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Circular Economy: principles, benefits, and solutions

The main goal of a circular economy model is to produce goods and services in a sustainable manner by reducing the consumption and waste of resources (raw materials, water, energy). It contradicts with the traditional linear economy, that of a ‘take-make-consume-waste’.

According to many, a circular economy requires a local production capacity. It is a process that depends on fundamental changes to the existing production and consumption systems. According to the World Economic Forum, the world’s economy is only 9% circular. To become more efficient and preserve our natural resources, we must open our eyes and begin to think circular rather than linear.

Today, we are going to focus on the Circular Economy model, its principles, benefits, and existing solutions implemented to tackle the traditional linear economy.

The principles of the Circular Economy

In this model, every single product is manufactured and designed for future reuse, and ideally, at the end of its lifetime, it becomes a potential resource. Within this model, each stage in the economic cycle is modified, from producing goods and services to using them. It is an environment where products are built to last, with less energy and resources consumed. Please find below the three main principles of the Circular Economy.

1.       Design out waste and pollution

What if waste and pollution were never created in the first place? In a circular model, product waste is eliminated straight from the design stage, meaning that goods can be used and reused longer, fixed more easily, and finally recycled to create additional industrial inputs.

2.       Keep products and materials in use

A circular economy promotes activities where value in terms of energy, labor, and material is preserved. With the available technologies and innovative solutions, products should be designed for durability, reuse, remanufacturing, and recycling. This leads to a closed-loop production system, where components are circulating the economy. It takes advantage of bio-based materials, allowing businesses to reuse them for several products.

3.         Regenerate natural systems

The process of extracting and processing natural resources causes 90% of global biodiversity loss and water stress while harming the global climate. The World Economic Forum predicts that by 2060, the current resource use of 190 billion tones will double and exceed our planetary boundaries. Therefore, changes in business and policy models must occur.

A circular economy is designed to eliminate the use of non-renewable resources, preserving, and focusing on renewable ones. This way, valuable nutrients are returned to the soil and renewable energy is used rather than fossil fuels.

Economic benefits of a Circular Economy

At a macro level, circularity has many economic advantages. A surplus of $2 trillion a year could result from more effective resource management. This is due to a substantial decrease in the cost of raw materials.

  • Considerable resource savings

Even if more and more people become aware of the circular economy model, the extraction and prices of the main raw materials are still on the rise. In 2019, only 9% of all raw materials were recycled. In theory, a circular economy should recycle 100% of these materials, without new virgin raw materials required. However, it is predicted that this scenario will take quite a long time to be accomplished. Innovative methods should be applied to completely recycle materials that are utilized in production.

  • Economic growth

In this model, economic growth is not dependent on the scarcity of raw materials. It is predicted that a shift towards the circular economy is set to promote economic growth. Since new raw materials are not extracted anymore, the development, maintenance, and production of circular products will require a specialized workforce, increasing the number of jobs. With less demand for specialized jobs in the extraction and processing of raw materials, specialized employees will have to adjust to a new work environment.

  • Employment opportunities

As previously mentioned, the need to extract raw materials is not fundamental within a circular model. For this reason, such an economy requires a specialized workforce with a new set of relevant skills and aptitudes. Therefore, workers that extract and process raw materials might have to adapt and get familiar with new procedures and environments. The existing studies anticipate a modest, but positive impact of Circular Economy on employment volume.

  • A good reason to innovate

Change comes with a desire to innovate. Thinking circular rather than linear already motivates innovators to optimize the entire system. This will form new collaborations between different parties involved, such as recyclers, producers, and designers. They can add more knowledge and great value in terms of sustainable innovations.

Circular Economy solutions

  • CleanCup

Headquartered in Lyon, France, CleanCup is a solution designed to eliminate the use of disposable cups. They promote it as a turnkey solution meant to distribute, collect, and automatically wash reusable cups. Places such as campuses, companies, and communities are prioritized since those tend to generate a lot of waste.

Globally, it was established that people use 500 billion plastic cups and 16 billion coffee cups coated in paper. In theory, it is possible to recycle disposable cups, but the manufacturing process tends to be somewhat difficult, leading to very few of them being recycled. With CleanCup, one can get a clean and empty cup for a 1€ deposit. At any point in time, the user simply puts the cup back inside the machine and gets back the deposit. As soon as a cup is returned, the machine automatically washes it to be reused.

  • Positive Energy Ltd.

