Bridging The Gap: Why More Brands Are Bringing Blockchain To The Loyalty Industry

The underpinnings of loyalty rewards programs date as far back as 1793 when a merchant in the US began handing out copper tokens to his customers, which they could then exchange for items in the store, thus enticing customers to return time and time again. The idea caught on and the rest is history! While merchant and customer interaction has evolved over time, the desire for brands to create loyalty incentives in a bid to retain their customer base, has largely remained the same.

Be it flying across the world earning air miles with your favourite airline, visiting your local coffee shop, or getting your hair done, companies across every industry have implemented loyalty systems which build traction and patronage from their customers. The emotional connection that is created with each stamp for a new haircut, cup of coffee, or a discounted airline ticket, creates a bond between the customer and the brand. Subconsciously, emotion plays a big role in consumers’ desire to be loyal to a certain brand, especially if loyalty rewards programs are in place and benefits can be accrued over time. 

Although beneficial when up and running, encouraging greater customer engagement, increased footfall and repeat visitors, loyalty programs are not without their shortcomings. From a brand standpoint creating the program, implementing guidelines, and focusing on the longevity and retention rate of customers remain ongoing issues. When it comes to customers themselves, spending trends play an influential role, while drop off rates continue to be a problem.

In today’s world, everything can be accessed at the click of a mouse and customers have the ability to research the best options on the market when looking for a specific product or service. While this has its advantages, it can also lead customers astray, regardless of whether or not a loyalty rewards program is in place. A recent study by Essential Retail revealed that more than 54% of those surveyed appreciate loyalty programs from service providers. However, 42% of respondents claimed that loyalty programs alone did not instill a sense of brand loyalty.

The oversaturation of the market can also cause customers to engage with brands less and with countless companies vying for consumer loyalty, it can be overwhelming for customers and result in them availing of another brand’s products or services due to the rewards they stand to benefit from joining the other brand’s loyalty program.

The end result is that customers often find themselves enrolled in numerous loyalty rewards programs, where they are then left with a plethora of stamp cards and loyalty swipe cards that they need to hold on to in order to avail of rewards. Often, customers collect loyalty points but rarely redeem them and, against this background, it is difficult for brands to boost the level of activity within their loyalty programs.

So where does blockchain come into all of this? Incorporating distributed ledger technology is a way to unify, simplify, and streamline the challenging aspects of loyalty rewards programs for both consumers and brands.

One of the biggest benefits of powering a loyalty program with blockchain technology is the ability to account for inactivity. Blockchain enables the consolidation of different programs onto a single platform without the need for cost-intensive integration for brands or an upfront investment for customers.

From a consumer standpoint, a blockchain-powered loyalty program also makes it easier to monitor the loyalty programs one participates in, and the ability to manage rewards in one digital wallet. Also, a loyalty ecosystem offers customers the ability to sell loyalty tokens for fiat or other cryptocurrencies, where previously points might not have had real value outside of the brand context.

Another advantage for brands utilising blockchain to power their loyalty programs is the lower implementation costs involved. Due to blockchain’s decentralised nature, the technology minimises costs that can be incurred when setting up and running  loyalty programs over a sustained period of time. 

We are increasingly seeing companies recognise these benefits — just last month, Singapore Airlines officially launched its blockchain-based loyalty program for frequent flyers. The loyalty program, KrisPay, allows customers to convert their travel miles into units of payment. These units of payment can be used with partner merchants in Singapore, including restaurants, salons, petrol stations, and a handful of retailers.

For companies such as Singapore Airlines, there are specific benefits to be gained by switching to a blockchain-backed loyalty program. Loyalty points have historically translated into outstanding liability for brands as they are accounted for as deferred revenue. In this sense, blockchain technology addresses the operational risks and inefficiencies inherent in loyalty programs. Besides Singapore Airlines, retail stores are also looking to encourage customer loyalty. Brands know how important customer loyalty is for their bottom line, as repeat customers contribute to a steady revenue stream and it makes financial sense for brands to retain customers than constantly attempt to acquire new ones.

One thing is for sure: the future of the loyalty sector looks bright with blockchain technology and with consumers seeking more innovative, flexible, and rewarding loyalty programs, companies will need to up their game if they want to stay relevant.

Pure Diamond Farm Singapore to Create Affordable Lab-Grown Diamonds on the Blockchain

Diamonds are a girl’s best friend is a popular saying that has become a well-known anthem for steadfast relationships. Yet, even though people put trust into a diamond they are buying, how can we be sure that it has been ethically sourced and is genuine? Not only that but is there a cheaper alternative available?

In 2017, worldwide natural diamond production produced an estimated 148 million carats, a seven percent increase from 2016. With industry leader De Beers raking in $5.3 billion worth of diamonds last year, the industry remains a lucrative market.

Unfortunately, for many who have purchased a diamond for a special occasion, guaranteeing the quality of it has become an issue. After all, who’s to say whether a diamond has been sourced from a conflict zone where gems are being used to finance violence?

