How to explain the significance of blockchain? It’s the technology with which bitcoin was built, but its potential extends beyond virtual currency into all aspects of fintech. Some have said it could do to fintech what TCP/IP did for the internet (which is a lot). Others talk in more Utopian terms. Richard Branson says it has “great potential to change the world in an incredibly positive way.”
So it’s clearly important. But what is it, and what’s it got to do with Rakuten? Blockchain is a permanent distributed ledger of transactions that is hosted across a network of computers. Additions to the ledger can be made by anyone, but only in a way that those additions are recorded and visible. It’s therefore a secure and efficient way of recording transactions of just about any kind of asset. In addition to applications in fintech, experiments are underway to apply it to everything from e-commerce and identity verification to the diamond trade and second-hand luxury goods.
Rakuten first flagged its interest in blockchain back in 2014, when it invested in Bitnet Technologies, operators of a digital payments platform powered by blockchain. On August 22, Rakuten takes that interest to the next level when it opens the Rakuten Blockchain Lab, in Belfast, UK.
The Lab’s function will be specifically to explore applications for blockchain in e-commerce and fintech, and it will be headed up by Chief Technology Officer Stephen McNamara and Vice President of Engineering Fergal Downey, both of whom will join Rakuten from Bitnet.
McNamara is clearly excited about synergy between blockchain research and Rakuten’s many existing fintech interests. “Given Rakuten’s reach into banking, payments and insurance, as well as a host of digital services, no one can doubt Rakuten’s position as a fintech leader. We’re looking forward to exploring and creating many new interesting applications of blockchain technology for Rakuten and their customers,” he said.
Meanwhile, Downey hailed the significance of Rakuten’s decision to open the Lab in Belfast. “There is a very strong engineering community here in Belfast and the lab will contribute to and benefit from the ferment of creative energy that exists here,” he said.
Rakuten’s enthusiasm for the new technology is also beyond doubt. “It’s quite possible that in the near future blockchain will revolutionize the way that financial and e-commerce transactions are conducted,” commented Yasufumi Hirai, Group Executive Vice President, CIO, CISO and head of the Technology Division, Rakuten, Inc. “We want to not only prepare for that change, but take a leading role in making it happen.”
Just where that role will take the company is yet to be seen. Fernando Paulo, Executive Officer, Rakuten, Inc., who leads the Ecosystem Services Group and is responsible for the Lab’s launch, explains that no specific applications are planned yet. “The idea is to use the lab to experiment, and see what is possible,” he explained.
The establishment of the new Lab followed Rakuten’s acquisition of IP assets from Bitnet. Oskar Miel, Managing Partner of Rakuten FinTech Fund, who led Rakuten’s initial minority investment in Bitnet in 2014, commented that “Rakuten is already known for its leadership position in fintech in Japan and the launch of the new Rakuten Blockchain Lab represents a fantastic opportunity for us to quickly grow our in-house blockchain capabilities.”