This is a matchmaking platform between investors and small to mid-scale renewable energy facilities. Its purpose is to allow investors to easily find projects that require renewable energy financing.  This blockchain-based asset financing, trading, and management platform digitalize the transaction workflow, making renewable energy investments fast, liquid, and transparent for all parties involved.

This initiative aims to boost renewable energy investments. By 2030, it could save around 20 million tons of CO2 per year. It is widely accessible and profitable for shareholders, with return on investment.

  • RePack

This solution replaces the single-use delivery packages in e-commerce, providing reusable, and returnable delivery packaging. It is cost-efficient and environmentally friendly, with 78% less CO2 created and 92% less landfill waste, compared to traditional packaging.

Users can simply return these packages in letter-size or to any location using RePack packaging. Customers are incentivized to return used boxes through different vouchers to be redeemed at any participating RePack store. This packaging can be used at least 20 times.

Oveit as a possible solution to track local recycling practices

Not long ago, we concluded that our technology can be utilized in different contexts. Among these, we feel that Oveit can be looked at as a viable solution to track and incentivize communities to recycle responsibly.

By using NFC wristbands or cards, community members can be rewarded and incentivized to recycle waste. It could add up gamification elements to an important cause. Participating locations can simply use any Android NFC enabled device to scan cards or wristbands. Based on the expected outcome, members can easily be rewarded in real-time. For instance, the economy owner might reward members that recycle at least three times per week. To record data, NFC readers could be placed nearby waste containers. Members that recycle enough are automatically rewarded and all that information is stored on their digital accounts (NFC wristband or card).

The evolution of money: from barter to digital currencies

Money, as we use it today, is the result of a long process. Its physical characteristics are worthless without the value that people place on it. We use it as a medium of exchange, allowing us to trade goods and services.

Standard money did not always exist and in its early ages, people utilized other forms to exchange goods and services. With the changing requirements of economies and the evolution of technology, money and payments have changed considerably. As we speak, credit card transactions and digital currencies enable people to purchase goods and services virtually, in a matter of seconds. On top of that, there are currently over 150 currencies worldwide.

How did we get here? Let’s find out more about the evolution of money, how it was used in its early ages, and what brought us where we are.

The Barter economy

When barter was used as an exchange medium, the needs of people were very limited. The barter system has been used for centuries and it dates to 6000 BC.  This trading method doesn’t involve money and it relies solely on exchanging goods and services for other services and goods in return.

Bartering was common among Mesopotamia tribes and it was later adopted by Phoenicians. Belongings were exchanged for munition, herbs, food, and tea. Salt was considered a common exchange item and Roman soldiers wanted it so much that their salaries were paid with it. Europeans traveled around the world to barter crafted items and furs in exchange for silks and perfumes. Livestock was as well demanded in bartering. If someone owned cows and sheep, it meant they were wealthy.

Commodity Money

Similar to barter, commodity money worked under the same principle, with the only difference that societies placed different values on specific items. Let’s assume that we have two farmers, X and Y. X is growing olives and Y is growing potatoes. Farmer X needs potatoes and offers farmer Y olives in exchange, but Y doesn’t need olives at all. As a result, Y refuses the offer and the exchange fails. This was the main challenge of barter. It was quite hard to agree on two goods to be exchanged.

Therefore, common things like shells, salt, and pebbles (small stones) were looked at as commodities for exchange. This enabled farmer X to sell his olives in exchange for shells (as money), and with those shells, he could simply buy potatoes from farmer Y. Commodity money brought the birth of money in ancient times and economies started to develop because of that.

Metallic Money (coins)

As people were using commodity money more often, they identified new problems. This trading medium had three major common defects – perishability, indivisibility, and heterogeneity. They couldn’t be kept for a long time, so people couldn’t repay their loans or save it for other needs in the future. Besides that, commodities were not the same in every market, and trading with other regions was very difficult.

King Alyattes of Lydia became the first to mint official currency in 600 B.C. This currency was represented by coins, made of silver and gold. Coins were stamped with pictures to avoid counterfeiting. Each coin had a different value which made it easier for people to estimate the cost of items. As a result, this adopted currency helped Lydia’s both internal and external trade, classifying it as one of the richest empires in Asia Minor. If you’ve heard the saying “as rich as Croesus”, it refers back to the last Lydian King that issued the first gold coin. Soon after that, countries started to mint their own coins with different values.

