DigitalBits: The Blockchain For Brands. 2019 in Review

What is DigitalBits? The protocol layer blockchain is designed to support consumer digital assets. In particular, branded currencies that you can spend on rewards and offerings. That said, the company is planning to take the feature to a completely new level.  

In the last couple of years, notable brands such as Facebook and Walmart have entered the crypto/blockchain space. These companies are developing grand projects like Libra, among others.

With this, branded currencies look to play a significant role in developing the blockchain landscape. To that end, DigitalBits, which is aiming to create a platform for the provision of branded currencies, seems to be right on time.

Robust technology 

The DigitalBits blockchain uses a construct of the Federated Byzantine Agreement, a robust consensus mechanism. It allows for high scalability (+10 000 TPS) across a decentralized network. The protocol will support a wide variety of on-chain assets. Effectively, allowing for a number of branded currencies to co-exist.

The protocol seeks to optimize the backend infrastructure of existing consumer applications. Additionally, it will enhance connectivity for the company’s large and established ecosystems.

There is another important aspect here: it has to do with consumer behavior. The protocol will become part of existing user-friendly applications. This means that the consumers will start using blockchain without even knowing it. They won’t have to learn new processes and complicated technologies. Instead, they will enjoy the advantages of blockchain technology immediately.

It also ensures the existing communities on these apps stay connected. Thus reduces the switching costs.

This way, DigitalBits aims to facilitate the transition to blockchain technology and paves the way for its mass adoption.

What is a branded currency?

A branded currency may be defined as “a store of value and a medium of exchange, sponsored by a specific brand or merchant, in a physical and/or digital form and used for the functional purpose of being a coupon, loyalty point, gift card or stablecoin.”

For more information on branded currencies, click here.

The problem and solution

As per a study by Reuters, nearly 80% of Americans stand enrolled in at least one loyalty program. The majority of consumers choose programs that help them save money when buying groceries, clothes, and medical drugs. Yet, both brands and consumers face frictions.

Consumer friction

Participants of US-based loyalty programs generate points and rewards worth $50+ million annually. Around one-third of this sum, approximately $16.6 billion, is never used. Partially, because programs operate in silos, restricting the movement of value. In other words, consumers can’t spend that money on the offerings they want.

Additionally, consumers have complained about how difficult it is to redeem those points. They state that sometimes it takes too long to figure out the whole thing. As a result, they often abandon the process without spending the points.

Reuters also analyzed the behavior of consumers who turned down lucrative loyalty programs. Almost 40% of those mentioned the reason why. Some stated they were not the brand’s regular customers. At the same time, around 12% noted that they were concerned about the platform’s security.

Brand friction

D2C marketing is currently on the rise. Brands are facing fierce competition from new and agile players, some of which directly connect with the consumer. Consequently, they understand their needs better and are able to adjust quickly. This puts pressure on CPG brands (large brands that distribute through retail locations).

DigitalBits solution

DigitalBits seeks to address the challenges faced by both brands and consumers. Its blockchain platform facilitates the frictionless movement of assets within the ecosystem. The latter includes brands, merchants, consumers, and payment providers.

Brands will be able to launch their own unique branded currencies on-chain. In some cases, they may resemble stablecoins.

As a result, users will be able to manage their assets within existing applications. This will spur adoption and reduce friction.

Furthermore, brands will be able to directly connect with the consumer. That is because each transaction will deposit a value-backed coin into the respective consumer application. Effectively, this creates a closed-loop system between the brand and the consumer. In some cases, it even removes the retailer from the system.

Besides, brands can benefit from additional marketing intelligence and consumer insight. At the same time, the consumer gains access to customized promotions and actual monetary value. Unlike traditional point programs, this value can be spent anywhere, not just with the issuing brand.

The market & adoption

In 2017, approximately 3.8 billion unique loyalty program memberships (a 15% increase compared to 2015) were available within the United States alone. Over the years, this figure has been growing. Thus, the potential is tremendous.

That said, DigitalBits is taking a step-by-step approach. It understands the revolutionary nature of blockchain. However, it is also aware of the fact that the technology is still an intimidating subject for the average consumer. S/he doesn’t understand such terms as public and private keys, wallets and so on.

