A fresh look at Rewards tokens
It’s been three and a half years since we turned our attention to creating a blockchain loyalty programme that was fit for purpose and that merchants and customers alike would actually value enough to use. As we launch our new toolbar and gain momentum with users, that seems like a good enough reason as any to look back on the nature of truly rewarding rewards.
I’m sitting in Starbucks, drinking a steamed coconut milk (it’s late and I value my sleep too much these days for caffeine).
Starbucks run a loyalty system. Pay with the mobile app, linked to your bank card, and you’ll get Stars. Earn enough Stars and you can redeem them for a drink. Simple.
I don’t use it, despite the fact it would probably be worth my while. Why not?
Well, there are a few reasons. One is a passive-aggressive resistance to being forced to download new apps for my phone, and link my debit card to the app, though I could probably overcome that if I had to. But then there’s the nature of the reward token in the first place.
Starbucks’ Star tokens can be used only to buy Starbucks drinks. And they can only be used by you — they’re non-transferrable. And despite the fact that not using the app is costing me a drink every now and again, I don’t like that and won’t use it. It’s not necessary to restrict me like that. It means that everything about this is designed to funnel money and custom up to Starbucks. Sure, I get a ‘free’ drink here and there. But this is fundamentally not about me. It’s about Starbucks.
So what would my ideal Starbucks loyalty token look like?
Well it’s pretty simple. Very similar, but transferrable.
What benefits would this have?
It means I can send someone a Starbucks drink whenever I want, ideally straight from the app that I would immediately download to my phone. It also instantly opens up a third-party market for Stars. I could buy these at market rates from anyone willing to sell them, on one or other exchange that would no doubt start trading them within a day of the initiative being launched.
So a Star would immediately have market value — value that would approximate to the value of the coffee it represented in any of Starbucks’ outlets around the world. It would be a decentralised token, effectively a currency, ‘backed’ by Starbucks’ willingness to redeem it for drinks. (Naturally a blockchain would be a good way to administrate this.) It would, to all intents and purposes, be money. There’s no reason that money couldn’t be used to pay for all kinds of things that Starbucks doesn’t know or care about.
But Starbucks don’t do this. They limit me from using their reward tokens in the way I want to, and in doing so they make it clear that the whole thing is designed very firmly for their benefit. These might be sound commercial decisions, or they might be short-sighted. The jury is out on that, but regardless, I choose not to use it.
It’s clear to me that cryptocurrency offers the perfect use case for reward tokens. They would effectively become private currencies, issued by corporations, small businesses, charities and not-for-profits, backed by whatever economic activity that organisation undertook. We can do so, so much better than the limited, limiting zero-sum thinking we see all the time in the traditional corporate world.
Since this article originally went out, we’ve crowdfunded the Incent loyalty currency, which is a token hosted on the Waves platform. We’ve built some awesome, low-friction software that enables anyone to get their hands on crypto rewards more easily that ever before. We’re developing functionality that will integrate that into affiliate marketing schemes, meaning ordinary customers will get crypto cashback just for going about their everyday shopping online.
Perhaps best of all, and the bit I’m most proud about, is playing a small part in launching a new currency that embodies real and open value; that should increase in value rather than become worth less (or worthless) as time goes by; and that it makes sense to save and hold onto as an investment when cash deposits are historically unrewarding. It opens the way to a completely new kind of economy, and to reward everyone involved in the system — merchants, customers, the platform creators itself, holders of the currency, even the wider crypto economy — with a genuine and meaningful token with real monetary value.
To take it for a spin, visit www.IncentLoyalty.com and download the toolbar
The original article was published on the BitScan platform in 2015.