Paper money or Representative money

Paper currency was first developed in Tang dynasty China during the 7th century, but true paper money only appeared during the Song dynasty, in the 11th century. Marco Polo was the one that introduced the concept of paper money in Europe, during the 13th century. Back then, paper money was used to buy goods and it operated in many ways just like currency nowadays. The main difference was that currency was issued by banks and private institutions. Now, the government is responsible for issuing money in almost all countries.

Representative money (paper money) was made and is currently made of materials with little to no value. The real value was backed by a bank’s promise to exchange that piece of paper for various goods, such as gold or silver.

Credit Money

As money became the main standard and societies started to realize that living a good life is dictated by a piece of paper, life was not safe anymore. Paper money had no protection from theft and rich people were treated as targets by thieves. In response, a banking system was created. This model enabled people to save their earnings into a safe savings account and allocate loans for people in need. However, in its early stage, the biggest issue was that moneylenders were exploiting poor people. As a result, banks took the responsibility to provide loans with some conditions.

Electronic Money or ‘Plastic’ Money

Electronic money is what we know as credit or debit cards. It is a way to store currency electronically and one can withdraw money by using an ATM. During the 1920s, individual firms in the US started to issue credit cards for customers. Purchases were only available internally at company locations. Nowadays, this model is used by businesses such as Starbucks. Customers receive a loyalty card on which they can add money and pay with it at any Starbucks location. They receive points with every purchase. With Oveit, economy owners can create a closed-loop environment, which works under the same principle. It is up to the economy owner to decide which vendors are part of it and members can easily be rewarded based on purchase behavior.

In 1950, Diner’s Club introduced the first universal credit card, which could be used within different locations. In 1958, American Express revolutionized the use of credit cards. It was the first credit card to be accepted internationally. In its early stages, these cards were made of paper, with the account number and customer’s name typed. After one year, in 1959, American Express began to issue plastic cards, an industry first.

In our days, credit cards can be stored on mobile devices. Services like Apple Pay and Samsung Pay enable customers to pay by simply tapping their phones to a point-of-sale terminal. It replaces the need to carry a physical card in your wallet.

Cryptocurrencies

In 2008, Bitcoin was the first cryptocurrency to appear. Satoshi Nakamoto, whose true identity is still a mystery, was the one that mined the first block of the Bitcoin network, piloting the blockchain technology. The most important differentiator of crypto payments is that transactions are decentralized, without a governing body. Transactions are stored in individual blocks and are immutable. Cryptocurrencies are not tangible, and they don’t possess a physical value. Businesses begin to realize that using crypto payments results in lower transaction fees. Without intermediaries involved in the process, traditional credit card fees are not an expense anymore. To give you an understanding of the evolution of crypto, as we speak, there are 5000 cryptocurrencies out there.

Final thoughts

Quite a long journey, isn’t it? The evolution of money indicates technological and economic development. From exchanging cows and chickens to digital currencies, humankind never fails to adapt and find innovative alternatives.

At Oveit, we are truly impressed by how money evolved over time. Our closed-loop payment solution wouldn’t be in place without this continuous development and eagerness to dream big. We want to focus more on local economies and their overall well-being, providing them with our Economy as a Service solution.

How can blockchain technology improve the travel and tourism industry?

According to robust data, the travel and tourism industry is the second-fastest-growing sector in the world, after manufacturing. The World Travel and Tourism Council (WTTC) concluded that in 2018, travel and tourism increased by 3.9%, more than the global GDP growth of 3.2%. As we speak, the Coronavirus outbreak generates a degree of uncertainty related to how and when the travel and tourism sector will get back to normal. However, we consider that destinations around the world begin to accept this delicate situation with a number of precautionary measures in place. Besides recommended measures coming from local authorities, such as social distancing and proper hygiene, we believe that travel and tourism organizations have the proper resources to integrate innovative technologies, such as blockchain and cryptocurrencies.

If used accordingly, blockchain and cryptocurrencies can contribute to the comfort and safety of a traveler’s journey. It can provide a new experience in terms of booking travel tickets and hotel rooms, removing intermediaries out of the way. For the purpose of this article, we’re going to explore different applications of blockchain technology in the travel and tourism industry.

First, what is blockchain technology exactly?

Even if it might sound confusing at first, it is actually pretty straight-forward to understand the basics of it. It can be looked at as a list of public records, also known as public ledger, with transactions between parties listed or stored in a transparent manner. Individual entries are encrypted and grouped into blocks that form a chain, therefore leading to the blockchain terminology.