In order to change this, the consumers will have to start learning the process. They are forced to adopt new habits, understand and navigate unfamiliar interfaces. This is precisely where DigitalBits implements a novel approach. It facilitates adoption while solving real-world challenges.

Breaking the silos

DigitalBits is not planning to introduce only one type of branded currency. On the contrary, it will introduce a handful of them, once more brands choose to use DigitalBits. Thus the points and rewards will not work in silos.

To avoid the issue of silos, DigitalBits’ in-built decentralized exchange leverages multi-hop technology. This allows trades to be completed in up to 6 intermediary hops.  Thus reducing the need for direct markets. It also allows the movement of different assets when trading.

This feature will play a crucial role in making branded currencies liquid. Eventually, creating a flexible ecosystem, where consumers can spend the points they earned buying coffee and get a discount on an airline ticket.

The XDB token

DigitalBits’ uses a utility token, XDB. It performs a number of different functions. Such a diverse set positively impacts token velocity, a subject of growing importance within the blockchain industry.

1. Anti-Spam features

In order to authenticate new accounts and activate the send function, users need to stake a minimum of 10 XDB (transaction fee: 0.00001 XDB). This measure deters malicious entities that may look to clog the network.

To that end, the measure is curious as the platform will end up locking up large amounts of XDB supply, one more brands join it.

2. Bridge token

XDB can act as a bridge token to facilitate transfers and trades between asset pairings. Especially, the ones that may not have a large direct market.

Currently, in the development, the DigitalBits proposes a Node Operator Program. It will utilize XDB to incentivize entities to run instances of DigitalBits core.

2019 IN REVIEW

2019 proved to be a fulfilling year for DigitalBits. The progress spanned across technical developments, partnerships, and user growth.

Partnership milestones

iCash Rewards

iCash and iBank Digital announced that they are exploring the use of the DigitalBits blockchain for tokenizing the iCashRewards loyalty point. Platform users will be able to utilize their iCash loyalty token as payment on iBankEX within the iCash Ecosystem. They will benefit from reduced transaction and exchange fees.

Notably, Toronto and New-York based MLG Blockchain has decided to accept iCash Loyalty Cards as payment for their advisory services.  

Pundi X Global Network

Pundi X, a leading provider of blockchain-powered devices, announced recently the integration of XDB to its global ecosystem. This made the token usable within Pundi X’s powerful suite of financial products. Both users and merchants can use XDB on XPOS. The latter is the first blockchain-powered point-of-sale device. And the transactions can be carried out within the XWALLET app, and spent via XPASS cards and smartphones.

The company has shipped the XPOS device to over 30 countries. Eventually, 100 000 devices will be distributed across the global retail market by 2021.

This partnership has a tremendous long-term opportunity. Integration with Pundi X significantly enhances the utility of XDB. And for all assets that will reside on the DigitalBits network.

Looking forward

The initial set-up ranging from early partnership concepts, payment off-ramps, and community growth seems to be a strategic move to position DigitalBits as the Blockchain for Brands. That said, the project has set the foundation for the 2020 launch. That’s because it is already integrating major brands.

More official announcements are coming soon.

Organizational milestones

DigitalBits was successful in its fundraising efforts across 2018 and 2019.

A number of notable contributors spanning business, blockchain, and technology have supported DigitalBits, including:

• Richard Rofe – Arcadia Crypto Ventures
• Anthony Coscio – TokenStack Partners
• Bradley Rotter – LP at Pantera Capital
• Ari Paul – Blocktower Capital
• Matthew Roszak – Bloq
• James Lowry – Storj Token
• Lars Rensing – Ark Ecosystem

Exchange listings

Since August 2019, IDEX, Bilaxy, Hotbit, and Sistemkoin have all listed XDB. Thus, allowing for user growth and liquidity. With increasing industry recognition, it is likely that other exchange platforms will be adding support for XDB soon.

All in all, 2020 looks promising for DigitalBits. Q1 of 2020 is especially exciting with a major announcement in store. Its inclusive of partnerships focused on the development of major brands’ own branded currencies.

In Q2 and Q3, the team appears to be focusing on major technical developments.  This will begin with the official launch of the TNCS and Algorithmic Pool.

Altcoin Buzz will be covering the progress of DigitalBits over the course of 2020, so stay tuned for more updates.

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