Quora credits, American Airline miles, Esso points, reddit Gold.

What are these things backed by? The companies that issue them.

What will they be backed by? bitcoins.

Private banks issued Gold backed currency a hundred years ago for ease of use in everyday transactions. Corporates will be issuing Bitcoin backed rewards/loyalty/gamification tokens in the near future.

Many argue that Bitcoin will have gone mainstream when people don’t even know they are using it. Next time you are collecting those Starwood SPG points, what you will actually be doing is receiving Bitcoin. Any reward program not backed by Bitcoin will be less credible in comparison.

Bitcoin fundamentally is dynamic in a way Fiat and Gold cannot be. This is why corporate points have never been redeemable for Gold or Fiat because it has been too difficult to link with digital reward units.

For exclusivity and loyalty reasons, I don’t suspect companies will let you buy your way into Starwoods Platinum with bitcoins. Similarly, if you redeemed your points for bitcoins, you will lose your status. However, the reserves in bitcoins will be there should you choose to leave the company’s system.

Private organizations move much faster than governments so I would expect corporates to be the first to back their currencies with Bitcoin. At that point, the argument that Bitcoin isn’t backed by anything becomes a whole lot more blurry.

Today’s loyalty programs like One Alliance and Starwood’s SPG are extremely large and concentrated because people want more and more ways to collect and redeem. If you compare Bitcoin to fiat currencies, then sure, it looks like Bitcoin isn’t quite there in terms of proliferation. However, if you compare to loyalty points, it looks a whole lot better. Bitcoin backing will allow many smaller companies to issue trusted loyalty points as they will be leveraging off the credibility of Bitcoin as value.