Cryptocurrency Marketplace, Blockchain, Smart Contracts, Oh My!

In this post, we talk about how to use blockchain technology to improve the employee experience with a cryptocurrency marketplace.

At several previous companies I’ve been given jackets, t-shirts, mugs and other nice employee perks — the simple stuff. While these have always been well meaning by company leadership, it’s usually been the case that these perks were not entirely to my own personal taste. After all, it is pretty hard to imagine a scenario where you are able to accommodate the tastes and interests of all employees. But what if there was a way to customize employee merchandise to what each employee really wants?

At Valence we like to use the digital transformation technologies we evangelize to our customers to advance our own business. You certainly have heard this before — the old “eating your own dog food” program. But for us we not only learn how these technologies work but also helps us (1) create a learning environment for all our employees and (2) have real-life experience we can share with our customers. To that end — and to tackle the issue of employee preference — we developed our own merchandise cryptocurrency marketplace using Hyperledger Sawtooth, one of the most popular blockchain technologies available today.

The user experience is simple: when joining Valence our employees get a fixed number of Valence Level Electrons (symbol: VLE), and we have an internal cryptocurrency marketplace website where employees can spend the VLE for various Valence-branded items you might not normally find: wireless headphones, beer growlers, and more. More VLE is given to employees over time as and when performance and situations allow.

If you’re saying to yourself right now, “um, folks… in 2017 we just called this a ‘website’”, then I’d say you are both right and wrong. Right in that — yes, it’s a website! But wrong in that the sense that the underpinnings of our marketplace use blockchain technologies. And this underpinning allows us to think about a few new things that would not be easily possible with just a “website”: (1) a level of integrity and transaction auditing, and more importantly (2) the ability to easily open this up more broadly to other vendors. After all, why couldn’t other companies in the local area start accepting VLE as a currency for the exchange of goods and services? It is both possible and totally reasonable.

For larger companies this starts to make a lot of sense. It allows them to give employees more choice and, in theory, spend less on perks as there would be less waste. Plus, it allows employees more choice because blockchain technologies allow for very simple integration, so they can accept VLE instead of the good old U.S. dollar (USD). In order to enable this, we would need to create a reimbursement flow as well assign a starting VLE to USD exchange rate. But note that this can all be done in a trustless environment. In other words, in order to add a vendor that accepts VLE, we don’t need to trust that company and they don’t need to trust us. Smart contracts running on the blockchain enforce the rules that govern our business relationship. Each party can do what they want as long as they follow the rules.

There are many companies out there that issue loyalty points, with airlines certainly one of the largest. As their users start to accumulate large amounts of points this creates several problems: first, customers accumulate too many points and thus may switch airlines, and second — and in many cases a bigger issue — it creates an outstanding financial liability for the company. As a reaction, airlines try to create innovative ways to solve these problems. In fact, recently I saw a glass of fancy champagne available to buy with my Delta Airline SkyMiles. And yes, I can already exchange my SkyMiles for a few other things but honestly the selection is really limited — and there is a reason for that: you can only imagine the IT integration headaches to onboard a vendor into the Delta Airline IT systems so that they could access the user’s SkyMiles balance in order to redeem points for goods or services.

Realizing this scenario is one that many customers might struggle with, we built and released today our Blockchain Innovation Accelerator focused on loyalty points systems. Built on Microsoft Azure and Ethereum, this Innovation Accelerator provides a reference architecture and sample code to make these technologies more approachable. In general, moving loyalty points — or scenarios similar to this — to blockchain technologies offers the potential to create a much larger market for those points by solving issues associated with the current system.

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