select which supplier they wish to select so making peer-to-peer...

Emerging Tech
The announcement that this week SK Group (South Korea’s largest telecoms company) is going to invest $10 million into ConsenSys will come as no surprise, as South Korea has for a while been rapidly digitising its economy.

ConsenSys is a Blockchain consulting business set up by Joseph Lubin, co-founder of Ethereum. Although this is not the first time these two companies have signed an agreement, in 2018 they agreed to collaborate on technical training to help developers who wished to use the Ethereum blockchain.

SK group has been active in the Blockchain sector, having agreed to support Ok CashBag which is a Korean mileage loyalty program that has enrolled approximately 38 million people - 50% of South Korea’s population! The intention is to use Cryptocurrencies as part of the incentivisation program that Ok CashBag operates.

LG, the second-largest manufacturer after Samsung, has been developing a Blockchain-powered platform to help improve the transparency of information about food that is supplied to school canteens across South Korea. The intention is to have details about the production, processing, distribution, purchase, and consumption of products that school canteens use. As all of this information will be recorded on a Blockchain, it will become available for authorities, schools, and parents to see what is being consumed and who the suppliers are.

Samsung, which has dominance over the insurance, real estate, electronics, and payment sector in Korea, has been allocating most of the resources of its crypto and Blockchain department by developing its Cryptocurrency ASIC mining hardware. This hardware is used by people wishing to mine Cryptocurrencies like Bitcoin.

Hyundai, which is Korea’s leading car manufacturer, has been building a Blockchain-powered platform to monitor information about second-hand cars, such as mileage, age and service history.

The above examples are just a snapshot of the different ways that Korean conglomerates are using Blockchain technology, and how this technology is impacting on the day to day lives of Koreans. The Korean population is ageing quickly, as families tend to be smaller, meaning that there will be fewer workers to support its elderly retired citizens. This is one of the reasons why Korea is embracing new technology to ensure that it is able to create high-value exports and to be able to use technology as opposed to heavy manufacturing, which is arguably where much of its economic success historically came from.

In recent years retailers have been focusing on loyalty reward schemes as a way to entice their customers and encourage them to buy more.

According to a study by the Harvard Business School, increasing your customer retention by just 5% can have outsized benefits on profits of up to 95%! However, low redemption rates are a big problem for providers of loyalty schemes, as it can result in a lack of engagement. Loyalty schemes are often not that popular with companies’ accounts’ departments as they can create a large, intangible liability on a company’s balance sheet. Loyalty scheme members that do not redeem their rewards are not actively engaged but, on the flip side, members who do redeem points typically spend more and have greater satisfaction with loyalty programs.

According to Mckinsey, US companies spend $50 billion a year on loyalty schemes alone, and if you get it right, loyalty programs can generate as much as 20% of a company’s profits! However, with increasing online shopping, and particularly shopping on mobile devices, consumer retail behaviour has been changing dramatically and reward schemes seem to have lost some of their appeal. Customers often cite the difficulty of being able to redeem rewards and the fact that they may have many different loyalty schemes with few of them operating together. This is where Blockchain technology is able to help bring multiple brands together, offering a wide range of products to consumers in order to redeem their reward points.

Blockchain technology allows a customer to store all points in a single wallet rather than trying to manage these multiple schemes. It would be possible to create a solution enabling all schemes to have compatible rules for acquiring and redeeming points from different loyalty schemes. It is thought that Facebook’s proposed Digital currency, Libra, could be a real boost for loyalty schemes, as it may allow some form of global standard to develop for smaller schemes to then adopt. One challenge Facebook has is that regulators do not like the collection of data from individuals without the user being compensated. However, if Facebook started to pay it’s 2.3 billion users in Libra for clicking on content, it could be a way to satisfy regulators and, in turn, create the world’s BIGGEST loyalty scheme overnight! 

Loyalty schemes using Blockchain technology and Smart Contracts can automate many of the transactions, making the running of loyalty schemes autonomous. Data can be stored in a highly secure manner using a Blockchain platform, enabling the privacy of users’ information, which will increase the trust of the brand among these users. Implementing joint loyalty schemes with other brands becomes easier because Smart Contracts can handle the transferring and converting of reward points while validating users and redeeming these points. Furthermore, the brands/ retailers are not giving up control or access to their most important asset – their customers’ data!


