Title: "The Crypto Breakthrough Movement: Tokenization Redefines the Relationship Between Brands and Consumers"

Author: Ge Jin

A scholar who has long studied games and virtual economies, director of the world's first documentary on gold farming in games, "Gold Farmers," currently serving as the general manager of a Chinese subsidiary of a publicly listed technology company in the U.S., and providing strategic consulting for several global brands, as well as being a technical partner for Epic Games.

The crypto movement is rapidly entering the mainstream, not only with traditional financial institutions investing capital in crypto assets, but many mainstream consumer brands are also embracing NFTs and Tokenization.

It is no longer news that brands are integrating NFTs into their marketing strategies. From Visa purchasing CryptoPunk to Coca-Cola and McDonald's launching NFT memorabilia, the magic of NFT marketing lies in its ability to not only give brands new vitality and deepen connections with consumers but also transform the costly endeavor of marketing into a potential new profit model. However, a more significant trend is emerging: the tokenization of loyalty points.

The loyalty program is the most crucial link between brands and loyal consumers, and tokenization will redefine the relationship between brands and consumers. This trend may not be as exhilarating as the price fluctuations of crypto assets, but established consumer brands are bringing substantial capital and users into the crypto market, providing more use cases for crypto assets, which is the long-term force that will make the crypto market's pie larger and more substantial.

On October 28, Starbucks CEO Kevin Johnson announced a plan to tokenize Starbucks' loyalty program, meaning that the rights of Starbucks members will not be limited to coffee discounts and gift vouchers; member rights will have long-term value and combinability.

Kevin Johnson specifically pointed out that the Starbucks loyalty program can be integrated with other brands, allowing loyalty points to be redeemed across different brands. Starbucks is also collaborating with the crypto financial company Bakkt to soon accept cryptocurrencies as a payment method.

In my daily work, I interact with the marketing departments of many international brand companies, and over the past few months, I have seen the tremendous impact the crypto movement has had on them. As consumer brands, they pay close attention to the latest consumer behavior and psychological trends, and the younger generation's interest in memes and Play-to-Earn games in the crypto world is certainly being captured.

Consumer brands have consistently tried to guide customer behavior through incentive mechanisms, using methods such as discounts and community operations, while the experimental incentive mechanisms in the crypto world are providing brands with many new inspirations.

Some sports brands are researching exercise-to-earn; they have already been stimulating more people to exercise through sponsoring sports communities and organizing events to expand their consumer base, and in the future, they will allow consumers to exchange their daily exercise data for points.

Some automotive brands are planning drive-to-earn, where car owners can exchange mileage and data for points, but these points need to be transformed into on-chain tokens to be innovative.

Currently, brand loyalty points are often quite useless for consumers, with narrow and short-term value, trapping consumers within the capability circle of a single brand. Not to mention that in order to redeem benefits, consumers have to repeatedly sacrifice their privacy, providing their identity and contact information to each brand.

Tokenization will change all of this; on-chain tokens are the long-term carriers of rights, allowing consumers to confirm ownership of rights through tokens rather than accounts containing private information. Tokens also inherently possess combinability, which means there will not only be tokens that integrate different brands but also a market for the free circulation and exchange of rights tokens from different brands.

There are already bold pioneers in this field.

Singapore Airlines launched a blockchain-based loyalty points system and digital wallet—KrisPay—in 2018. It aims to integrate a large number of travel-related businesses into this system, turning points that were originally limited to mileage into tokens for paying for various travel-related services, from shopping and car rentals to hotels. KrisPay is still operating well today, although its rapid development has been hindered by the pandemic.

If we think deeper, one important aspect of the Web3 vision is to turn users into shareholders—owners of the platform.

In fact, the relationship between brands and consumers can also be redefined this way; brands with loyal consumers are valuable. A small number of loyal consumers often provide more profit to the brand than a large number of ordinary consumers. Why can't their loyalty points be converted into partial ownership of the brand?

I have seen some innovative international brands exploring this question, and we will see tangible cases in the coming months.

Friends in the crypto circle are enjoying the bull market where various tokens are being hyped, but during this time, I am increasingly anxious that the crypto world is becoming an endless virtual Las Vegas.

What gives me confidence in this bull market is actually outside the exchanges, as more and more merchants accept cryptocurrencies as payment, and more mainstream companies adopt blockchain technology and game mechanics from the crypto world.

Tokens are often criticized as Ponzi schemes because they lack intrinsic value, but their role is more as a medium for value exchange. Through tokenization, brand points will allow consumers and brands to capture greater value in their relationship: brands can grow more effectively and bind loyal consumer communities; consumers receive rewards in every interaction with the brand, and these rewards have certainty and extensibility, potentially evolving into brand ownership.

This is the vision that fascinates us about the crypto world: a multi-win value internet (Internet of Value).