Loyalty Programs on the Blockchain
Loyalty programs are ripe for disruptive innovation that would make them easier to use. Blockchain may just be the answer.
Blockchain enables a ledger of transactions to be shared across a network of participants. When a new digital transaction occurs (for example, a loyalty point is issued, redeemed, or exchanged), a unique algorithm-generated token is created and assigned to that transaction. Tokens are grouped into blocks and distributed across the network, updating every ledger at once. New transaction blocks are validated and linked to older blocks, creating a strong, secure, and verifiable record of all transactions, without the need for intermediaries or centralized databases.
Adopting blockchain will enable companies to rapidly add and maintain loyalty partnerships without adding complexity to their programs. A robust, frictionless partner network could mean many more redemption options outside of the core product.
Participating in the initial structuring of commercial agreements and partnerships will be essential to protecting critical loyalty program components, including currency value, customer data and relationships, and transaction costs.