People often fall into the misconception that anonymity is core to the blockchain.
Drew Beechler, the founder and CEO of Holder, explained that the blockchain is an entirely public and immutable ledger, which is the exact opposite of anonymity.
“Nothing about anonymity needs to exist to make the blockchain work,” explained Drew on the Behind the Product podcast.
Zac Darnell, the Principal at SEP, and Raman Ohri, the President & CEO of SEP, sparked this conversation with Drew in the Holder: Web3 for Marketers podcast episode — diving deeper into web3 technology.
Here are my main takeaways from the episode. Listen to the whole session below for additional insight.
Anonymity shouldn’t be assumed in the web3 ecosystem.
In this episode, Drew explains that even though users are identified in web3 by a 42-character string that nobody knows, their transactions, data, and interactions will always exist and remain public on the blockchain.
Because of this, people shouldn’t assume that web3 technology is anonymous. More recently people have adopted ENS domains — the Ethereum Name Service (ENS) is a distributed domain name service (DNS) built on Ethereum, which turns Ethereum addresses into readable usernames. If you want to set up an ENS domain, here’s how to do it.
At some point, people won’t always want all their wallet addresses kept secret. Drew touched on this in the episode — he explained that using an ENS not only gives you a web3 identity but also allows you to have more social provability. He used the example that you can represent your loyalty to something based on when you purchased a digital collectible. Because the date of the transaction is immutable, it gives you the credibility to prove you have been a fan since day one.
Side note: This identity layer in web3 creates a unique opportunity for brands to know their loyal customers and reward them for their dedication to their brand. Check out what 17 of the best brands in web3 are doing.
Drew explained how he manages multiple wallets on the blockchain — he has one public wallet, with an ENS domain that is easily identifiable, but he also has several other wallets that he keeps private. By doing this, he has more control over what information he publicly shares.
Web3 users can keep their wallets private or add ENS domains depending on how they want to represent themselves in the open environment. By managing wallets, consumers have more control and privacy in web3.
The blockchain replaces expensive databases.
In addition to more transparency, brands use blockchain technology for many reasons. More recently, brands have been using this technology because it is a great way to store data and engage with customers. Simply, the blockchain is a database with built-in perks for brands and their consumers.
The blockchain stores immutable data in a fully public and permissionless interface. In many ways, the blockchain is a cheaper option for creating online brand experiences. Brands use the blockchain as a database to build web3 loyalty programs and store customer data — like Starbucks’ new loyalty program called Starbucks Odyssey.
The blockchain benefits users because they can have full ownership over their assets — they don’t need an intermediary system or middleman, reducing costs on both ends for the brand and consumer.
Brands continue to adopt web3 technology into their businesses because of the positive impact it has on the consumer experience and the reduction of associated costs.
Monetization is easier for brands and creators using web3.
The beginning years of the blockchain didn’t reflect web3 well — the technology was known for the crypto gold rush of users making fast money off of crypto investments. Luckily, brands have more recently redeemed web3 through use cases that innovate around B2C experiences and drive user engagement.
One example that came up in this episode was the Lens web3 use case. Lens is a web3 social network that similarly resembles Twitter/X. The Lens Protocol is built on the blockchain, indirectly enhancing users’ experiences.
Within the Lens platform, users can create a social profile by signing in with their crypto wallet. Once their profile is created, users can post, scroll through their feed, and like/comment on content.
The protocol itself easily allows users and brands to make money, though. Creators in the space make money off of the content they create — brands can assign value to digital assets, giving users more incentives to interact. This is just one example of many — brands and users are effectively monetizing web3 spaces in creative ways.
Once wallet management is easier, there will be mass adoption of web3 technology.
To onboard more users into web3, brands are working to simplify the overall process and remove the technical barriers keeping the average consumer out of web3.
Traditional brands are doing this by working with wallet-as-a-service providers. Wallet-as-a-service providers help consumers enter web3 spaces with email-based wallets or in other words, “invisible wallets” — companies like Magic help brands benefit from web3 technology without worrying about everything under the hood. As a result, the onboarding process is simplified and the third-party company helps manage customers’ crypto wallets on the back end.
Users want a brand experience that feels normal — they don’t want to learn a new technology or language to have a good experience. By doing this, brands can create web2 experiences on the front end and web3 experiences on the back end. (Learn more about the differences between web3 v. web2).
Drew also believes that there needs to be a way for consumers to manage their risks and fears before mass adoption happens. This can only happen if brands create better customer experiences and use cases.
Web3 technology is helping creators, users, and brands to experience the digital world in new ways. Not only will the future include web3 technology, but so will the most innovative marketing strategies.
If you want to move your business into the web3 space, consider reaching out to Holder — we would love to help you build a strategic marketing plan.