Would it be reasonable to consider CVS Extrabucks a sort of cryptocurrency?
Cryptocurrencies hold the promise of making it easier to transfer funds directly between two parties as part of a digital transaction, without the need for a trusted third-party such as a bank or credit card company.
The first cryptocurrency to capture the public imagination was Bitcoin, launched in 2009 by an individual or group known under the pseudonym, Satoshi Nakamoto. Bitcoin’s success led to a number of competing cryptocurrencies, such as Litecoin, Namecoin and Ethereum. Nowadays, there are thousands of cryptocurrencies available online, with an aggregate market value of over $120 billion as of February 2019.
Cryptocurrencies allow for the secure payment of online transactions denominated in terms of a virtual “token,” representing ledger entries internal to the system itself. As digital or virtual methods of value transfer, cryptocurrencies make use of cryptography for security, thus their name. One of the key defining features of a cryptocurrency is that it is not issued by a central authority. Thus, many cryptocurrencies are based on a distributed and decentralized ledger enforced by a far-ranging network of computers. Indeed, many technology companies now provide platforms for establishing and “rolling-your-own” blockchain, or online ledger, to support the creation of cryptocurrencies. However, few currencies based on corporate-specific platforms have taken off. CVS’ ExtraBucks might be one exception.
CVS shoppers using the ExtraCare card can earn 2% in CVS ExtraBucks on every transaction they make within CVS locations. Also, several promotions run throughout each month letting shoppers earn ExtraBucks for many multiples of US Dollars spent on products purchased at CVS. Finally, ExtraBucks may also be earned by filling a prescription, signing up for email or text alerts, as well as for receiving the yearly flu shot. ExtraBucks expire within thirty days of being earned rendering ExtraBucks as a unique form of “exploding” digital currency or a sort of cryptocurrency.
While ExtraBucks cannot be exchanged for cash currency the same way certain cryptocurrencies could be traded for cash on a cryptocurrency exchange, shoppers may still earn free items when making a purchase with a rebate. However, CVS won’t provide shoppers with money back if the value of ExtraBucks is greater than the purchase price.
When ExtraBucks are used as payment for goods at CVS locations, a unique number/barcode identifier is used at the point of sale and likely serves as a reference to both the shopper’s ExtraCare account making the purchase along with the denomination in ExtraBucks. Whether this numeric identifier ends up in some form of ledger hosted by CVS (or otherwise), such a platform may not necessarily be decentralized in the way cryptocurrency ledgers are classically defined.
Since no banking system is involved at the point of sale, ExtraBucks do make it easy to transfer funds directly as part of a digital transaction performed at CVS. This would serve as a point in favor of categorizing ExtraBucks as a sort of cryptocurrency.
Several benefits are associated with CVS ExtraBucks and there are many ways to earn ExtraBucks at participating CVS locations. However, since one of the key defining features of a cryptocurrency is that it is not issued by a central authority, this poses a significant challenge towards considering ExtraBucks as a cryptocurrency. Particularly since CVS itself is the central authority issuing such digital currency and redeeming ExtraBucks is only possible at CVS locations.
Separately, it is quite intriguing to note that the “exchange rate” for ExtraBucks and US Dollars is effectively 1-to-1, unlike rates of exchange found in other such loyalty programs. Based on the above, having awareness of the data-gathering potential behind the ExtraBucks program, and pending future changes to the program administered by CVS/CareMark, ExtraBucks may characterized as more of a digital loyalty program, rather than a cryptocurrency, having very unique and interesting capabilities.