Loyalty Programs
Deutsche Bank finally revealed what the market had been expecting for years, that it needed to reduce its cost base and become leaner and fitter against a backdrop of anaemic global growth.

This has led to Deutsche Bank cutting 18,000 jobs.
In April 2019, Christine Lagarde, Managing Director of the International Monetary Fund, told CNBC that cryptocurrencies and financial technology developments are “clearly shaking” the banking system. She also added, “We do not want innovation that would shake the system so much that we would lose the stability that is needed.”
However, like the story of the emperor who wore no clothes, the real problem is DEBT at a personal, corporate, and national level - and it is a global problem. Furthermore, with historically low-interest rates, the options available to central banks to stimulate economic growth in the event of an external crisis are extremely limited.
To give you a feel for the truly horrific state of affairs of how utterly out of control the debt in most major countries is, look at the US Debt Clock which illustrates in “real-time” how debt mountains are piling up in a selection of the very biggest countries in the world.
While the national debt numbers are a cause for concern, what is truly alarming is the foreign debt - otherwise referred to as the external debt as a percentage of Gross Domestic Product (GDP). This is the ratio between the debt a country owes to non-resident creditors and its GDP. External debt is the part of a country’s total debt which was borrowed from foreign lenders and is, therefore, vulnerable to the confidence foreign investors have in the ability of another country to keep paying its own debts.
The amount of debt owed to foreigners as a % of GDP for different countries has to be of concern - France 201%, Germany 145%, Italy 136%, Japan 105%, USA 87% and Holland with a massive 457 %. Asking for your money back, or not lending an indebted nation any further capital, potentially is one of the levers that foreign investors have in the event of the escalation of trade wars, disputes, and disagreements.
As we have seen, geo-political uncertainties can also trigger an enormous financial crisis e.g. the financial crash in 2008, and was also demonstrated by the spike in the price of oil in the 1970’s and the Wall Street crash in 1929 (which led to the global depression in the 1930s and was arguably the precursor to World War II).
Deutsche Bank estimates that the impact of the U.S - China trade wars has already resulted in over USD 5 trillion from the financial market, and the two largest economies in the world have yet to agree on terms. Given the uncertainty in Europe over Brexit, Greece has just voted-in a government that is going to reverse the spending cuts and tax hikes that it agreed to, as part of its financial bailout. If this leads to Greece getting back into financial trouble, will the Germans agree to bail it out again? Meanwhile, Italy looks to be headed for a confrontation with the European Union as its national debt spirals out of control to over $2.3 trillion (which is the...

Global Debt
In a recent report from Blockstate, in Switzerland, it revealed that so far in 2019 there are over 120 planned or launched Security Tokens Offerings (STOs).

These STOs have already raised over $1 billion, compared to 2017, when there were only 5 STOs which raised $67.5 million. STOs are set to replace Initial Coin Offerings (ICOs) as a method to raise capital and, because they are subject to much greater regulation and typically backed by real assets such as bonds, equity, commodities, property, etc., they ought to perform in a much less volatile manner. Given the higher regulatory bar that a STO has to comply with, STOs are likely to be much more attractive to institutional investors and will be traded on regulated exchanges across the world. The Blockstate report highlights that five countries are dominating STOs - Estonia, Germany, Switzerland, UK, and USA - who between them, account for 75% of the STOs issued to date.

The infrastructure to offer more STOs also continues to develop, as seen by the announcement of the tie-up between Globacap and Archax this week, both of which are regulated by the FCA in the UK. Globacap is a platform that has been built to be able to issue Digital Assets/STOs and is similar to Tokeny (which has just had €5 million invested into it, as detailed above by Euronext) and also has a partnership with Archax to use its exchange.  In 2018, Globacap tokenised its own shares. Then, in 2019, the platform tokenised two UK-based companies, helping them to raise capital, with Globacap serving as the custodian. The purpose of the platform is to provide built-in compliance to properly transfer ownership from traditional assets to Digital Assets.

Archax is looking to officially launch its exchange, which is intended to trade Digital Assets later this year. It will be using Blockchain technology to reduce costs and offer more transparency, both of which Archax believes are of great interest to the institutional investors that it is targeting.

