Wanted: Global Brands Ready to Take Consumer Loyalty to the Next Level

TL;DR Very soon, consumers will be able to swap tokenized loyalty points and rewards of major brands in a single tap.

Many of you know that for the last three years, I’ve been closely working with the Minter blockchain’s core team on products that aim to evolve a single global network of loyalty points and rewards. In plain English, we want to become a foundation for everyone launching platforms to reward their users or customers for doing something useful, such as making a purchase or recommendation. And blockchain plays a vital role here, allowing to set up and program relationships between the parties so that no one can change the rules on the fly. If you think we’re overreacting to the scale of the problem, just keep reading . . .

At the beginning of 2021, we’ll enter the second phase of Minter deployment, where points and rewards from brands will become liquid on the global market of e-transfers. Users will not only be able to receive and spend their points within a specific business, city, or country, but also sell, buy, and exchange them for other monies. What’s more, the issuing organization will face no losses whatsoever. I won’t get into the details but let’s just say that any brand will be able to launch a loyalty system and distribute points to its users — for example, via e-mail — in a couple of minutes. The users will have an opportunity to save, spend, and send their points to friends or swap them for gift cards of other companies and cryptocurrencies. Most digital assets have been getting more and more rooted into our everyday lives recently through the payments giants like PayPal and Square. Once a shameful hobby, crypto is now the main fintech trend of the 2020’s among governments and banks.

Below is a step-by-step look at how this liquidity of points works on the Minter network:

The company issues a branded token on the Minter blockchain. It doesn’t need to be reserved or backed as its only function is to reward customers for performing useful actions. As I’ve written above, points can be sent via e-mail if integrated with Minter Wallet. Besides, users will also be able to send points to one another via e-mail, and they won’t need to have any special knowledge of the tech or apps installed.

Since the company usually offers its bonuses — e.g., goods and services, discounts, gift cards, or access to premium services — for points, they have a value inside that very relationship. It’s obvious that almost everybody needs miles of a popular airline, but very few need rewards from a no-name entity located in the middle of nowhere. When someone invites you to join yet another loyalty program, your first thought probably is, ‘Do I even need these? What will I do with them?’

In fact, you do now that the points are tokenized. The economic model of any product implies that even if only a small group needs the points of a little-known company, those points will still have demand if both the seller and the buyer are OK with the price. Finding an equilibrium is one of the primary tasks in any market, and we solve it with an automated market-making algorithm. Any member of the system can sell or buy their tokens — in our case, loyalty points and rewards — at any time, knowing beforehand the amount they’ll receive. They just need to agree to the terms of a deal. The second party to the transaction is not the buyer themselves, but a blockchain-powered smart contract that accepts points from one system and accrues points from the other using the reserve, which, for example, had been topped up by the previous seller. This is a swing where people (and machines) can agree on the terms of the exchange in a completely asynchronous manner on both sides. At the same time, never and under no circumstances — even the most dashing global cataclysms such as pandemic — can someone stop the operation. It always reflects the views of the parties. For simplicity, we call these coinary relationships ‘pairs.’

Anyone can launch a pair and at any starting rate. It’s not important at all; the market — namely, the point where the interests of the parties intersect — will balance, and we’ll very soon see the correct numbers. For example, one month ago, a pair against USDT was launched for our community token HUB with a starting price of $0.1. Almost instantly, it rose several times and eventually reached the $2 level. Almost 2,000 people who’d received this token for free were not willing to sell cheaper, and buyers were not willing to pay more — that’s what I mean by ‘free market price.’

The power of pairs is in that they can build chains, hence creating the same network effect where even the most worthless points can be exchanged for something ‘delicious.’ The only question is the price and number of pairs that will take part in the transaction. For example, you need miles that a progressive airline has transferred onto blockchain (even if we’re not talking about Minter), and the only rewards you currently have are from super-boring businesses that you’ll most likely never return to. In our ecosystem, you just need to choose what you want to buy and what you want to get rid of. With the whole process taking seconds and less than $0.01 in costs, you stand to win a lot. The blockchain will independently locate the best exchange options. We call this ‘the Internet of Money’: a several-pair route into the chain of swaps, and your coins transform into what you need.

Let me emphasize that the brand that issued the tokens does not participate in the swaps. It does not need to sell or buy back the points, take care of the rate, or monitor the reliability of the exchange. It may seem that such an approach could harm the brand image. In reality the exact contrary is true: the tokens, as I’ve already said, simply end up where they are really needed. Any business wants their customers to be satisfied with the goods and services provided and not throw out a loyalty card, thinking they’ve just wasted their time. If points have already been allocated and credited to some consumer, they’d better be spent by those who appreciate the brand. Blockchain allows companies to find them as quickly and easily as possible. It’s hard to imagine a more efficient system.

But we can go even further, and this is the second part of our plan: to exchange loyalty points and rewards for money. Real money, but in electronic form: for example, digital dollars that exist on many blockchains as stablecoins and have a circulation volume of more than $20 billion. Today, various exchange services let you convert USDT into any currency in a matter of minutes and receive it on any electronic wallet. Minter is already integrating into the largest decentralized liquidity marketplace on the Ethereum network, where trading pairs’ daily volumes are already peaking at $1 billion. In a completely decentralized way, of course, with no restrictions and censorship. Minter will empower people to sell their extra miles and hotel points for national currencies they’re so used to.

To sum up:

1. You accumulate the points you need by receiving them in your inbox and managing them in a convenient Minter Wallet
2. Say goodbye to the points you don’t want in one click and get other points or gift cards from Spotify, Apple, Xbox, or one of the remaining 18,000 merchants instead
3. If there are not enough points, you can buy more with traditional money
4. Or vice versa, sell your points and withdraw e-money to popular digital wallets

The second phase of the Minter deployment is about the absolute liquidity of loyalty points and rewards of those brands that will be the first to enter the global market, programming relationships with users and customers on blockchain and increasing transparency. We are already working on pilots for several companies who are ready to move to a new level.

I wrote this post with an important goal for myself: to ask for help. As Steve Jobs once said, “I’ve never found anybody who didn’t want to help me when I’ve asked them for help.” So I ask all my friends, acquaintances, and colleagues to introduce me to the world’s top companies and brands that are ready to start working about the launch of global and local loyalty programs, ready to experiment, and are not afraid to be progressive in a pioneering field. At the very least, they will receive high-quality market expertise from us, the team at the forefront of the blockchain rewards industry. And if they are ready, they will also save tens of thousands of dollars. We’ll not only provide opinion and feedback, but create a full set of software, design an economic model, and, of course, offer legal support in order to ensure compliance with the regulations of the jurisdiction where the target audience is concentrated.

Please give me the intros to the best companies in the world. I can be reached at eg@grom.org.

Many thanks in advance!