Blockchain Loyalty Programs: The Key to Mainstream Crypto Adoption
Dissecting the importance of real usage and non-crypto audience participation.
At the time of writing, bitcoin (the ur-decentralized cryptocurrency) is hovering around a 55% dominance in the cryptocurrency market. In a 186 billion dollar market, that percentage is nothing to scoff at.
Bitcoin has become the de facto ambassador and benchmark for an entire movement aimed at decentralization and improving payment systems. The oft-repeated catchphrase, ‘the next bitcoin’ has since become a meme in and of itself, being applied to not just the cryptocurrency industry but also used to indicate major trends outside of it.
In a general sense, the essential methods of gauging the success of a cryptocurrency are focused on two aspects:
- The monetary worth of the cryptocurrency.
- The proliferation of its real-world usage.
Currency speculators ultimately care about the former. Supporters of crypto projects keep their eyes on the latter. The truth is that without success in the latter, the former will never surpass bitcoin. The network effect, in which a product gains more value as it adds more users, isn’t exclusive to bitcoin. The time of the ‘first-mover advantage’ has come and gone. New challengers need to stand out and prove the necessity of their token in the business model they’ve been created for.
Identifying a maturing crypto project: shifting the focus from token speculator to token user.
A cryptocurrency, outside of the whims of speculators, lives or dies on its real-world usage, and its real-world usage is (for a majority) restricted to those already familiar with using or storing cryptocurrency. The mere act of setting up a wallet, learning how to purchase and transfer cryptocurrency, and how to keep all of this information save is an arduous process for those not technologically inclined. They are bombarded with information that changes with every wallet, every coin type, and every exchange.
With a little out-of-the-box thinking, we can achieve a method allowing cryptocurrency laymen to utilize them without even being aware of it. The key is to apply cryptocurrency to a system with an abundance of transactions and interactions, and a loyalty system would be one of the more obvious candidates.
Why loyalty systems?
Loyalty systems are ubiquitous. The average person is bound to have at least one loyalty card in their wallet. When the loyalty system is directly connected to the payment method, many are not even aware they’re benefiting from their repeat patronage until they reap the benefits through discounts and offers. In such a case, just being a customer benefits them, with no additional input necessary.
Such loyalty systems are the most user-friendly and preferred type of interaction: the transaction of loyalty points becomes continuous and widespread, being utilized by day-to-day customers, at a rate that would make bitcoin transactions blush.
When we approach loyalty points and crypto from the perspective of scale, the potential becomes obvious. Ethereum, one of the altcoins vying for bitcoin’s position, currently has a market cap of around 20 billion USD. However, Ethereum exists as a speculative entity, with the promise of future adoption.
Meanwhile, there are industries and systems ripe for blockchain and cryptocurrency solutions that are already outdoing those numbers. Loyalty programs in the airline industry alone are achieving roughly 50 billion USD in transactions, with none of it speculative. It’s all real-world usage. As loyalty programs migrate onto the blockchain (as the current trend indicates), the crypto market would see an immediate inflow of hundreds of millions of customers.
Instead of trying to convert everyday customers to become involved in cryptocurrency and its many newcomer pitfalls, an app-based loyalty system can get people using cryptocurrency without even realizing it:
1. Allow the loyalty app to function as a multi-feature crypto wallet.
2. Incentivize the initial accumulation by rewarding loyalty points for everyday actions to introduce newcomers to the system.
3. Give people abundant options to accrue and spend these loyalty points.
It’s not only conceivable but realistic that in due time, the daily transactions of a successful crypto-based loyalty system will outpace daily bitcoin transactions.
Industry giants adapt: trying to stay ahead of the curve.
Already we’re seeing major players in their respective industries overhaul their existing loyalty programs to cater to the possibilities of crypto loyalty points.
Tony Fernandes, chief executive of Malaysia’s largest airline AirAsia, recently told Nikkei Asian Review that they intend to convert their frequent-flyer rewards program into BigCoin, a cryptocurrency platform aiming to improve the company’s digital services and moving closer toward a cashless system.
Earlier this year, Hiroshi Mikitani, CEO of Japan’s largest e-commerce site Rakuten, unveiled a new initiative: Rakuten Coin, a new part of the company’s point-based loyalty rewards system. The ability for these points to be accrued and spent globally was a key driving factor in the decision to overhaul their current loyalty program, which has awarded more than $9 billion worth of points since its 2003 debut.
Singapore Airlines, a leading airline operator, has already launched their own updated loyalty program: KrisPay. The intent wasn’t just to streamline an existing system but to give their frequent fliers more flexibility and ownership of their accumulated points. Through KrisPay’s digital blockchain wallet, airmiles are able to be exchanged for digital currency which, in turn, can be spent at an extensive list of partners, including hotels, petrol stations, and retail establishments.
It’s clear that these giants see the writing on the wall. For both their customers and their bottom line, forward-thinking changes such as these have the potential for major returns in the future.
We’re still at the cusp of this technology, with an entire industry at the whims of speculators. Adoption is a major struggle for many projects, as evidenced by DappRadar, with the most popular non-exchange projects on the Ethereum blockchain topping at around 500 users in the last 24 hours. But cryptocurrency loyalty initiatives are set to make a significant push towards real-world usage and adoption.
The most effective and useful cryptocurrencies might just be cryptocurrency loyalty points. And the most extensive cryptocurrency users might wind up being those who don’t even know what cryptocurrency is.
Alex Busarov is the CEO & founder of the Tael safe-product retail ecosystem, utilizing Tael to incentivize consumer interaction and ensure the collective security of its tamper-proof anti-counterfeit system.