Points are all the rage in crypto right now.  And that’s sort of odd, since they’re nothing new.  Brands have used them for decades (Delta miles, Starbucks, Amex).  Driving consumer engagement with rewards is nothing revolutionary.  But what if we applied that model directly to money? Underneath it’s simple facade, Points actually opens up a massive opportunity….Inflation-Resistance.

So, how would we use “Points” to solve real world problems, like, say, inflation?  Fairly simple - instead of rewarding consumers for transacting (as in the normal course with Starbucks, et al), reward them with Points when inflation rises.  Think of it as a loyalty program for the US Dollar, or “Points on USD”.

This is the wedge for the mass adoption of crypto payments and could reshape commerce.  A completely ridiculous statement, but it sounds fun. Let's see how.

A 100 years ago, prominent economist Irving Fischer described a compensated dollar that would maintain purchasing power and thus act as an ideal form of money.  Its goal was to reward holders when inflation rose, to offset any loss in the value of the dollar.  It didn’t end up working.  But with crypto and Points, we get another legitimate shot at bringing Fisher’s general idea to life.

To jump right in, our goal here is to create a form of money that maintains purchasing power.  We can call them Flat Tokens.  As inflation rises, holders of Flat are rewarded with Points on each US Dollar denominated Flat they hold.

Fairly simple idea.

But, as always, the deliciousness is in the details.

Details:

The basic idea is a token that rewards holders daily with additional tokens, or Points. But only when inflation rises (i.e. CPI peg).  The additional tokens would be used to offset any change in purchasing power. Still, fairly standard. Ok, ok…get on with it already.

Sorry, first, just a little example:

A user holds $100 in Flat tokens.  Inflation rises 0.01% today.  The smart contract is triggered and Inflation Offset Rewards (ie Points) are minted against that total $100 Flat Token Balance.  Points are then set to the holder, to offset the rise in prices.

Now, there are existing Flatcoin schemes out there that do something similiar. But their designs all of them have problems. Especially when used as a medium-of-exchange. We solve those issues with Token Bound Accounts, and usher in a usable form of inflation-resistant money.  More details on token design can be found on an earlier post here.

So, why is this revolutionary?

Because it offers consumers something they can’t get anywhere else…inflation-resistant cash.

Consumers don’t use crypto because there’s no real advantage for them to do so. Amex and debit work fine.  Points and programmability create a unique benefit that current payment methods don’t offer.  It opens up an entirely new incentive system on top of money, and will drive increased demand for crypto payments.

Soon, consumers will have a choice on the version of digital money they use.

Do I want to continue using boring old regular dollars, OR upgrade and use a dollar that rewards me with Points. Many will recognize/demand the differentiated product.

So, simple idea. Unique design. With big implications.

“Points on USD” enables an ideal form of currency that maintains purchasing power.  A crypto version of Fischer’s “Compensated Dollar”.

This is the path to crypto mass adoption.

Thanks as always for reading. Feel free to reach out on X (@philip0x). DMs open.

Points are all the rage in crypto right now.  And that’s sort of odd, since they’re nothing new.  Brands have used them for decades (Delta miles, Starbucks, Amex).  Driving consumer engagement with rewards is nothing revolutionary.  But what if we applied that model directly to money? Underneath it’s simple facade, Points actually opens up a massive opportunity….Inflation-Resistance.

So, how would we use “Points” to solve real world problems, like, say, inflation?  Fairly simple - instead of rewarding consumers for transacting (as in the normal course with Starbucks, et al), reward them with Points when inflation rises.  Think of it as a loyalty program for the US Dollar, or “Points on USD”.

This is the wedge for the mass adoption of crypto payments and could reshape commerce.  A completely ridiculous statement, but it sounds fun. Let's see how.

A 100 years ago, prominent economist Irving Fischer described a compensated dollar that would maintain purchasing power and thus act as an ideal form of money.  Its goal was to reward holders when inflation rose, to offset any loss in the value of the dollar.  It didn’t end up working.  But with crypto and Points, we get another legitimate shot at bringing Fisher’s general idea to life.

To jump right in, our goal here is to create a form of money that maintains purchasing power.  We can call them Flat Tokens.  As inflation rises, holders of Flat are rewarded with Points on each US Dollar denominated Flat they hold.

Fairly simple idea.

But, as always, the deliciousness is in the details.

Details:

The basic idea is a token that rewards holders daily with additional tokens, or Points. But only when inflation rises (i.e. CPI peg).  The additional tokens would be used to offset any change in purchasing power. Still, fairly standard. Ok, ok…get on with it already.

Sorry, first, just a little example:

A user holds $100 in Flat tokens.  Inflation rises 0.01% today.  The smart contract is triggered and Inflation Offset Rewards (ie Points) are minted against that total $100 Flat Token Balance.  Points are then set to the holder, to offset the rise in prices.

Now, there are existing Flatcoin schemes out there that do something similiar. But their designs all of them have problems. Especially when used as a medium-of-exchange. We solve those issues with Token Bound Accounts, and usher in a usable form of inflation-resistant money.  More details on token design can be found on an earlier post here.

So, why is this revolutionary?

Because it offers consumers something they can’t get anywhere else…inflation-resistant cash.

Consumers don’t use crypto because there’s no real advantage for them to do so. Amex and debit work fine.  Points and programmability create a unique benefit that current payment methods don’t offer.  It opens up an entirely new incentive system on top of money, and will drive increased demand for crypto payments.

Soon, consumers will have a choice on the version of digital money they use.

Do I want to continue using boring old regular dollars, OR upgrade and use a dollar that rewards me with Points. Many will recognize/demand the differentiated product.

So, simple idea. Unique design. With big implications.

“Points on USD” enables an ideal form of currency that maintains purchasing power.  A crypto version of Fischer’s “Compensated Dollar”.

This is the path to crypto mass adoption.

Thanks as always for reading. Feel free to reach out on X (@philip0x). DMs open.