Blockchain used to be all about finance, but not anymore. Today, new territories are being explored and companies are popping up across multiple sectors. O2O and marketing are also among them—areas in which Chinese companies have traditionally been fast innovators.

VeChain, a blockchain firm with offices in Shanghai, Singapore, and Paris, sees the technology as a “trust machine.” It assigns each item with a unique ID which is registered to VeChain’s blockchain allowing it to be authenticated and traced to its origin—an important task considering how many fake products there are on the Chinese market.

VeChain also builds a connection between consumers and products. The company ran an experiment with fashion brand Babyghost by embedding NFC-enabled chips which would tell the “story” of a particular garment or accessory when scanned with an app. It also distributed 50 limited edition items among which several had lucky serial numbers which would earn winning customers an introduction to the brand’s designer.

“It engraves the uniqueness of each product and digital ownership as a connection with the consumer as owner. The brand can establish one-on-one interaction with the consumer through the product,” VeChain’s Branding Manager Kate Liu told TechNode. Besides fashion, the company is currently working with luxury, food, wine and automobile brands.

Similar experiments are also being run by Chinese e-commerce giants Alibaba and JD, but authentication is not the only way this technology is changing the relationship between consumer and product—some are looking to make blockchain more addictive.

Beijing-based LoMoStar is building an O2O ecosystem by putting cryptocurrency in red envelopes, also known as “hongbao.” The company’s LoMoCoin (LMC) token can be exchanged for real value (either fiat money, bitcoin, or other cryptocurrencies) and it enables marketing and advertising in the LoMoStar ecosystem, according to its CEO, Xiong Lijian. It’s like the Pokémon Go app but with cryptocurrency gift cards.

Screenshot from LoMoStar YouTube video.

“Take this as an example: a cafe releases LMC red packets on the map, attracting users’ attention, even drawing them close to the physical location of the cafe. At the same time, it can also send coupons, discount cards, and other services,” Xiong explains to TechNode. “On the other end, users open the app and find red envelopes issued by a nearby cafe. They walk into the cafe and get LMC in a red envelope. If the coffee shop itself and the sales are really attractive, users may transform consumer behavior immediately.”

LoMoStar is also a social platform. Users automatically follow the business from which they received red envelopes and businesses can reach out to them and build communities. The advertising effect is easier to measure and evaluate.

“It’s kind of like what Ether is to the Ethereum ecosystem. Ether enables smart contracts for users. Meanwhile, LMC promotes and smooths traffic conversion from users to businesses,” said Xiong.

LoMoStar also plans to connect its blockchain tech with the Internet of Things (IoT) with the help of iBeacon, Bluetooth devices developed by iPhone which enable smartphones and other devices to perform certain actions when they get close to them. This option, however, is still in early phases of development.

Cryptocurrency is also far from mainstream and it remains to be seen if it will become a widely accepted marketing tool. LoMoCoin now has more than 300,000 users and has signed up several hundred businesses in China.

“Just like Bitcoin, it’s a meaningful social test,” said Xiong. “Although blockchain technology is not mature enough we still believe that it can change many industries, and cryptocurrencies will be applied into more industries under the legal compliance framework.”

Both LoMoStar and VeChain are building their presence on the international market. For VeChain, this brings opportunities to bring foreign products to China’s huge market, for LoMoCoin it means avoiding the conundrum caused by China’s cryptocurrency trading and ICO ban. Nevertheless, blockchain is still very much a hot item in the country: At the end of last year, blockchain technology was written directly into the national “13th Five-Year plan.” Xiong noted that LoMoStar is planning a comeback soon and preparing more interesting projects.

Masha Borak

Masha Borak is a technology reporter based in Beijing. Write to her at masha.borak [at] Pitches with the word "disruptive" will be ignored. Read a good book - learn some more adjectives.

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