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Author Topic: Reward points for using Bitcoin?  (Read 4390 times)
Elwar
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June 11, 2012, 02:17:55 PM
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I was thinking about the consumer and how they may have the choice between using a credit card or using Bitcoin. Most consumers use credit cards because they get perks or reward points that can be used toward airplane trips or vacations.

For the merchant, accepting Bitcoins is an obvious choice because you do not have to pay the 2-3% merchant fees and there is no chargeback. For the consumer, the incentive is not there unless the merchant gives a discount for using Bitcoin.

Perhaps the merchant would be willing to pay 1% toward a Rewards points type of program. The point system could be completely tied to a BTC address that the consumer uses to pay with. As that user accumulates reward points, it is logged in a server with a company that provides the rewards. Once enough reward points are accumulated, the consumer merely has to send a small transaction to the reward site in exchange for whatever goodie that they have built up.

People love reward programs. I used to use my American Express card exclusively as opposed to cash just so that I could accumulate skymiles. I figured out the savings I was getting and it was less than 1% of each purchase going toward a future plane ticket.

What do you think?

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herzmeister
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June 11, 2012, 02:25:46 PM
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I hate reward programs and bonus points and all that crap.  Angry

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Elwar
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June 11, 2012, 02:45:05 PM
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I hate reward programs and bonus points and all that crap.  Angry

That is all well and good but 43% of consumers use credit cards for purchases over $100 and according to http://finance.yahoo.com/news/summer-travelers-seek-vacations-substance-140000806.html
"Forty percent of consumers surveyed belong to a loyalty program with either reward points or frequent flier miles. To keep costs down, 19% percent of summer travelers (up from 15% in 2011) are using rewards points to book. Almost half (47% vs 43% in 2011) are charging their travel expenditures to a credit or charge card. "

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hazek
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June 11, 2012, 02:46:43 PM
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I'd rather see them offer their goods and services at a discount.

I'm particularly sad when I for example compare the fee coinabul.com charges for their products compared to other dealers in precious metals where instead of perhaps offering a discount they actually charge around 125% more meaning more than twice more. (I used the goldmoney.com rate for purchases between $1-$9,999)

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Stephen Gornick
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June 11, 2012, 05:37:31 PM
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People love reward programs. I used to use my American Express card exclusively as opposed to cash just so that I could accumulate skymiles. I figured out the savings I was getting and it was less than 1% of each purchase going toward a future plane ticket.

What do you think?

The reason AmEx (and VISA/Mastercard) can give a reward is because the merchant is subsidizing it.   The merchant fee is the same whether or not the customer gets a reward.

Now consider what is possible, today:
  $100 if paying with Amex (with or without you getting a rebate, as it costs the merchant the same
  $98 worth of bitcions if paying with bitcoin.

in both of those instances, the merchant gets the same amount in the bank a couple days later.

Which of the two would you as a consumer choose (assuming you know about bitcoin)?

Here's an example
 - http://www.bitmit.net/en/trade/i/2846-100-at-t-gophone-prepaid-wireless-refill-card/descr
Pay $100 with your credit card to AT&T
or pay $95 worth of bitcoins.

Here's their catalog (with T-Mobile, and other wireless providers):
 - http://www.bitmit.net/en/user/TangibleCrypto

Now what I'm waiting for is the first smart cookie to start offering a credit card with rewards or merchant loyalty program where the reward earned is in bitcoins rather than airline miles.

Elwar
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June 12, 2012, 06:06:02 PM
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I understand that the merchant pays the same regardless of points. But the key here is that he pays.

Sure, you could give a discount for using Bitcoin. My wife gives discounts at her retail store for using cash.

But with a reward point type of marketing for Bitcoin, it would be the reward company pushing consumers toward using Bitcoin because it would give them a profit.

It is almost like every merchant that uses Bitcoin is paying 1% to get people to use Bitcoin.

Sure, it is smarter to get something at a slightly lower price at the point of sale. But by the time someone goes to buy something, they already have Bitcoins or not.

If I went to a website and saw $98 with Visa or $100 with Amex, it would mean little to me if I did not have a Visa card.

But if I saw an ad saying "Get a free vacation by using your Visa card for puchases", I would be willing to start using Visa.

One interesting twist would be offering gold and silver as incentives for using Bitcoins.

That would blow people's minds.

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Stephen Gornick
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June 15, 2012, 04:22:37 AM
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The point system could be completely tied to a BTC address that the consumer uses to pay with.

Consumer's won't have any control over that.  Techies using the Bitcoin.org client know how to use the coincontrol feature coming in a future release, but that's not a good way to try to identify the customer.

