The future of loyalty is on the blockchain

We can solve the problem of loyalty: with decentralization. What does this mean exactly? The simple answer is empowering your fans. How can you do that, and have safety and freedom? We will create a decentralized ecosystem of loyalty programs.

Blockchain will become the new standard for loyalty.

Let’s pause on the difference between centralized vs. decentralized systems. In a centralized system all the digital assets, for example loyalty points, are being stored in a database and server infrastructure that are owned by one entity. This means that there is one single point of failure, which can be violated through potential internal and external attacks.

In a decentralized system all digital assets are stored as a token on the blockchain, which is run by many different nodes, owned in turn by many different entities. If you want to attack the infrastructure, you need to breach at least 51% of all nodes, to be able to manipulate the digital assets. This means that you don’t have to rely on one central entity. Basically, you are protected through an immutable and secure decentralized network.

Now, let’s turn to the benefits of the blockchain for the loyalty market.

First of all, blockchain boosts the efficiency for all branded loyalty initiatives. As soon as you have a blockchain-based loyalty program, where points or miles are tokenized, all transactions are recorded on the blockchain, and are secure, trackable and immutable. You create one single source of truth for all participants, which eliminates reconciliation needs and costs for all actors involved, for example when you exchange points from one program to another. All of this happens while eliminating frauds’ risks and protecting the loyalty points.

The second major benefit of the blockchain is impact, namely empowering fans. Today you have thousands of stand-alone and multi-partner programs in the loyalty market. Most of them work alone. Only a few, mostly the most important loyalty programs globally, truly connect with each other (e.g. Payback and Miles & More). The loyalty market of tomorrow will feature more and more connections between individual stand-alone and multi-partner programs, enlarging the ecosystem of loyalty programs, and enabling fans and Brands to trade freely between themselves.

Consumers will earn, spend and exchange whatever they want, anytime, anywhere. This is the big unlock of all the value of loyalty programs globally.


Francesco Pagano

Experienced Marketing & Business Leader. Global profile, passionate about innovation, brand management, brand communication and international business. Always up for irresistible product concepts, ultimate communication integrated campaigns & great Italian food.




Go, Set the World On Fire!

By Shawn Nason | November 24, 2020

Like most things 2020, the upcoming holiday celebrations will look different than they usually do. But the feelings of gratitude,…

Read More
Experimentation Works

The Revolutionary New Way to Create Shared Value for Businesses, Customers, and Society [Interview]

By Braden Kelley | November 20, 2020

I had the opportunity recently to interview fellow author Jeff Gothelf to talk with him about his new book Sense and Respond, which is his second book with his co-author Josh Seiden and a major publisher. Congratulations Jeff! 1. Why is it so important that companies embed the two-way conversation with customers at the center of what they do?

Read More

Leave a Comment