In a recent press release, Rakuten, one of Japan’s biggest e-commerce companies, announced that its subsidiary, Rakuten Wallet will be partnering with the blockchain security firm, CipherTrace. This collaboration will help tighten the security and anti-money laundering (AML) measures of the anticipated e-commerce blockchain project – Rakuten Wallet; an upcoming cryptocurrency exchange.
Since most cryptocurrency based transactions are relatively anonymous, criminals have often taken advantage of this to commit all kinds of cyber-crimes. Back in February, Japan’s National Police Agency (NPA) reported that there were 7,096 cases of crypto-related suspicious transactions last year; this is a tenfold increase from the 669 cases reported in 2017.
With crypto-related crimes on the rise, Rakuten’s partnership with CipherTrace will help put an end to the problem of money laundering and hacks that occur on other exchanges, this will improve the reputation of cryptocurrencies and make them safer to use.
Speaking on this development, Head of the Risk Control Department at Rakuten Wallet, Yoshinao Kiyama quipped:
“We are happy to partner with CipherTrace in advance of our exchange launch. Regulatory compliance and anti-money laundering protections are of the utmost importance, and we believe CipherTrace will provide us the necessary tools needed to best support Rakuten Wallet.”
Consequences of E-Commerce Blockchain Projects
As one of the most prominent e-commerce companies in Japan and the 14th largest internet company in the world, Rakuten’s experimentation with its e-commerce blockchain project will undoubtedly have repercussions across the e-commerce industry. Blockchain technology and cryptocurrency integration could rapidly transform how the e-commerce marketplace operates, giving rise to groundbreaking developments, including:
– Innovative Payment Infrastructures: Most cryptocurrencies are decentralized means that they are free from the influence of geopolitics, or central authorities; their anonymous nature also helps protect the identity of transacting parties, and improved speeds allow users to complete financial transactions in minutes compared to fiat which may take days.
– Advanced Supply Chain Management: Many experts see blockchain as a potential solution to the current issues that plague supply chain management. Since supply chains are an integral aspect of e-commerce; blockchain integration could help provide more efficient ways of recordkeeping, inventory management, and product tracking. By creating a highly effective administrative process and eliminating intermediaries, blockchain integration will help reduce overall costs incurred by the system and curb fraud.
– Transparent Markets: Trust thrives in a decentralized environment where under distributed authority. This is one of the merits blockchain integration will bring to the e-commerce marketplace. Trust is needed, especially now when many big retailers are facing backlash over their opaqueness.
Cryptocurrencies Are Gaining Momentum
Rakuten is not only working with blockchain enhancements; the company is also directly experimenting with cryptocurrencies. This is something other e-commerce players have been cautious about due to the volatility of the cryptocurrency market, and regulatory uncertainty.
This apprehension was duly expressed by Alibaba’s founder Jack Ma when he famously stated that “Bitcoin is a bubble”. In this realm his apprehension stems from security and sustainability issues. However, despite the hesitation to adopt cryptocurrencies, many e-commerce companies have no problem utilizing blockchain technology, and Jack Ma’s Alibaba is not an exception.
Last month, Alibaba launched two blockchain subsidiaries in the Huangpu District of Shanghai. These companies are focused on developing solutions in areas like network and software development, financial and technology consultation, and big data services.
Rakuten intends to integrate digital currencies into its already existing payment infrastructure. They can contract out the work to any licensed crypto exchange in Japan. However, Rakuten decided to build its exchange from scratch. This move is strategic because Bitcoin and other cryptocurrencies are gaining tremendous momentum in Japan. In addition, the Japanese government officially recognizes cryptocurrencies.
The Rakuten Wallet will also provide an additional source of revenue for the company. They can charge fees on all transactions done on the exchange platform. With this approach, Rakuten could very well be sitting on a multi-billion dollar time bomb. The success of this model and the reputation of Rakuten could eventually attract many traditional users and newcomers; competitors may also come up with e-commerce blockchain projects of their own in order to keep up. This trickle-down effect could lead to a blockchain revolution in e-commerce.