In order to solve this issue, and to deliver an affordable solution, a Singapore-based company is teaming up with a Japanese lab-grown diamond business. Using the blockchain they are verifying the authenticity of diamonds to clear the supply chain of impostors.

According to Pure Diamond Farm Singapore, in the synthetic diamond market, industrial use had a global market size of $16.2 billion in 2016. This is expected to rise to $27.6 billion by 2022. With De Beers and Swarovski already announcing the launch of their own synthetic diamond brands, the industry will only continue to grow as affordable substitutes come on the market.

Realising the potential this will have, Pure Diamond Farm Singapore has teamed up with Pure Diamond Lab Co. Ltd., a production, research, and development company in Japan. For the first time, lab-grown diamonds will be produced in Japan, which could produce a significant impact on the diamond market.

In its white paper, Pure Diamond Farm Singapore stated: “We have succeeded in producing a lab-grown diamond that exhibits the same chemical, physical, and optical properties as those of a naturally mined diamond.”

  Chemical Formula Thermal
Conductivity
 Crystal
Structure
 Mohs
Hardness
 Density
[g/㎠]
 Refractive
Index
 Optical
Dispersion
Natural diamond C high cubic 10 3.51 2.42 0.044
Lab-Grown Diamond C high cubic 10 3.51 2.42 0.044
Cubic zirconia ZrO2 low cubic 8.25 5.50-6.00 2.16 0.060
Moissanite SiC high hexagonal 9.25 3.21 2.65-2.69 0.104 

An announcement from the Singapore company stated that the Japanese firm will be using the blockchain technology to store and trace the data of each lab-grown diamond such as its origin, certificate, date, and time of creation.

To kick-start the Japanese business, Pure Diamond Farm Singapore will be launching its own initial coin offering (ICO) by the end of the year.

“Pure Diamond Farm Singapore will introduce its cryptocurrency, Pure Diamond Coin, that is associated with its lab-grown diamond,” said Chris Yang, president of Pure Diamond Farm Singapore. “The token connects lab-grown diamond by the blockchain and is distributed by the token. It is supported by the physical lab-grown diamond, hence unless the value of the diamond declines, the token value does not depreciate.”

Yang added that the Singapore-based company is aiming to use the Pure Diamond Coin in the real world to conduct transactions in the supply chain.

“This means Pure Diamond Coin can be distributed in the diamond market and be utilised to purchase everyday products,” he said.

The team at both companies are hoping that by combining the lab-grown diamond technology and the blockchain, new opportunities and possibilities will be brought to the market.

Pure Diamond Farm Singapore will conduct its presale for its ICO from the 1st – 25th September 2018. This will be followed by Phase 1 from the 5th – 20th October 2018 and Phase 2 from 1st – 15th November 2018.

Find out more about the ICO and read the whitepaper here

Capital One Wants to Authenticate Users on a Blockchain

capital one blockchain
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Blockchain adoption continues to rise in the banking sector, with the news that Capital One has applied for a patent to potentially develop a blockchain system that authenticates new users in a secure manner.

Capital One is a bank holding company specializing in credit cards and bank loans, making security a primary concern. According to documents published this week, the company has applied for a patent entitled “Blockchain Systems and Methods for User Authentication.” The patent was filed in Virginia, USA, with Johnathan Weimer and Ryan Fox listed as the inventors of the authentication system.

The abstract to the patent describes the project in more detail, stating that computer-implemented methods and systems are provided for blockchain-mediated user authentication and going on to list potential applications of a user system, which will include verification messages indicating that the root system successfully authenticated the user and including an authorization code for receiving, from the root system, a root system secret.

The authentication system will comprise of:

“At least one processor; and at least one non-transitory memory containing instructions that, when executed by the at least one processor, cause the authentication system to: publish a root system block for a user to a private blockchain.”

The patent published this week is a continuation of a patent filed in June 2017 by Johnathan Weimer, showing that the company has been working on the technology for quite some time, and is seemingly designed to decongest computer systems by streamlining authentication while improving user experience, citing the resentment felt by users forced to respond to repeated authentication requests associated with different institutions as one of the use cases for merging them all into a collaborative authentication system that handles authentication interactions for multiple institutions.

capital one user authentication

However, the patent continuing the work filed in 2017 may yet be incomplete and may require some collaboration to overcome certain technical problems.

From the patent

“A preferable authentication system would track authentication interactions for users attempting to access the computer systems of the participating institutions. Such an authentication system would be non-reputable, preventing users or institutions from later challenging authentication records as false or inaccurate. Furthermore, a preferable authentication system would limit sharing of personal information between the users and the institutions.”

“The authentication system would also be constructed in a way that encouraged the participating institutions to trust in the validity of the authentication records. A need therefore exists for an authentication system architecture that addresses these technical problems,” the authors continued.

Capital One is the latest in a series of major financial institutions and financial services companies to file blockchain patents and integrate blockchain technology into their business model. Many of the public banks in China now use blockchain technology in some way, and Barclays is also pursuing blockchain patents for the development of a new cryptocurrency.

Images from Shutterstock

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