Blockchain technology that underpins cryptocurrencies like Bitcoin can also be used to create loyalty points that can be accepted by many merchants.

Patrick Palacios, CEO, Appsolutely

Patrick Palacios, CEO, Appsolutely

Perceived brand value is a curious thing. Historically, people have spent more on things from brands that they found to be of higher value, whether or not that was true. A 2008 study showed that increasing the price of wine also increased sommeliers’ perception of the quality of the wine. However, once again, millennials are not buying this perception.

The Loyalty Problem

One of the larger problems regarding brand loyalty is that millennials aren’t buying it. In fact, 79% of millennials report caring more about quality than brand. When losing a customer to a competitor is just a simple click away, and it costs between 5-25x more to attract a new customer than retain an existing one, brands have no choice but to be on their A-game. With loyal customers spending 67% more than new customers, it’s clear that allocating a significant budget to loyalty programs more than pays off.

Points earned from buying a latte in the morning at Starbucks could be used later in the day to buy lunch at Chipotle.

However, yet another problem with many loyalty programs is that they leave much to be desired. Consumers lose interest in programs that don’t make their points easily accessible, easily redeemable, or easily located. When loyalty programs don’t work, they can backfire and leave a bad taste in consumers’ mouths about empty promises from the brand. In fact, an estimated $100 billion worth of loyalty points are sitting around unclaimed.


A Crypto Solution Beyond the Punch Card

With the rise of cryptocurrency has come a new and incredibly beneficial opportunity for loyalty programs in the form of a loyalty economy using digital tokens By switching to this digital, “loyalty currency,” brands can offer unprecedented, more personalized and highly effective ways to engage consumers and cater to their individual needs, wherever and whenever.

Perhaps the most intriguing part of using digital tokens for loyalty points is the ability to use them as currency or as redeemable rewards at a different, in-network establishment. For example, points earned from buying a latte in the morning at Starbucks could be used later in the day to buy lunch at Chipotle. This versatility is a game-changer and puts both the brand and the consumer in the driver’s seat.

In addition, brands can build a loyalty solution on a blockchain (a highly secure, decentralized ledger system), enabling them  to solve an age-old problem of expensive—and often unreliable—loyalty programs. Blockchain technology creates transaction records shared across a network of computers. In the case of a loyalty program, every transaction creates a new block of information for every reward point created. These “blocks” of information are “chained” to previous blocks, which are then shared across a network. Hence, the term “blockchain.”

Blockchains reduce system management costs with smart contracts (software code that automates transactions) and its tamper-resistance eliminates fraud-related costs. Additionally, it’s able to update in real-time and provide time-stamped data entry, providing companies with secure and immediate information about their customers’ needs and wants. This is an invaluable aspect of any successful loyalty program. The upfront cost of using blockchains is well worth the savings and effectiveness of this decentralized, secure database.


By reshaping the loyalty program landscape and turning to a customer-oriented digital currency, brands can ignite deeper relationships with consumers than ever possible before. And it doesn’t stop there: with giants like Burger King and IBM jumping on the loyalty currency train, it’s becoming increasingly obvious that the loyalty economy is here to stay.

Appsolutely develops loyalty programs, apps and websites, including a program called LoyalCoin based on blockchain technology.