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By Shahaf Bar-Geffen, CEO of COTI
Blockchain technology has grown from a niche and highly specialized subset of information technology into one of the modern era’s most popular and in-demand solutions. Driven in part by digital assets like cryptocurrencies and NFTs, the adoption of blockchain technology in various conventional sectors like farming, wine harvesting, and supply chain management has been a true sign of its positive utility.
Blockchain technology has proven to be a secure, scalable, transparent, and highly trustworthy form of storing and transmitting data among a limited or unlimited number of users. It’s no wonder that spending on blockchain infrastructure will increase to about $20 billion by 2024, from its current value of $5 billion.
The financial sector has historically driven most of this spending as customers continue to demand quick and efficient payment solutions tailored to their every need. In an industry where large volume transactions need a few days to process and settle, blockchain technology and custom tokens are perfectly positioned to cut this timeframe down to seconds.
Digital Currency is Here to Stay
In early 2021, JP Morgan, the world’s largest bank by market capitalization, announced the creation of the JPM Coin – a permissioned payment rail powered by blockchain technology. The number of other large-scale enterprises dedicating substantial amounts of personnel and resources to implementing blockchain solutions is also growing, with companies like Amazon, Meta, and Alphabet expanding the headcount in their blockchain research teams.
Meta, in particular, has taken a considerable interest in creating a fully immersed digital experience or “metaverse” on its platform. Last year, the company made some significant strides in developing its own blockchain-based stablecoin called Diem (although this project has been stalled for regulatory reasons).
It is clear that digital tokens and currencies will remain a constant in the coming years.
Given the current archaic financial systems with their long settlement times and a dramatic change in the view of “money,” digital tokens will remain an essential component in the global flow of digital transactions. Most of all, blockchain technology has enabled companies of all sizes to develop a much deeper and more direct relationship with their customers globally.
Building a loyal community through blockchain technology
The web3 economy is driven to a large extent by a niche community of crypto enthusiasts. In the traditional economy, customer loyalty is driven by a wide range of correlated factors like product-market fit, marketing, customer development, and more. As businesses scale and compete with more prominent players with bigger customer acquisition budgets, most traditional companies find it difficult to maintain customer loyalty. Taking a page from the web3 playbook, these companies can launch unique tokens or digital assets that create and build a much deeper relationship with their customers at a fraction of current acquisition costs.
Imagine the following:
You receive a digital token each time you leave a review of a dish at your favorite restaurant;
Receiving an NFT or token for ticket discount each time you attended a fashion show;
Amazon launches its own token for use across its popular marketplace.
All of these will result in a much more engaged and community-driven customer base, inadvertently leading to increased revenue and exposure for the companies.
Indeed, Amazon has taken significant steps to introduce its virtual currency using blockchain technology. With over $37 billion in annual transaction volume, a digital coin would enable Amazon to process transactions much faster and at much cheaper rates, resulting in higher profits for merchants on the platform.
Like clay in the potter’s hands
As more of the larger retail-consumer driven companies like eBay and Walmart continue to explore blockchain solutions tied to customer loyalty, the market for solutions like token-gated events and promos will continue to grow.
Part of this will lead to companies creating and launching their own unique tokens for their product ecosystem. Through these tokens, deeper relationships can be formed with their core customers while creating an avenue for prospective customers to seamlessly onboard into the product ecosystem. By issuing a token or digital coin, a company can decide to use this as a tool for customer feedback, holiday giveaways, discounts, and lots more.
Community lies at the core of any great product. Companies of all sizes and at all product stages can easily and efficiently grow and maintain their community using tools like digital tokens. The future of loyalty programs might lie in the hands of blockchain technology.
About the author
Shahaf Bar-Geffen is the CEO of COTI, the first enterprise-grade fintech platform that empowers organizations to build their own payment solution and digitize any currency to save time and money. Shahaf is known as the founder of WEB3, an online marketing group, as well as Positive Mobile, both of which were acquired. Shahaf has degrees in computer science, biotechnology and economics from Tel-Aviv University.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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