Unlocking Rakuten’s vision for blockchain and Web3 technology

Blockchain and Web3 are more than just buzzwords; they are tangible solutions to some of the tech world’s toughest challenges, transforming digital interactions and transactions today. Fergal Downey, head of Rakuten Blockchain Lab, recently shared his insights on the future of Web3 with employees at Rakuten Crimson House Singapore, highlighting how these emerging technologies are set to drive innovation across digital services and empower new opportunities within the Rakuten ecosystem.

Rakuten Blockchain Lab: A hub of innovation

Since its inception in 2016 in Belfast, UK, Rakuten Blockchain Lab has been driving experimentation and implementation of technologies such as blockchain, cryptocurrencies and Web3.

“Web3 and blockchain are incredibly broad and complex fields, each with the potential to revolutionize various aspects of our digital lives,” Downey remarked, emphasizing the exciting opportunities they present for creating more secure, transparent and efficient systems.

“Our goal is to design and build solutions,” Downey stated, underlining the lab’s role in consulting Rakuten’s business units and partners to gain a competitive edge through innovative tech stacks.

Rakuten’s blockchain initiatives

To highlight the lab’s impressive record of driving innovation within the group, Downey noted several key projects, including an energy trading system for Rakuten Energy, the launch of Rakuten Wallet in 2019, and the Rakuten NFT marketplace in 2022. These initiatives showcase Rakuten’s commitment to leveraging blockchain technology to enhance services and create new opportunities for users.

Web3 wallets: The gateway to a secure digital identity

Building on these innovations, Web3 wallets play a crucial role in enabling users to manage their digital assets securely and efficiently.

“Your wallet is the Web3 snapshot version of you,” Downey explained. He highlighted the growing adoption of Web3 wallets, citing 10 million daily unique active wallets, a number that appears primed to continue expanding worldwide.

Rakuten Wallet, which offers spot and margin trading of crypto assets, is expanding into the Web3 space with new services launching in 2024. These services will feature integrated management of digital assets, including crypto assets and NFTs, through a smartphone app and seamless integration with Rakuten Wallet’s existing platform.

X to earn: A new paradigm

Rakuten’s robust point ecosystem traditionally rewards users for spending, but the new “X to earn” model expands user expectations of rewards to include various activities, fostering deeper customer engagement. A core belief at the Rakuten Blockchain Lab is that customers will increasingly earn, hold and transact with digital tokens representing diverse digital assets, enhancing the overall experience.

“Customers want more for their loyalty,” Downey explained. Activities such as physical exercise, learning and even simple interactions can now be incentivized with digital tokens. This model enhances customer engagement and offers more diverse and programmable rewards, enabling issuers to define specific usage rules through the token’s metadata, complementing more traditional loyalty systems.

For example, Rakuten’s blockchain-based campaigns through Rakuten Pay in Japan enable users to earn tokens for specific activities. During the recent Nagoya Festival, participants received tokens for spending at various stalls, which could be redeemed for exclusive rewards. This initiative allowed Rakuten Pay to deepen customer engagement by encouraging usage and offering more personalized redemption options.

Web3 gaming: The next frontier

Web3 gaming is revolutionizing the industry by integrating blockchain and token economies, allowing players to own and trade in-game assets. “Web3 gaming isn’t about new gameplay mechanics,” Downey explained. “It’s about integrating blockchain and token economies into games.”

Rakuten is partnering with Oasys, a gaming-focused blockchain network, as a validator – an entity that verifies and validates transactions within the blockchain. This collaboration highlights Rakuten Wallet’s goal to elevate and innovate the gaming experience within the Web3 landscape.

Enhancing Rakuten Wallet with Web3 capabilities

One of the most anticipated developments is the integration of Web3 capabilities into Rakuten Wallet this year. This enhancement will enable Rakuten members in Japan to seamlessly interact with decentralized applications (DApps) and fully participate in the global Web3 ecosystem. The integration will provide a unified experience for managing digital assets, including cryptocurrencies and NFTs.

“We’re offering the security and trust that comes with a fully non-custodial solution, combined with the benefits of a custodial solution,” Downey explained. With custodial wallets, like many traditional options, users may lose their assets if the company suffers a security breach. Conversely, a non-custodial wallet, like Rakuten’s, allows users to retain control of their private keys, mitigating risks.

Despite these advancements, Downey acknowledged that user adoption of blockchain and Web3 technologies is still in its early stages. “There’s still work to do,” he admitted, but expressed optimism about Rakuten’s role in driving adoption: “Given our involvement, user base, and focus on society and community, Rakuten has a role to play.”

A bright future for blockchain at Rakuten

Fergal Downey’s presentation at Rakuten Crimson House Singapore provided a comprehensive overview of the current state and future potential of blockchain and Web3 technologies. Rakuten Blockchain Lab is not only exploring these technologies but proactively integrating them into the company’s ecosystem, paving the way for innovative solutions and enhanced user experiences.

As Downey aptly put it, “There’s a huge amount of building going on.” With all this building, Rakuten is poised to unlock new opportunities and create a more interconnected digital ecosystem.