The Return of the QR code

Friday 10 May 2019
London, UK
By Sam Volkering

  • No food for fluffy
  • The train station of the past is the future
  • QR codes, payments and shorting the banks

Dear reader,

It’s late, very late, way later than you should be heading home from work. But you got stuck with a vital piece of work that absolutely had to get done.

That means you simply didn’t have time to do the shopping like you’d hoped to that evening. It means there’s no food in the fridge, no beers on ice. It also means that ‘Fluffy’, your cat, hasn’t been fed tonight.

You can probably go the night scavenging from the remnants of canned food in the cupboard. But Fluffy…no you simply couldn’t live with yourself if you didn’t feed Fluffy tonight. You’d be a bad kitty parent, and no one wants that.

The commute home is about 45 minutes on the train and then a short walk home from the station. So, it’s late, you’ve got no food, the cat is hungry and there aren’t many options left.

Except then you remember that you live in a high-tech world. Just because it’s late doesn’t mean technology can’t help you get things done, even when on the commute home from a late one at the office.

You get to the train station and there on the wall is what appears to be a selection of supermarket goods. Everything from microwave meals to milk, cereal…cat food!

Thankfully you know this isn’t your ordinary station advertising. This is a virtual supermarket, right there on the station platform.

While you’re waiting for your train home you open your supermarket app and scan a little QR code next to the item you want to order. You walk along the virtual aisle scanning the goods you need. You check your app and it’s listed all the shopping you want. You click ‘order’ and have a choice of different payment methods.

There’s also a ‘fast delivery’ option, which means your shopping will arrive at your doorstep within the hour. By the time you’re walking through the front door, you shopping will also be arriving.

Food for a late dinner. Food for Fluffy. Happy household.

The Markets

Overnight the Dow Jones Industrial Average closed down 138.97 points, or 0.54%.

The S&P 500 lost 8.70 points, or 0.30%.

In Europe, the Euro Stoxx 50 index finished down 66.55 points, or 1.95%.

Meanwhile, the FTSE 100 fell 0.87%, and Germany’s DAX lost 206.01 points, or 1.69%.

In Asian markets, Japan’s Nikkei 225 is down 203.14 points, or 0.95%. China’s CSI 300 is up 1.86%.

In Australia, the S&P/ASX 200 is up 8.00 points, or 0.13%.

On the commodities markets, West Texas Intermediate crude oil is US$61.74 per barrel. Brent crude is US$70.39 per barrel.

Turning to gold, the yellow metal is trading for US$1,286.60 (AU$1,841.19) per troy ounce. Silver is US$14.79 (AU$21.17) per troy ounce.

One bitcoin is worth US$6,269.82.

The Aussie dollar is worth 69.89 US cents.

The old is new again

This idea of a virtual supermarket might sound a little futuristic to you. The idea of scanning a bunch of little QR codes on a poster on the wall of a train station platform to order the groceries may be a little too unreal.

But this is exactly what has been possible in forward thinking places like Korea…for around the last eight years.

Whoa, whoa whoa…

Eight years?

You see, this kind of system is easy to implement. All you need is an application that can recognise unique QR codes, and then a payment gateway to an ordering and distribution hub.

You scan the product, pay for the product, deliver the product. Easy as pie.

The reason this is quite easy to do is because you can allocate a distinct, unique QR code to any product you want. Then a smartphone can easily read that QR code, recognise the data behind it and when fed into an application translate that into a product.

Of course, it all does boil down to the ability to utilise the QR code to its full potential. QR codes aren’t all that new. In fact, the first QR code was developed in 1994 by a subsidiary of Toyota.

That makes QR codes 25 years old this year. That’s almost as old as the World Wide Web!

The idea behind QR or ‘quick response’ codes was to enable fast decoding of information. Initially it was so the production line could quickly and easily track parts in the supply chain.

But now 25 years later QR codes are forming a crucial part of a whole new kind of chain…the blockchain. And while QR codes haven’t taken off in regions outside of Asia, that’s all set to change.

QR codes have taken off in Asia mainly due to their use within the world’s largest standalone application, WeChat. WeChat is a Chinese messaging, social network, and payments application with more than 1 billion monthly active users.

You probably have never seen or used WeChat before. And unless you’re in China, there’s a good chance you never will. But WeChat relies heavily on QR codes. They’re used for identification, links, even for payments.

But for some reason outside of China, outside of WeChat, QR code hasn’t seemed to get the traction it deserves. We think a big part of that is the delay of western countries to adopt mobile commerce at the same rate as China.

We also believe that QR codes probably hit western markets too soon. The technology wasn’t ready to present a compelling use case for their mass adoption. But again, that’s all set to change.

And outside of China we think you’re going to see a resurgence of QR codes in the world thanks to better mobile technology, better adoption and — importantly — a better use case scenario for it. Namely, we think that crypto markets are going to see the QR code, an ‘ancient’ technology, make a resurgence over the next few years.

You see, QR codes are great for quickly decoding information. That was their original purpose. And a cryptocurrency wallet is a pretty complex piece of information. But when its coded into a QR code it’s becomes much more user friendly.

If you want to send crypto as a payment for a good or service, rather than manually entering a whole bunch of numbers, letters, upper and lower case, you just scan a QR code and send a payment.

The use of QR codes in crypto is now as commonplace as sending a text message to someone. And therein also lies the potential for their western mass adoption.

Any social network, any forum, any messaging application has the potential to utilise QR codes linked to cryptocurrency wallets to enable payments across borders for next to no cost and instantaneously.

For example, if you’re a worker in the US and you have family in Indonesia, you may want to remit money to them. But to remit USD back to Indonesia you need to utilise an intermediary like Western Union or Union Pay. They then take a massive commission on exchange rates plus fees for the transfer. It’s also far from being instantaneous, it can take several working days to get to the end destination.

All of this eats away at the final value remitted back to Indonesia. But if that person can simply convert value into crypto, send a QR code via WhatsApp to family which they scan and then can instantly receive that crypto and convert back into the local currency.

The process is fast, cheap and the final value is almost exactly the figure that was intended to be remitted in the first place.

QR codes in global payments, crypto is one of the most novel applications of QR code technology. And we think finally they’ll start to be a normal everyday part of operating in the digital world.

We also think their potential in payments and the use of crypto in payments is going to eat away at the revenue models of massive global remittance companies like Western Union. And ultimately put pressure on the entire banking and payments system.

Our view is, quite simply, short the banks and go long crypto.

Regards,
Sam