Blockchain Loyalty Programs – Sizzling Or Fizzling?

8 June 2022

I’ve been asked many times to share my take on the latest status of Rakuten Coin, an altcoin that I wrote about in How Blockchain Can Crack The Holy Grail Of Loyalty Programs four years ago.

That is not strictly true. I’ve been asked only once, by someone on Twitter.

(Fans of Joseph Heller might find a striking resemblance between the above paragraphs and the opening paragraphs of Good As Gold, one of my all time favorite novels. I apologize in advance to the Estate of Heller for taking the liberty of paraphrasing what’s one of the most captivating novel starts that I’ve ever read.)

I did some quick-and-dirty research on Rakuten Coin and this is what I found:

  • There’s no mention of Rakuten Coin anywhere on Google, at least not in any English language websites. I didn’t check the Japanese language entries on the SERP.
  • I found several mentions of Rakuten Pay, Rakuten Points, Rakuten Cash, and Rakuten Point Card. Cf. Coindesk article entitled E-Commerce Giant Rakuten Now Lets Users Shop With Cryptocurrency and Rakuten.Today blog post entitled Rakuten Points: Much more than just a loyalty program.
  • According to the Rakuten.Today blog post: “Since 2017, crypto asset management service Rakuten Wallet has allowed users to buy and sell cryptocurrencies such as Bitcoin and Ethereum, conveniently exchanging them to and from Japanese yen. But yen isn’t your only ticket to ride the cryptocurrency train: Rakuten Wallet users can also use their Rakuten Points to top up their portfolio. The service sweetened the deal even further, introducing a new way for users to convert their assets back into a spendable currency. For no cost, users can now turn their Bitcoin and Ethereum into Rakuten Cash — tied to the Japanese yen and functionally similar to Rakuten Points” (emphasis mine.)

From the above, it would appear that Rakuten did not go forward with its original plan of minting alt-coin (Rakuten Coin) from its loyalty points (Rakuten Points).

That said, by permitting consumers to convert Rakuten Points to cryptocurrencies and convert those cryptocurrencies back to Rakuten Cash, the Japanese conglomerate has achieved “Buoyancy” and “Unlimited Liquidity”, the two defining attributes / key benefits of a blockchain loyalty program that I’d described in my original post. So Rakuten is effectively running a blockchain loyalty program.

Then there’s TokkenIT.

rsk: Supported by Koibanx and RSK technology, TokkenIT enables companies to create their own loyalty programs and reward their customers with benefits and prizes using blockchain technology. Any company willing to reward their users with a token can benefit for this service, as transactions are 100% transparent and secure. Coupons, paper or membership cards are no longer required.

and

Bakkt: Starting out as a cryptoexchange, Bakkt pivoted into a blockchain loyalty platform / wallet app that unlocks one trillion dollars of digital assets.

Then there’s a slew of startups and enterprises that have launched crypto rewards programs. While it’s too early to say whether they will grow into fully fledged blockchain loyalty programs, let me give a sneak preview of some of them below:

Jaguar: Jaguar Land Rover announced rewards for motorists in its cryptocurrency IOTAcoin for sharing road data such as congestion, potholes, lane closures, and so on. Waze, the Israeli mapping company that was acquired by Google for one billion dollars, also crowdsources collection of such data but, as far as I know, it does not reward drivers using its app for such data – in crypto or fiat.

J P Morgan Chase: In its article entitled JPMorgan to turn loyalty points into tradeable assets, Finextra reports that America’s largest bank has partnered with fintech startup Affinity Capital Exchange to create a new class of financial assets based on the trading of loyalty point portfolios.

Lolli: This startup runs a bitcoin-based loyalty program that rewards consumers with the world’s #1 cryptocurrency for shopping at 1000+ stores.

Navigate: Per The Block article titled Alan Howard invests in Polygon-based web3 data startup Navigate, Web3 startup Navigate lets “its users share (sensor) data and earn crypto rewards in its native NVG8 token”. Data includes “data points captured by Internet of Things (IoT) devices tracking air pollution, carbon emissions, water pressure, noise levels, utility efficiency, airspace activity, and network signal strength”.

Permission: This company rewards users in its cryptocurrency ASK for shopping data. Hope it does better than ShopIn, a Web3 startup that attempted the same business model a couple of years ago but shutdown when its founder got embroiled in a fraud.

TYB: Try Your Best issues loyalty reward points in AVAX cryptocurrency. Built on the Avalanche blockchain, TYB helps brands to wean away from excessive dependency on pricey ads on Facebook, Instagram, Snap, and other third-party social media platforms. See TechCrunch article titled Athleisure icon Ty Haney raises $9.8M in fresh funding for her blockchain rewards startup for more details.

There are many more examples in RSK’s blog post titled Personal Data & Blockchain Technology: Rewarding Users’ Preferences on A Tokenized Economy such as  Steemit, Sapien, Somee (content), Brave (browser), Presearch, Bitclave (Search), and so on.

We have crypto rewards for driving, shopping and data of all kinds but, for some reason, there seems to be nothing similar for banking data.

I mooted the concept of crypto rewards (“OBcoin”) for banking data in Open Banking Needs A Blockchain Boost.

The closest I’ve seen a bank or fintech in this space is UK specialist lender Shawbrook, which offers discounts for sharing banking data. But, from what I could glean from the Finextra article about this announcement, both the loan and the discount are in fiat, not crypto. If readers are aware of any bank or fintech that offers crypto rewards for banking data, please share in the comments below.

While blockchain loyalty programs and crypto rewards schemes have not yet gone mainstream, they have certainly gained serious traction in the last year or two.

So, sizzling is the right answer!

UPDATE DATED 15 SEPTEMBER 2022:

Then there’s the Mother of All Blockchain Loyalty programs: Starbucks Odyssey.

The highlights of the new program announced by the world’s largest coffee retailer are as follows:

  • Rewards via NFT aka Journey Stamp
  • NFT can be earned and bought (via debit / credit card) (See Loyalty Gifts – Buy Or Earn?)
  • Gift in the form of product (e.g. free coffee) and experience (trip to Costa Rica coffee farm)
  • Based on Polygon blockchain.

According to TechCrunch, Starbucks has gone out of the way to obfuscate the complications of crypto in its iconic loyalty program.

DISCLAIMER: The Blockchain world has an eclectic mix of elements like cryptocoin, ICO, and so on whose legal status is ambiguous and swings wildly between various states of the spectrum such as illegal, maybe-illegal, not-illegal and legal and from one country to another. Before following through with the guidance given in this post, please consult your legal counsel about their legal status in your respective jurisdiction. We offer no guarantees as to legality of any of the guidance provided in this post.

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