The Potential of Blockchain

Technology harnesses the crowd for secure, flexible transactions

CHANDLER, Ariz. -- Blockchain has the potential to revolutionize the convenience-store experience through coupons, age verification, loyalty or consumer privacy. But to understand it, it helps to consider an analogy.

Say there is a car accident on a busy street and the police arrive to investigate. Driver A accuses Driver B of causing the accident, but 10 witnesses clearly saw Driver A swerve into Driver B. Those 10 witnesses are the equivalent of a decentralized ledger, another term used to refer to blockchain. The ledger is decentralized because it uses many sources instead of just one as a final authority on a transaction or event.

And that is essentially how blockchain works. Simply replace the accident bystanders with computers spread around the globe.

Another Brick in the Wall

More technically speaking, blockchain serves as a mechanism to confirm and keep secure transactions. A transaction, be it with bitcoin or rewards points, is requested and run through a vast network of computing devices. These computing devices make up the decentralized ledger. If the request matches the information that already exists in the blockchain, the chain approves the transaction. Transactional data is collected into blocks, which are added to the chain every 10 minutes. Once the block has been added, the record is permanent and the transaction is approved. (See “Blockchain Illustrated,” below.)

Blockchain Illustrated

Here’s a step-by-step look at how the technology works.

1. One party requests a transaction, which could include anything from cryptocurrency to loyalty points.

2. That request is broadcast throughout a network of computing devices. If the request matches the known algorithm powering the blockchain, the network of devices validates the transaction.

3. The validated transaction is collected into a block of data, which is added to the existing blockchain. Once the block has been added, the data contained inside is permanent and cannot be changed. Each block of data is added to the chain every 10 minutes.

4. The transaction is complete once the block of data has been added.

But how is a decentralized database different from a centralized database? To return to the earlier  example of the car accident, a traditional database would be like a single eyewitness account of an event, says Corey O’Donnell, senior vice president of marketing for Chandler, Ariz.-based Mobivity, “whereas blockchain is like 200 people giving an eyewitness account to an event. When 200 people say it happened, it probably happened.”

Mobivity specializes in text-message communications and custom images printed on receipts, and it works with restaurants and c-stores. But as cryptocurrencies and blockchain emerged, O’Donnell and the team at Mobivity started to realize what the technology could add to its service.

“It’s an incredibly powerful way to make sure that I can give somebody a rewards credit that can be portable, can be flexible, but is finite in the same way that a physical object is,” O’Donnell says.

Together, these qualities allowed Mobivity to offer a cross-brand rewards program to Chanticleer Holdings, which owns and operates several fast-casual restaurant brands, including Burgers Grilled Right, Little Big Burger and American Burger Co. The blockchain-based loyalty program, known as Merit, allows a customer eating a burger at Little Big Burger to earn reward points to use later at another Chanticleer Holdings brand, such as American Burger Co. Merit, for all intents and purposes, is a cryptocurrency like bitcoin. The only difference is that it is used specifically at burger joints.


Using blockchain to track rewards points begs the question: Why go through the trouble of creating a blockchain-based loyalty system when there are other, potentially simpler ways to build such a cross-brand program? In a word, fraud.

“You have people behind the counter who give a bunch of points away to their friends. You have a lack of accountability in how those points are consumed, and so you end with a customer being able to use those points more than once potentially,” O’Donnell says. With blockchain, retailers could simultaneously allow rewards points to go further while ensuring they are used as intended.

The reason blockchain is so secure and nearly impossible to cheat is because the system relies on mathematical equations. Attempting to hack a blockchain-based system would be the equivalent of trying to plug an incorrect number into a math formula. The equation would not add up, and thus would not be accepted by the chain. This is why bitcoin and other digital coins are referred to as cryptocurrencies. Cryptography, the writing and solving of code, is what powers them.

Mobivity sees the potential to do even more with blockchain. Instead of trading rewards points between different brands under one company, blockchain could allow a universal rewards currency that could be used with any brand under any company.

“I look at it much like American Express points or something like that,” O’Donnell says. “You use that card everywhere, you’re accruing points, and then you can spend those points in many places. This would be just like that, except it’s blockchain-based, which means that those points have sort of a persistent, reliable value because you know that they can’t be defrauded, they can’t be stolen, they can’t be reused more than once and they can’t be given in error.”

Blockchain Buy In

Blockchain is still widely misunderstood. Gartner Research recently released the results of a survey that showed 59.34% of respondents in the transportation sector found the technology “interesting, but unclear of its usefulness.” Similarly, a survey of chief information officers conducted by IT consultant firm Impact Advisors found blockchain is seen as the most overhyped technology for healthcare IT. Despite the confusion, global spending and revenue in blockchain technology is projected to skyrocket, and some companies have found creative ways to take advantage of the tech and its hype.

200%—Amount Long Island Iced Tea’s stock price rose after the company changed its name to “Long Blockchain Corp.” Source: CNBC

$2.1 billion—Expected global spending on blockchain solutions in 2018 Source: International Data Corp.

$19.9 billion—Expected estimated global revenue from enterprise blockchain applications by 2025 Source: IBM

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