<p>The difficulty with such a scheme would be identifying the customer.</p>

<p>Certainly, the loyalty program operator can monitor incoming transactions to addresses registered by participating merchants.  But the public blockchain shows only the address from which the payment was made.  The question is how to use that address to identify the customer who should be given points.</p>

<p>If the customer made all their payments from a single address, they could simply register this address with the loyalty program in advance.  However, most wallet clients don't work that way; users hold their coins in many different addresses, and new addresses are created (for change) every time another transaction is made.  (The thought is that this makes it harder to tell who a given address actually belongs to, and improves anonymity.)</p>

<p>So a customer would either have to register a large and constantly changing set of addresses (awkward) or would have to take steps to ensure that payments to the merchant were always made from one particular address that they had registered (not easy to do in most clients, and might require extra transactions and fees to move the coins to the proper address before making a payment).  </p>

<p>There is a similar issue in that merchants should also want to use a large number of different addresses for incoming payments.  If all incoming payments go to the same address, it makes it easy for a competitor to see how much business they are doing.  Also, for safety they may not want to hold all their coins in a single address, so if all incoming payments go to a single address, they would need to make extra transactions later to spread them across other address.  So ideally, each customer makes their payment to a unique address.  Thus, it's not as easy as having each merchant register a single payment address.  They would probably want to pre-generate a large number of addresses and register all of them.</p>

CC BY-SA 3.0
2014-08-25T23:56:54.543Z
Please check > coinkite.com/faq/security . I think it is possible in this case ? Also note their comment about trusting them."The founders of Coinkite understand the inherent risk in trusting a third party with the private keys for your bitcoins. We feel by using BIP32 HD keys in this way, we can help to address those concerns should the business disappear"
Rad
CC BY-SA 3.0
2014-08-24T18:07:45.317Z
2014-08-24T18:07:45.317Z
Nate Eldredge
<p>Since it is possible to track the transactions in Bitcoin, is it possible to devise loyalty schemes?</p>

CC BY-SA 3.0
2014-08-24T04:49:39.200Z
Can you explain in more detail what you have in mind?
Nate Eldredge
CC BY-SA 3.0
2014-08-24T05:11:24.320Z
Sure. The loyalty program  monitors the Bitcoin network by watching for payments to pre-configured Bitcoin wallet addresses. When payments to these addresses are detected members are awarded points based on the transaction amount. Just like you earn points when using master /visa cards or other loyalty cards.
Rad
CC BY-SA 3.0
2014-08-28T20:32:57.563Z
So... people would get money back for spending with specific merchants? Who would decide which merchants were part of this program?
Nick ODell
<traceability>
Loyalty programs for Bitcoin transactions
Rad
# Loyalty programs for Bitcoin transactions

(Asked by: username_0 on 2014-08-24)

Since it is possible to track the transactions in Bitcoin, is it possible to devise loyalty schemes?

**Tags:** traceability

> **Comments:**
> **username_1**: Can you explain in more detail what you have in mind?  
> **username_0**: Sure. The loyalty program  monitors the Bitcoin network by watching for payments to pre-configured Bitcoin wallet addresses. When payments to these addresses are detected members are awarded points based on the transaction amount. Just like you earn points when using master /visa cards or other loyalty cards.  
> **username_2**: So... people would get money back for spending with specific merchants? Who would decide which merchants were part of this program?  

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## 1 answers

### Answer by username_1 on 2014-08-24. Score: 2

The difficulty with such a scheme would be identifying the customer.

Certainly, the loyalty program operator can monitor incoming transactions to addresses registered by participating merchants. But the public blockchain shows only the address from which the payment was made. The question is how to use that address to identify the customer who should be given points.

If the customer made all their payments from a single address, they could simply register this address with the loyalty program in advance. However, most wallet clients don't work that way; users hold their coins in many different addresses, and new addresses are created (for change) every time another transaction is made. (The thought is that this makes it harder to tell who a given address actually belongs to, and improves anonymity.)

So a customer would either have to register a large and constantly changing set of addresses (awkward) or would have to take steps to ensure that payments to the merchant were always made from one particular address that they had registered (not easy to do in most clients, and might require extra transactions and fees to move the coins to the proper address before making a payment).

There is a similar issue in that merchants should also want to use a large number of different addresses for incoming payments. If all incoming payments go to the same address, it makes it easy for a competitor to see how much business they are doing. Also, for safety they may not want to hold all their coins in a single address, so if all incoming payments go to a single address, they would need to make extra transactions later to spread them across other address. So ideally, each customer makes their payment to a unique address. Thus, it's not as easy as having each merchant register a single payment address. They would probably want to pre-generate a large number of addresses and register all of them.

> **Comments:**
> **username_0**: Please check > coinkite.com/faq/security . I think it is possible in this case ? Also note their comment about trusting them."The founders of Coinkite understand the inherent risk in trusting a third party with the private keys for your bitcoins. We feel by using BIP32 HD keys in this way, we can help to address those concerns should the business disappear"  

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