The main characteristic and differentiator of the blockchain technology is that data is decentralized, meaning that it becomes available throughout the different nodes or computers part of the network. Copies of the compiled information are available on individual devices that are part of the network. In other words, the information stored is shared across a peer-to-peer (P2P) network. It is completely transparent, and it cannot be altered without the permission of the entire network and without modifying all subsequent blocks.

Applications of blockchain in Travel and Tourism

Recently, blockchain has gained a lot of interest in the travel and tourism industry. An increasing number of major companies have incorporated this technology in their list of offerings. Below, there are different ways in which blockchain technology might be used in the travel and tourism sector.

  • Lower transaction costs

The implication of intermediaries has inevitably been one key issue in the travel and tourism sector. These third parties involved in the booking process of hotels, airlines and other travel service suppliers result in additional fees for the end-user (tourist or traveler). TripAdvisor is an example of a third party that charges additional fees for their available services.

With the employment of blockchain technology, the long chain of intermediaries that results in delays and financial losses can be simplified. It is an ideal way to close the “gaps” made by different payment providers. At the moment, travel agents wait on average 60 days to earn their commission after a client checks out, because of the many parties involved in the payment cycle. Commission reconciliation can be a real hustle among travel agents. Travelport, a B2C travel service provider decided to adopt IBM’s Hyperledger Fabric to assure commissions paid to travel agencies. The main purpose of this partnership is to decrease the number of third parties involved in the payment cycle, by relying on blockchain in the process of a booking.

  • Trucking luggage

I bet that some of you that are reading this post have experienced issues with claiming a luggage, especially when dealing with international destinations. It’s definitely not a good start for a holiday or business trip. A traveler’s baggage is subject to several automated and manual processes, before being picked up at the final destination. This luggage itinerary is stored in a non-standardized form by the parties involved and these parties include airlines personnel, transportation companies, airports, and local authorities.

Blockchain, with its online-record keeping system stored on a peer-to-peer network can be a game changer and step up the way in which airlines tackle the problems of lost luggage. This way, both customers and airlines can track a luggage in all stages of its transfer process, offering full transparency to the process. Therefore, if a bag is mistakenly left behind, airlines can easily access its entire journey and identify the exact point where it went missing and the reason for that.

Back in 2017, Air New Zealand partnered up with Winding Tree, a decentralized Swiss travel start-up. The main purpose of this collaboration was to explore applications of blockchain technology in the airline’s business. Their mission was to improve  security and efficiency of services, such as baggage tracking and ticket booking.

  • Traveller’s identification

As blockchain does not store information on a central database, the customer identification process can save up a considerable amount of time by using this technology. It can even replace passports and become an industry standard for storing such personal information.

The World Economic Forum along the governments of Canada and the Netherlands launched a pilot program for paperless journeys between the two countries. This new project, entitled Known Traveller Digital Identity (KTDI), is the only solution to use digital identity for international trips, giving the traveler’s full control over how their own data is used. Personal data that is usually stored on a passport’s chip is replaced by encrypted data stored in a traveler’s digital wallet and it becomes available on mobile devices. Compared to old-fashioned ID systems that are operated by centralized authorities, KTDI is based on blockchain technology.

  • Secure and traceable transactions with Cryptocurrencies

An increasing number of companies in the travel and tourism sector begin to realize that accepting cryptocurrencies as a payment alternative creates a seamless purchase behavior. The major benefit that cryptocurrencies brings with it is that it eliminates traditional payment methods that rely on third-party payment apps. This way, transactions can occur between two entities directly involved. Payments based on blockchain technology will also decrease the time needed for completion of payments, resulting in faster transaction speed and more sales.

Another benefit is that cryptocurrencies replace the need of exchanging money into the local currency. It eliminates currency exchange commissions and users can take advantage of the same value no matter where they are. Forget about spending part of your allocated budget on bank commissions.

Given the various benefits of accepting crypto payments in travel and tourism, there are still some gaps that need to be addressed. It is not enough for a single entity to accept cryptocurrencies. For example, a travel agency that accepts crypto payments will still have to exchange those to Fiat money to contract services from providers that do not accept digital currencies. It is a matter of time until other parties involved will realize the benefits it brings with it.

Final thoughts

There is no doubt that blockchain technology has enough features and resources to revolutionize the travel and tourism industry. However, this innovative technology is still in the early stages of its life. To take advantage of its unique features, such as personal identification, governments and other authorities should have a good understanding of the benefits that it brings to the table. Anyway, many organizations from the travel and tourism industry begin to find out its applicability and that’s obviously a good sign for those involved in it.