Also, here's an article on how Facebook Credits are being used in marketing (could be used for rewards, as you suggest would work for Bitcoin).  The difference is that the consumer isn't paying with Facebook Credits, but that is a type of reward that can be earned that is different from cash or airline miles.

 - http://adage.com/article/digitalnext/facebook-ads-working-facebook-credits/235220/

Bitcoin Oz
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June 15, 2012, 10:05:43 AM
 #8

What if your card could display advertising and you got paid bitcents every time an ad was shown ?

Elwar
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June 15, 2012, 02:23:11 PM
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The point system could be completely tied to a BTC address that the consumer uses to pay with.

Consumer's won't have any control over that. 

Then I have completely misunderstood much of how a Bitcoin transaction works.

I was under the impression that I download the BTC client and obtain an address. With that address I can send or receive Bitcoins. If I send Bitcoins, I thought that the blockchain showed how many BTC were transferred from my address to the receiving address.

Is this not how it works? Does my address change at some point?

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Bitcoin Oz
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June 15, 2012, 02:30:08 PM
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I think this is a great idea.

You just need to get some merchants on board to kick it off.

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June 15, 2012, 02:34:53 PM
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I hate reward programs and bonus points and all that crap.  Angry
I'm with you bro. Having said that, such schemes are a proven model.

The gospel according to Satoshi - https://bitcoin.org/bitcoin.pdf

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hazek
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June 15, 2012, 02:43:38 PM
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The point system could be completely tied to a BTC address that the consumer uses to pay with.

Consumer's won't have any control over that.

Then I have completely misunderstood much of how a Bitcoin transaction works.

I was under the impression that I download the BTC client and obtain an address. With that address I can send or receive Bitcoins. If I send Bitcoins, I thought that the blockchain showed how many BTC were transferred from my address to the receiving address.

Is this not how it works? Does my address change at some point?

There's a disconnect between the two of you: Stephen meant the address consumers will pay to, while you were talking about the address the consumer would pay from.

Your idea isn't feasible because most consumers will use different addresses buying the same thing..

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
Elwar
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June 15, 2012, 03:23:12 PM
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Your idea isn't feasible because most consumers will use different addresses buying the same thing..

Ok, thank you for clarifying the disconnect. I understand the multiple receive addresses.

Why would a consumer use different addresses to buy the same thing?

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hazek
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June 15, 2012, 03:37:17 PM
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Because that's how a Bitcoin wallet works. Take me for example, my wallet balance is spread across many addresses and if I wanted to spend the entire amount, to the blockchain this would look like several different purchases, get it?

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

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Elwar
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June 15, 2012, 04:28:46 PM
 #15

Could you not use one wallet as your spending address and transfer money to that wallet when you want to spend BTC and get rewards?

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hazek
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June 15, 2012, 04:39:40 PM
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Could you not use one wallet as your spending address and transfer money to that wallet when you want to spend BTC and get rewards?

My point wasn't that it couldn't be done that way, my point was the most of the time it isn't done that way therefor rendering your idea useless.

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
Elwar
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June 15, 2012, 05:57:13 PM
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Could you not use one wallet as your spending address and transfer money to that wallet when you want to spend BTC and get rewards?

My point wasn't that it couldn't be done that way, my point was the most of the time it isn't done that way therefor rendering your idea useless.

But would you use the same address for spending if you knew that over time you could get an ounce of silver or a gold coin for using that address at certain merchant websites?

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Pool your bitcoins with others. Vote on solutions using the Bitcoin blockchain. Keep your bitcoins in your cold storage until you find a solution you like.
Links and Reviews of useful every day places to spend bitcoins: https://bitcointalk.org/index.php?topic=943143.0
hazek
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June 15, 2012, 06:00:24 PM
 #18

It would have to be worth the fees I'd need to pay to transfer my balance to that one address over and over and then it would have to be worth compromising what little of my pseudonimity I have using Bitcoin.

Personally I wouldn't do it for just a few crumbs.

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
Elwar
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June 15, 2012, 07:49:16 PM
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It would have to be worth the fees I'd need to pay to transfer my balance to that one address over and over and then it would have to be worth compromising what little of my pseudonimity I have using Bitcoin.

Personally I wouldn't do it for just a few crumbs.

Entirely valid points.


Anyone who has used a credit card or debit card has had to make the decision on which card to use and which bank/company to use.

Some people make that decision based upon reward points.

If it was not true, they would not exist.

http://www.bitpools.com
Pool your bitcoins with others. Vote on solutions using the Bitcoin blockchain. Keep your bitcoins in your cold storage until you find a solution you like.
Links and Reviews of useful every day places to spend bitcoins: https://bitcointalk.org/index.php?topic=943143.0
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