More than just rewarding customers in cryptocurrency, the underlying bitcoin technology holds a lot of promise in changing the loyalty rewards industry. In the latest version of the BitLicense framework in New York, these reward points based on the cyrptocurrency’s blockchain were exempted from regulation.
These comprise frequently flyer miles, hotel loyalty points, return-customer retailer programs and so forth that were developed using bitcoin blockchain. Ribbit.me, a company whose RibbitRewards are tradeable, blockchain-based loyalty tokens, gives reward points that are generated by an algorithm and issued in the form of a digital token on the blockchain.
Bitcoin Technology Applications
For merchants, this is a positive development, as the bitcoin technology can remove loyalty program liabilities that merchants have traditionally had to carry to recognize their future obligation to deliver goods and services against those points.
“There’s no liability on merchants’ balance sheets anymore, and that’s what’s huge,” said Ribbit.me co-founder Sean Dennis. “We can take millions of dollars in liabilities off their balance sheets.”
Using digital tokens issued under the blockchain, Ribbit.me is able to create assets on the individual’s portfolio without adding to the liabilities on the merchant’s side. This technique upends the centuries-old viewpoint of double-entry bookkeeping in which an asset has a corresponding liability.
“We tell them the liability disappears, because the blockchain belongs to no one,” said Ribbit.me co-founder Greg Simon.
This idea of blockchain-based rewards points has been catching on for a lot of retailers, which makes Ribbit.me founders worried that regulation could someday impose boundaries. For them, blockchain solutions could create better methods for managing merchant obligations, especially for the hotel industry in which franchises or branches can be operated by different owners.
Another advantage is the real-time aspect of bitcoin technology, which allows reward points to be instantly updated and available for use. For Eric Piscini, a banking technology consultant at Deloitte in Atlanta, this is good for both the customer and the owner of the business.