How can Live Stream Shopping help brands and influencers?

Live-streamed content is captivating young audiences more than ever. Twitch, the world’s leading live streaming platform for gamers has proved there is a big market for watching other people play video games in real-time. On the other side, influencers that partner up with brands to promote different products is nothing new. However, presenting those products within a live stream and enabling viewers to purchase featured items is a real success, especially in Asian countries. This is where Live Stream Shopping and influencers can do the magic.

In this article, we’re going to place the focus on influencers and brands in a Live Stream Shopping context. This partnership can revolutionize the way we shop and transform it into a social experience.

Live Stream Shopping for brands and influencers

An increasing number of brands begin to realize that live stream shopping is a powerful way to connect with consumers. As a result, Alibaba’s Taobao Marketplace has dominated so far, selling more than $15.1 billion in gross merchandise volume in 2018. Such platforms are great for fast-moving and practical consumer goods. As with any sales environment, as a marketer, it is truly important to find the most efficient way to reach potential buyers and therefore guide them through the purchasing process.

Beyond unboxing videos and try-on hauls, influencers can form partnerships with various brands and act as hosts during live-streamed shopping sessions. It can be looked at as the next step of making shopping a social experience. Influencers, also known as ‘key opinion leaders’ drive live shopping in China. Their role is to showcase products, try them on if possible, describe them for viewers, and answer live product related questions.

For brands, it is not enough to find an influencer with many followers to act as a host. Instead, the focus should be placed on finding influencers that inspire trust to their audiences. In China, Viya is the most known female Chinese influencer, with over 12 million followers on Taobao. Her followers trust her and are confident that she will never feature a product in her live stream unless she carefully tests it with her team. A successful influencer will most often have a team behind that success. In Viya’s case, her 200 employees filter products and strictly allow her to promote high-quality items from brands with a great reputation.

Another important aspect is to find an influencer with a follower base that matches your product and culture. Let’s assume that you own an outdoor brand. At first, you might think that an influencer with 2 million followers will be more efficient than one with 100k followers. That’s not true at all! If the one with 2 million followers is not passionate about outdoor activities, it is very likely that his/her followers are not either. On the other side, if the one with 100k is passionate about outdoor activities and apparel, his/her followers will most likely be as well.

Popular Live Stream Shopping solutions and Campaigns

Lazada (owned by Alibaba) – in South East Asia, Lazada has coined the term ‘Shoppertainment’. It is a term meant to highlight shopping with entertainment and social experiences, so that customers (viewers) can watch, play, and stay. Within this platform, live shopping streamers apply its ‘See Now Buy Now’ feature to complete sales. So far, 3000 live stream sessions were hosted on this platform in Thailand, the Philippines and Malaysia. Among these sessions, there were streamed fashion shows involving both local and international designers. One of the most important events hosted by Lazada was its one-month Woman’s Festival (May 2019). It focused on female consumers aged 18 to 24 to support and highlight their roles as digital influencers.

Tmall (operated by Alibaba) – Tmall, formerly known as Taobao Mall is a Chinese online retail website for business-to-consumer. It serves local Chinese and international businesses to sell branded products to customers in mainland China. On 6 November 2019, Kim Kardashian partnered up with the famous Chinese influencer (Viya) and hosted a live streaming session on this platform. The main purpose of this partnership was to help Kim sell her KKW branded perfumes. It was a real success and the pair sold 150,000 units during a live streaming session. The partnership between Kim and Viya kicked off a bigger initiative, called the Wall of Fame program. It was created to attract Western brand founders to partner up with Chinese influencers and sell products within live stream shopping sessions.

Amazon LiveAmazon launched its Amazon Live Creator app, which enables sellers to live stream their own products available on the Amazon platform. Shoppers can buy featured products in real-time without leaving the stream and they can discover brands hosting live-streaming sessions on the product detail page and other placements where shoppers browse. The platform is intended for US professional sellers that are part of the Amazon Brand Registry and for US vendors.

In the long term, it is important for brands and influencers to diversify and find new partnerships when hosting live stream shopping sessions. As an individual streamer (influencer), featuring the same list of offerings over and over again will overlap the audience and will have a negative impact on sales. Today, live streams are widespread and are not restricted by a single channel anymore. Besides budgeting for such campaigns, brands and influencers can stream on more than one platform simultaneously, spreading out the message as accurately and effective as possible.