Loyalty programs have proliferated across travel, retail, financial services, and other economic sectors.

The average U.S. household participates in 29 different loyalty programs, according to the 2015 Colloquy Loyalty Census.

The result is a maze of point systems and redemption options, with cumbersome processes for exchanging points among program partners. Loyalty programs are ripe for some kind of disruptive innovation that would make them easier to use.

Blockchain may just be the answer.

Best known as the technology behind bitcoin, blockchain enables a ledger of transactions to be shared across a network of participants. When a new digital transaction occurs (for example, a loyalty point is issued, redeemed, or exchanged), a unique algorithm-generated token is created and assigned to that transaction. Tokens are grouped into blocks (for example, every 10 minutes) and distributed across the network, updating every ledger at once. New transaction blocks are validated and linked to older blocks, creating a strong, secure, and verifiable record of all transactions, without the need for intermediaries or centralized databases.

Read all: Blockchain Will Transform Customer Loyalty Programs

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