The first STO in Germany, which was authorised by BaFin, took place in March 2019, raising €3.5 million for a company called Bitbond, a business that offers loans to small companies. Therefore, there is plenty of evidence that not only are STOs gathering greater traction but as we see more infrastructure in place it will enable asset managers and banks to be further engaged with Digital Assets. We have already seen the likes of Goldman Sachs and Fidelity offering custody solutions and Avia providing STO insurance, so all that we really need is evidence of good liquidity for STOs. If we see attractive trading volumes in STOs, Digital Assets really will be able to give their analogue paper-based alternatives a real run for their money!


Security Token
Almost daily there is a report of traditional investors embracing Digital Assets.

The CEO of Goldman Sachs, when asked if his firm is looking to launch a Digital Currency like JP Morgan, replied “Assume that all major financial institutions around the world are looking at the potential of tokenisation, stablecoins, and frictionless payments” 

Meanwhile, Wall Street seasoned-investor Henry Kravis (co-founder of KKR), has been investing in Parifi Capital which has $190 billion under management, and claims he now spends most of his time researching Blockchain and Cryptocurrency opportunities. Billionaire Peter Theil (co-founder of PayPal) has, according to Blomberg, also been investing in Blockchain and Digital Assets.

The chart shows the volume being traded in Bitcoin, and as you can see, even though the price of Bitcoin is still over 40% below the 19,454 it reached in 17th December 2017, the volume of Bitcoins being traded has been strong over the last few months.

Fidelity, with over $2.5 trillion under management, carried out a survey of 441 of its institutional clients and found that 22% had already bought a Cryptocurrency, and 47% thought that this asset class had a place in the funds it manages.

One of the concerns that have held back institutions has been that many of those that use Cryptocurrencies, like Bitcoin, are carrying out illegal activities. Therefore, in the recent analysis from Chainalysis, Bitcoin transactions have fallen in 2012 from 7% to less than 1% in 2018.

BitMex, which is the world's’ largest Crypto platform, last week reported over $16 Billion of trades in a day, demonstrating the clear demand and interest in this new asset class. Meanwhile, the Chicago Mercantile Exchange (CME) announced Bitcoin futures hit $1.7 billion in notional value traded on June 26th, 2019. This represents a 30% increase from its previous high, reportedly as a result of institutional interest.

Possibly one of the most powerful endorsements recently came from Mark Carney, Governor at the Bank of England who said, “Distributed ledger tech (DLT) projects have the potential to ‘unlock’ billions of pounds in capital and liquidity— and that they might one day see closer cooperation with the central bank itself.”

Digital Assets
Blackrock, the biggest asset manager in the world, with over $6.28 trillion under management, is capitalised at $72.billion and, during the quarter ending 31st March 2019, generated $3.246 billion of revenue.

Facebook is valued at $550 billion and, as at March 2019, it had over 2.38 billion users and generated $15.08 billion of revenue. Blackrock only has $6.49 billion of net cash and short term investments, compared to Facebook’s $41.12 billion of cash and short terms investments. 

Despite Blackrock’s size and global reach - having offices in over 100 countries- it is still very dependent on the Americas, as they make up 62% of the firm’s funds under management. Compare this to Facebook, where it is estimated that more than half of the US population (169.5 million people) use Facebook out of its 2.3 billion user-base. It is obvious that Facebook not only has greater distribution i.e. more direct clients that Blackrock, but Facebook has far greater penetration in faster-growing markets outside of the USA. 

Why is all this important? Well, quite simply, if you have the ability – cash and the type of global distribution and brand that Facebook has  - then even the biggest asset manager in the world needs to pay attention since Facebook has announced it wishes to launch an Exchange Traded Fund (EFT). The Facebook ETF will be based on Libra, which is a Digital Asset backed by a basket of currencies. Therefore it is not completely dependent on the fortunes of the US$, which it would be if it were backed by an asset that is priced in US$ (like gold), which is what the Editor of Forbes magazine is calling for.

Libra’s acceptance has received a boost from the third biggest economy in the world, Japan, as the Japanese Financial Services agency believes that Libra is unlikely to be a Cryptocurrency. It has stated that Libra will more likely be categorised “as general money transactions and remittances.”

The massive profits that fund managers have generated for years and their annuity style income (they earn a fee based on the funds that they manage, so having much greater visibility of their revenue) has meant that asset managers enjoy a high PE ratio. Blackrock’s PE is currently 16.8, although this pales into insignificance compared to Facebook’s current 23.35, as investors believe that Facebook is able to grow its revenue and profits faster than many other public companies!

