What started as a messaging service has become a robust platform for communication, services, and payments. WeChat has effectively replaced cash and credit cards in China — acting as a one-stop shop for everything from ordering food to paying utility bills. A hub for daily operations, 900 million people use WeChat for daily transactions, amounting to approximately 10 trillion dollars in transactions a year.
Could DigitalBits have a similar impact on the Loyalty & Rewards Points industry? Can it succeed in mobilizing the billions of dollars in points sitting underutilized into a dynamic economy of its own?
DigitalBits & the Points Economy
The DigitalBits Project forked the Stellar blockchain in 2017, and has since launched its MainNet in March 2018. The protocol supports asset tokenization, and the transfer and trade of on-chain digital assets — however, the team has selected the Points Economy as DigitalBits’ first targeted use-case. The current loyalty infrastructure is dated by both technological and social standards — resulting in frictions that affect parties across the board:
Issues faced by consumers:
- Programs exist in silos and do not communicate with one another. Transferability and portability are difficult to impossible, leaving consumers with points applicable to offerings they do not want.
- Changing rules and requirements make it frustrating to collect and redeem points.
Issues faced by producers:
- High cost to create and maintain loyalty programs.
- The underlying program infrastructure is not conducive to interoperability.
In the United States alone, $48 billion in points is accumulated across Travel & Hospitality, Finance Services, and Retail each year. Of this, in excess of 33%, $16 billion goes unused, never to be redeemed. This unused value has been earned and is owned by consumers, but a lack of utility and liquidity relegate it to sit idle as liabilities on the balance sheets of corporations.
DigitalBits proposes a blockchain based solution to mobilize the capital currently locked in the points economy. But what does the points economy have to do with WeChat?
When $1 Here Is Worth More Than $1 There
Ted Livingston, CEO of Kik Interactive, is not new to chat platforms, and has on more than one occasion praised the innovation and success of WeChat. In his response to Facebook entering the blockchain industry, “Facebook Isn’t Going After Bitcoin. It’s Going After the Dollar,” he outlines the “WeChat Playbook.”
- Make it compelling for people to bring their money into the messenger.
- Make it easy for them to move their money around.
- Create more and more reasons for them to keep their money inside the messenger.
In China, people will soon be able to bring nothing but their smartphones (and clothes, perhaps) when going out, and the one and only app they’ll need to download is WeChat — Quartz, Zheping Huang
In accordance with the playbook, an application should provide more and more reasons to keep funds within the ecosystem. This is the case with WeChat, that provides such a vast array of services that it has replaced cash and credit cards — money has more utility within the application! $1 within WeChat is worth more than $1 without!
DigitalBits Multi-Hop DEX — Enhancing Value within the Points Economy
DigitalBits provides a framework for the integration of existing loyalty programs as well as the creation of new ones. By providing a token standard, these points are able to interop with one another, facilitating cross-program value transfer that is lacking in today’s loyalty solutions. As DigitalBits expands to other industries, on-chain assets will diversify outside of just loyalty. But that’s a discussion for another time.
DigitalBits built-in decentralized exchange utilizes multi-hop technology to further support on-chain asset liquidity. Multi-hop enables trades to be completed up to 6-intermediary hops, allowing assets to trade freely, even in the absence of a direct market. Imagine you want to trade asset A for asset E, but this particular asset pairing lacks liquidity. The DigitalBits DEX amalgamates all other order pairings within the ecosystem, and may for example trade asset A for B, B for D, and D for E — ultimately satisfying the initial proposition, A for E. This allows virtually any proposed asset pairing to be filled, enhancing asset liquidity and bringing on-chain assets such as loyalty points closer to the role of “digital cash.”
WeChat Playbook Fulfilled — DigitalBits & Loyalty
- Points experience enhanced liquidity and utility from integrating with DigitalBits — as they enter an ecosystem in which their value can be applied to a wider variety of offerings.
- DigitalBits supports high speed (10 000+ TPS) and low latency (2–5 confirmation times), allowing value to be easily moved between parties.
- As more programs enter the DigitalBits ecosystem, the network becomes more robust, and points value can be applied to an ever increasing list of offerings. Points draw closer to the role of “digital cash.”
Why Loyalty Points?
Loyalty points are an existing digital asset class that already exists in the pockets of millions around the world — billions of dollars have been sidelined due to a lack of utility. Users are familiar with these programs, and the process of accumulating and spending points. Additionally, users already own these points, they have earned them through their purchases and activities.
A common hurdle with cryptocurrencies today is that they lack utility, in many cases valuable, usable fiat is traded for a “utility” token that in reality has little to no utility. These tokens are seen more as investments and less as the utility token they are purported to be. The amazing thing about loyalty points is that users already own this digital asset, in some cases, they own a lot of it.
Wouldn’t it be nice if the value people have been accumulating this entire time could be readily utilized? Well, that’s exactly what we’re looking to do.
Welcome to an Economy… Reimagined.