Crypto assets in loyalty programs — the key to mass adoption?
I have had some time to reflect on my trip from Korea. I am so excited by the development in the blockchain space. It will be a bastion for mainstream blockchain adoption not only in Asia but for the rest of the world. But before blockchain becomes mainstream, I think there will need to be some key applications that we use on a daily basis to be… blockchain-ified, if you may!
When we were looking at problem areas that the blockchain could solve, the current loyalty system stood out like a sore thumb. Don’t get me wrong; loyalty systems are hugely useful for retailers. Some surveys say that over 50% of retail consumers are a part of at least one loyalty program.
But it is not without its flaws.
Useful for retailers, not so much for the users
I was surprised to learn that over a fifth of loyalty points holders never redeem them. These users are twice as likely to not renew this loyalty membership with the retailer.
This is an issue — American retailers spent over 2 billion USD on loyalty programmes in 2017. This number would have only increased over the last year. Reducing customer interest in loyalty programmes brings these huge investments into questions.
A survey a few years later revealed that 48 trillion reward points go unredeemed every year, amounting to a whopping $360 billion dollars.
An opportunity in the problem
The cross-functional utility of crypto assets lend themselves very well to our loyalty points problem. Crypto assets are exchangeable with other crypto assets, and even actual cash. Imagine the value of a loyalty point that could actually be redeemed for real cash!
But more importantly, a universal and liquid loyalty token can have cross-vertical benefits. My vision with nCash went something like this -
You got some nCash as reward points for purchasing goods at the local retailer. This was added to your existing pool of nCash through your various interactions with other retailers, which was now enough for you to take a flight to Paris. The airline you used also rewarded you with nCash, which you redeemed for real cash through an exchange, with which you purchased a French 3-course meal, at a restaurant with a stunning view of the Eiffel Tower.
Sounds far-fetched? But cryptocurrencies have the potential to turn this into reality.
A way to go mainstream?
But at a larger level, think of this — The current market cap of crypto assets is at a little over 200 billion. This is still a 150 billion dollars lesser than the total number of loyalty points that go unredeemed every year.
There are several initiatives that are bringing crypto asset based payments reward system to the public. Forward thinking governments like South Korea and Japan are already accepting crypto assets as forms of payments. The world is simply buzzing with possibilities of blockchain and crypto assets.
I strongly believe that this application of crypto assets in retail is one of the key things that will take blockchain mainstream. Nucleus Vision will be one of the companies taking it there.
Disclaimer: This is not an investment advice. Please do your own research before investing in any avenue. The information contained in this post is for informational purposes only. You should take independent advice from a professional or independently research and verify, any information that you find in this post and wish to rely on, for the purpose of making any decision. Through this post you may be able to link to other websites which are not under the control of Nucleus Vision. We have no control on the nature, content and activity on those sites. The inclusion of any links does not imply a recommendation or endorsement of the other website, its products or views.
Abhishek Pitti,
Founder & CEO — Nucleus Vision.
