While the Gartner Hype Cycle may declare blockchain and cryptocurrencies at the peak of inflated expectations, there is one business case for which cryptocurrencies have proven their usefulness: as a public relations ploy. Enter Burger King Russia, which has emerged from the obscurity of the number of people who think regularly about Whopper sales in Moscow to make waves (on the Waves cryptocurrency platform, no less) with a new blockchain-based loyalty program that rewards BK customers with cryptocurrency that can be redeemed for Burger King menu items – or traded on the open market. That’s right, Russian fast-food fans: Whoppers are now an investment vehicle.
By Rick Ferguson
The blockchain-based reward tokens, dubbed “Whoppercoins,” because of course they are, are issued to Burger King customers at a rate of one Whoppercoin per rouble spent (59 RUB = 1 US dollar). 1,700 Whoppercoins buy you a Whopper, which translates roughly to one free Whopper for every US$30 spent – not a bad funding rate! The real juice, however – one of the many advantages to blockchain-based reward currencies touted by providers and advocates – lies in the potential to trade and sell Whoppercoins on the open market. As a fully-fungible reward currency, you can save your Whoppercoins, loan them to your hungry friends, or trade them online.
The question is, will Whoppercoins accrue enough market value to become meaningful to Russian consumers beyond their ability to redeem them for Burger King fare? Burger King sure thinks so. Money quote from Burger King Russia communications executive Ivan Shestov:
“Now Whopper is not only burger that people in 90 different countries love – it’s an investment tool as well. According to the forecasts, cryptocurrency will increase exponentially in value. Eating Whoppers now is a strategy for financial prosperity tomorrow.”
Meanwhile, Waves Platform executive Max Pertsovskiy toutes Whoppercoins as loyalty program proof-of-concept for cryptocurrency technology:
“We are glad that Burger King Russia has chosen Waves as a platform for its loyalty program launch and Whoppercoin distribution. We are sure that this decision will promote blockchain technology in Russia and will enable the promotion of its benefits and possibilities for a wide audience.”
The initial coin offering (or ICO in cryptocurrency parlance) for Whoppercoins is 1 billion, with the company promising to issue additional currency runs as required. While the coins are available now, Burger King customers won’t be able to earn or redeem them at the restaurants until the restaurant chain launches its loyalty apps on the Apple and Android platforms later this month.
The big question: are Whoppercoins merely a gimmick, or are they a harbinger of the impending transformation of the loyalty industry from an industry run by providers and in-house teams building and operating expensive backend loyalty platforms to one run through decentralized cryptocurrency systems? For opinion, let’s turn to Dr. Garrick Hileman, research fellow at the Cambridge Centre for Alternative Finance, as quoted by the BBC:
“[Hileman] said Burger King was the first major corporate brand to issue its own crypto-cash but he expected others to follow. ‘Traditional loyalty programs, such as airline miles, typically have a fairly limited range of exchange options,’ he said. The ease with which the branded crypto-currencies could be traded for other national currencies or even other assets could make them ‘more compelling’ than a standard loyalty scheme, he added. But one issue that corporate issuers had to confront, he said, was who else would accept their crypto-currency. ‘I don't imagine McDonald's will be quick to allow someone to pay for a Big Mac with their whoppercoins,’ he said. ‘Burger King's competitors are more likely to accept an independent crypto-currency like bitcoin.’”
There’s the rub: Absent a currency like Whoppercoins achieving critical mass that it actually does rapidly increase in value, it’s likely to be more a marketing ploy than a transformational loyalty play. If there is a strong loyalty play for cryptocurrency, it’s as a decentralized coalition play, with all merchant partners within the network facilitating the earning and redemption of the currency – such a play could potentially pose a serious competitive threat to the Air Miles and Nectars of the world. We may also expect to see, perhaps not too far in the future, a cryptocurrency partnership between two major corporations – say, a bank and an airline or hotel chain.
Lest we cast too skeptical of a side-eye at Whoppercoins, however, we should note that Whoppercoins are far from the most unlikely cryptocurrency on the market. If you’re of a mind, you can buy and trade such currencies as Dentacoin, accepted as payment at partner dental clinics (market cap $2.9 million); Trumpcoin, which I suppose promises to make currencies great again (market cap $386,000); and Potcoin (market cap $26.5 million), the cannabis industry’s own currency. Whoppercoin itself has a market cap of $316,000 – you can keep track of it here.
Whether Whoppercoins are a harbinger remains to be seen. Cryptocurrency-based loyalty programs have, however, moved from the theoretical to the actual, and that move alone makes them worth watching. As always, consumers themselves will be the judge.
Rick Ferguson is Editor in Chief of the Wise Marketer Group.