If Facebook focuses more of its attention to asset management, and Libra is just the start of a series of products and services Facebook is going to offer its users, then traditional managers need to pay very careful attention. Facebook has both the cash and the followers to become a substantial asset manager extremely quickly, and also has massive exposure in parts of the world which are growing fast, and where its younger citizens are already digitally engaged!


Asset Management
There has been considerable hype about how tokenising property will boost liquidity, as it will allow smaller investors access to this asset class which historically has been the preserve of institutions and the very wealthy.

Whether this is true or not, we will have to wait and see, but we are beginning to see different parts of the world tokenise property and slowly we are seeing more and more acceptance of the idea.

In France, a €6.5 million property in Boulogne (according to Forbes) is the first piece of Real Estate to be tokenised. The property was transferred to a joint stock company and held by 100 tokens, following which each token is then capable of being divided into 100,000 tokens. This means that, for as little as €6.50, one can own a fraction of the building. In the USA last year, a property in New York, valued at over $30 million, was tokenised and was touted, at the time, as being a way to finance property instead of relying on traditional banking arrangements.

Meanwhile, a company called ASA, based in Dubai, is looking to tokenise property in the UAE and Portugal. Also in Dubai, a company called Darico, has recently launched a service to help organisations tokenise assets, such as property, into tokens. 

So, one can see that a number of jurisdictions are looking at how property can be held in a different way and, while the promise of additional liquidity that tokenisation promises is yet to be seen, there are a number of other interesting benefits that tokenisation of assets offers. In essence, we are increasingly finding that economies are becoming more and more digital as this can offer greater transparency, stronger compliance monitoring and regulation, thus enabling engagement with people who are, themselves, more digitally savvy and reliant than previous generations.


Real Estate
MetLife, the US quoted insurance company with over 90 million customers worldwide, is piloting a project in Singapore called Lifechain.

The other firms involved with Lifechain are  Press Holdings and NUTC Income, which collectively are trying to simplify the process for relatives when someone dies. Once an obituary is placed in The Straits Times, these details are sent to LifeChain which forwards a consent form to the relatives and the deceased’s National Registration Identity Card is entered on to Lifechain. Lifechain will then search to see if the deceased had any valid life insurance policy in force. If a policy is found, then a claim will automatically be submitted so the claims process can commence.

It is estimated that, in the UK, there is over £2 billion of unclaimed life insurance, as relatives do not know that their loved ones had insurance policies, and the insurance companies are unaware that one of their insured clients has died. In the USA, according to the National Association of Insurance Commissioners, over 24,900 people in the just the last 2 years have tracked down life insurance policies and claimed over $360 million.

Insurance firms are looking at a variety of ways that Blockchain technology can be used. In the UK BlockClaim, which was developed at Imperial College in London, has recently secured £500,000 of funding for a platform that uses Blockchain technology for claim management, and AI to help as a fraud filter. The platform scans phone calls and emails to search for irregularities in a claim to try and identify fraud, while also managing the claims process more efficiently. The intention is that claims can be paid faster, while spurious claims can be queried and rejected. 

Also in the UK, Legal and General has announced that it is going to use Amazon’s blockchain expertise to launch estua-re, the first Pension Risk Transfer (PRT) reinsurance platform. The intention is that estua-re will handle every stage of the PRT reinsurance process, including pricing, claims handling, financial reporting and collateral and utilising data stored on a Blockchain. Using this new platform, it is believed that costs-savings can be generated, as well as creating much greater transparency. It will enable a secure record of information that cannot be altered, but easily retrieved by different parties about annuities - potentially in 50 years’ time. Legal & General Group's PRT transactions include the largest U.K. risk transfer to date, in 2018, when British Airways insured £4.4 billion in liabilities of its Airways Pension Scheme.

Blockchain technology is being used in the insurance sector more and more, as organisations understand how to utilise Blockchains’ secure, transparent, real-time characteristics. Increasingly, more transactions are being digitised and Blockchain technology enables the insurance companies to offer products that are more suitable and efficient in our digital economy.


International Crops Research Institute for the Semi-Arid Tropics (Icrisat) is exploring how it can use a Blockchain-powered platform called Elenev01, from India, in an effort to see how small Indian farmers can improve their productivity and revenue from selling the crops they are growing.

