Market Gears up for Crypto-Based Rewards Programs

Today, as cryptocurrencies take up an increasing amount of space in our minds, despite the plunge in the prices of bitcoin (BTC) and other digital assets, crypto rewards programs are increasingly becoming popular among merchants and customers.

Bakkt Loyalty and Rewards 2022 Outlook Study highlights that 51% of crypto consumers are interested in crypto rewards programs. Income level was found to be a key driver of crypto rewards interest. The study noted that 40% of consumers with income over $100,000 are likely to redeem rewards or loyalty points for crypto.

                                                                              Source: Bakkt Loyalty & Rewards 2022 Outlook Study, December 2021, n=1000

Cryptocurrency rewards programs have become a new normal in the market. Crypto businesses have turned to numerous ways such as crypto affiliate marketing, crypto credit/debit card rewards, and loyalty points to attract new customers to their products and services.

Let us understand the basics of what are rewards programs in cryptocurrencies and why businesses are keen on them.

What are crypto rewards programs?

Put simply, crypto rewards are a type of incentive program used by businesses in order to engage customers and encourage them to continue spending on their products and services.

This implies that businesses are leveraging their rewards programs with the help of cryptos and luring customers back to their services.

The crypto reward sector is still in its infancy and has a lot of room to grow. However, few businesses are paving the way and exploring the potential of such programs.

Crypto exchanges were obviously early to the blockchain rewards party. Binance, for instance, has a crypto reward hub – ‘Binance Earn’ – which offers plenty of rewards-earning possibilities for crypto HODLers.

Blockchain technology in rewards programs comes with a slew of benefits such as they can track and distribute rewards points, coupons, or other loyalty benefits and can be used to verify customer identities to prevent fraud.

Per a Deloitte study, inculcating blockchain into rewards programs can drive consumer expectations to the next level. The study noted that, “Blockchain is an ideal remedy for what ails loyalty rewards programs.”

                                                                                                                 Source: Deloitte center for financial services

Numerous crypto rewards have been introduced to increase user engagement and level up incentive strategies.

Crypto rewards in practice

Some businesses have been faster in adopting crypto rewards in their credit/debit cards that offer consumers the ability to use cryptocurrencies to buy food, art, and even other assets.

On the other hand, businesses also provide consumers to exchange their crypto rewards for other benefits like travel, discounts and even non-fungible tokens (NFTs).

There are also crypto cashback rewards – a type of loyalty program where customers can earn rewards for shopping with a particular retailer or using credit cards.

For instance, Visa backed the first credit card to offer bitcoin rewards in 2021 in partnership with BlockFi. Cardholders will earn 1.5% cashback on all purchases that will automatically be converted to bitcoin and placed in their BlockFi crypto wallet, the company noted. This means, if a customer spends more than $50,000 in a 12-month period, a cashback of 2% can be earnt.

Another common crypto reward program that drives user engagement is crypto staking – a method of earning rewards for holding or accumulating certain digital assets.

The bottom line

As crypto customer expectations change, the industry changes too. Blockchain tech has proved to be one of the best mechanisms to redeem rewards in the form of digital currencies. For businesses, the ability to issue a desirable reward is crucial to succeeding in the new digital money era.

Though crypto rewards programs are not a complete replacement for traditional reward/loyalty programs, the trend is starting to be considered, for their ability to reduce costs.

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