How NFTs, crypto and blockchain will one day work together to propel Web3.
Web3 is at that awkward moment when it is learning how to walk in a world that expects it to run. Like any new technology in its infancy, Web3 is babbling buzzwords—crypto, NFT, blockchain. The Web3 hype is tangible. This baby is growing up to be a doctor! The challenge for the digital marketer is to appreciate what the baby can do, when it grows up. Trying to understand what a technology can do, as opposed to what it promises to do, requires perception and discernment.
Shlomi Ron, founder and CEO of the Visual Storytelling Institute, first explained NFTs and crypto to MarTech almost two years ago. (See “A Guide to Visual Storytelling” Part I and Part II.) We thought it would be a good time to talk with him again to gain a better understanding of how NFTs, crypto and blockchain work together to propel Web3.
Step 1: Crawl
NFTs and crypto are each hard to understand when viewed in isolation. They must be taken together to see how they work. As Ron put it, “[They] are like the building blocks for Web3 technology.”
“Think of NFTs as one-of-a-kind treasures, like rare collectible toys, that can’t be replicated or traded for anything else. They help keep track of who owns unique digital things like digital art and in-game items on the blockchain,” he said.
“Cryptocurrencies, on the other hand, are like digital wallets filled with virtual cash. They help make payments and transactions on the blockchain secure and trustworthy,” Ron continued.
“Both NFTs and cryptocurrencies help Web3 work smoothly and securely, like puzzle pieces fitting together,” he said. “You can pay with crypto currency to buy NFTs in order to buy goods, services, and other digital assets.”
Step 2: Walk
Which leads to the tangible rewards Web3 must deliver. The whole point of this technology package is to engage customers in such a way as to increase brand loyalty. Just remember that the reward cannot be commonplace, like a coupon or a free pizza.
The NFT/blockchain combination can be crafted to deliver a customer reward that cannot be copied or faked, Ron pointed out. “By offering exclusive rewards, brands can encourage customers to engage with them and develop a sense of loyalty as they receive rewards that are otherwise unavailable.”
“Think of them as the evolution of the good ol’ loyalty points that airline companies offer but with a long-term ownership benefit,” Ron said. “[B]y using blockchain technology to track and reward customer engagement, brands can provide a sense of security and trust, which can further increase loyalty.”
Dig deeper: Web 3? It’s the web we hope for, not the one we know
Step 3: Run
Some brands are already trying out Web3 solutions, with varying degrees of success. Ron listed a few such efforts.
- The Gap used the Tezos blockchain platform to launch its own NFT program. NFT owners got a limited edition hoodie.
- Gucci turned to the Roblox platform to launch its “Gucci Garden” for a two-week period. “It attracted 20 million players despite being open for just 2 weeks,” Ron said.
- Gucci Town was the permanent follow-up, launched last year. “It sold one NFT accessory for over $ 4,000, exceeding the price tag of the physical version of the accessory,” Ron noted.
A more extensive use case popped up last December, when The Art Basel Miami art show saw a number of brands tried out their Web3 offerings on the public. “Phygitals (Rtfkt’s Nike co-branded Space Drip sneakers), distributed NFTs as a reward for doing something, such as attending a fashion show (Altuzarra) or being a member of a special app (Adidas),” Ron said. “Token gated entrances allowed NFT collectors exclusive access to events by DressX or Bored Ape Yacht Club.
“But it doesn’t end there. After people attended these exclusive events, they received NFTs called POAPs (Proof of Attendance Protocols) – paving the way for future rewards.” Ron added.
Step 4: Fly
Web3 is a promising start set against the dismal background of the “Crypto Winter”.
“The key triggers include an overvalued market, with some coins like Bitcoin reaching all time high $ 65k in Nov 2021.” Lack of regulation and rampant speculation fueled the chaos. Follow this with “the crash of the Luna and Terra stable coins, [and] the FTX’s crypto currency exchange bankruptcy. Last year’s volume of crypto abuse didn’t help,” Ron said.
A few things must happen to build public confidence in NFT and crypto if Web3 is going to succeed. “The public needs to have better understanding of how these technologies work in lock step with better usability,” Ron said. Right now, these processes are disjointed. “People need to be sure that their transactions are secure and the NFTs they buy are authentic,” he said.
“In short, to cross the chasm from the recent Early Adopters stage to Early and Late Majority, we need better usability, security, regulation and stronger utility,” Ron continued. “Embedding crypto and NFTs in everyday use cases that will drive perceived benefits.”
Ron reminded us that we are still in the early days of Web3. That world is “still wide open for everybody to innovate in.”
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