These improvements are hoped to be achieved by reducing the number of intermediaries involved,and allowing farmers to have more information about price of goods and connecting them with potential retailers, which is increasingly vital as merchants are being asked to prove the provenance of the goods they are selling. 

Blockchain technology is also being used to record and share farm-data as, by having one trusted secure ledger of information, it eliminates the challenges that are so common in the childhood game of “Chinese whispers”. Data and information on crop yields, soil conditions, moisture levels, etc., can easily be misinterpreted, as records are passed from the farm through a chain of different third parties so that, after three of four times, this information can easily be misunderstood from what the actual real data is saying. The Kansa State University has produced a report that offers a summary of some of the above challenges and how Blockchain technology is able to address them. Blockchain technology is able to help agricultural supply-chains to track the provenance of agricultural goods and, using sensors and Internet of Things (IoT), it is possible to monitor the conditions that goods have been kept in, from farm to retailer.

In Sri Lanka, Aon, the global insurance firm, has teamed up with Oxfam and Etherisc to offer insurance to 200 small farmers so they can protect themselves from damage to their crops due to extreme weather. Bojan Kolundzija, the country director of Oxfam in Sri Lanka has said “Allowing farmers to access the blockchain platform is an important milestone that is bringing an effective and affordable risk transfer mechanism to a large portion of the Sri Lanka economy.”

Blockchain technology is able to automate much of the traditional claims process, as the farmer will not need to submit a claim and the insurer will not need to incur the cost of sending claims’ adjusters to inspect the damage. Therefore, the cost of processing and handling the claim is faster, cheaper, and more trust is generated. Thus confidence is created to encourage smaller and often less-sophisticated farmers to protect their livelihoods.

There have been a number of interesting announcements around the use of Digital Assets with some interesting products and companies receiving the green light from regulators.

In Europe, we have seen a Luxembourg-based business called Argento emerge and, from the UK, The London Block Exchange has launched what it calls “the world’s first genuine bitcoin (BTC) bond”. This new bond being issued by LBX, which is regulated by the UK FCA, will enable institutional investors to buy a bond that has no exposure to fiat currencies. It will have its own International Securities Identification Number (ISIN) code, and its price will be on all Bloomberg terminals i.e. another example of Crypto being adopted and accessible to institutional managers.
In the UK, Token Market, which had been very active promoting Initial Coin Offerings, raising over £240 million for 30+ companies funded by 170,000 investors, has had approval from the FCA to issue its own Security Token Offering (STO). The Token Market STO goes live on 8th July 2019 and will pave the way for Token Market to launch further STOs - all of which will be subject to much greater regulatory scrutiny, compared to 5,597 ICOs that have been launched to date. Once again pioneers like Token Market, offering STOs in a regulated manner, will make it easier for institutions to be more engaged with this asset class  - not least because these Digital Assets will be backed by assets i.e. bonds, property, shares in companies. 
In February 2019, the London Stock Exchange invested into a UK-regulated company called Nivaura, which has now issued both digital bonds and equities using Blockchain technology. Euronext, a Dutch-based stock exchange that has over 1,300 companies listed with a market capitalisation of over €3.5 trillion, has invested €5 million into Tokeny, which is based in Luxemburg. This investment in Tokeny will compliment Euronext’s investment in Liquidshares, where it joined a consortium of 15 other organisations. Liquidshares is a post-trade Blockchain-powered solution, connecting asset managers’ and broker and custodians’ information systems, thus enabling them to more easily invest in and process listed and non-listed European SMEs.
However, the regulators are also showing some signs of caution, with the UK FCA announcing that it wanted to ban the sale of “Crypto derivatives” to retail customers. It is understandable that the FCA has taken this stance, as crypto derivatives are a highly-geared way in which to get exposure to, in this case, an unregulated asset – Cryptocurrencies. While many have generated high returns, Cryptocurrencies are themselves very volatile. Furthermore, the Cryptocurrencies which largely have been created via an ICO are typically not listed, nor traded, on regulated exchanges. However, as we see more STO’s being launched which can be admitted onto regulated exchanges, such as Token Market, it will be interesting to see if the FCA allows derivatives on these Digital Assets.

Meanwhile, in the USA, there has also been some caution and concerns being raised in particular about Facebook’s new Libra-Cryptocurrency, with the House of Democrats asking Facebook to halt developments until the regulators and congress have had the opportunity to review the potential risks. This is unlikely, as Libra has been established in Switzerland, which is...

Digital Assets