Consumers are becoming more protective over their personal data — one could argue that consumers’ increased awareness could be attributed to Netflix's release of The Social Dilemma in 2020, a docudrama film that exposes how brands and social platforms track consumer data.
Whatever it may be, it’s clear consumers care about data privacy and ownership — a recent study done by Cisco found that 86% of consumers care about data privacy and want more control over their data and 79% of consumers are willing to spend extra time and money to implement protective measures to protect their data.
Since data privacy and control are key to consumer experiences, brands and users have begun to enter web3 spaces because they offer data privacy, ownership, and control.
What is web3?
Before we discuss consumer privacy and control, you first need to understand the basics of web3 technology.
Web3 is a decentralized ecosystem built on blockchain technology — it’s the third generation of the internet. Web3 is characterized by ownership and giving users more control over their relationships with brands.
Within the realm of decentralization, everything is transparent — every web3 transaction is publicly posted to the blockchain, an open and public general ledger. All the data on the blockchain is immutable, meaning it can’t be tampered with or changed.
In order for users to interact in web3 spaces, they have to create a web3 wallet.
What is a web3 wallet?
Web3 wallets are simply accounts that hold web3 data — this data consists of digital assets, NFTs, tokens, cryptocurrency, etc. Each wallet (think of it being a hybrid between your Instagram profile and Apple Wallet) is tied to a blockchain address. The wallet address functions as a unique identifier or username — similar to a Twitter handle or Instagram username. Wallet addresses are a randomized string of numbers, normally about 42 characters long.
Wallet addresses are fully open and public, but also fully anonymous.
Before I lose you, let me explain it.
If someone searches your wallet address, everything in your wallet would be visible to that person — they would be able to see all of the web3 assets held in that wallet.
Here’s the kicker — based on the information tied to the wallet, there’s no way for users to identify that you own that wallet. The only way for people to know your wallet is yours is if you connect personal data to it, like submitting your email and wallet address in a web3 form, or if you create an ENS domain (which will be explained later).
How do web3 wallets lead to consumer privacy and control?
Wallet addresses empower you to have more control and privacy over your personal data. After setting up your web3 wallet, you can easily decide what information you want to share with each brand.
There are two specific ways users do this.
You can create different wallets for different purposes.
Web3 users can create various wallets to represent different identities or personalities.
If you love sports, cars, and managing your finances but want to keep it all separate — there’s a way to do that. You can create three different wallets to represent your different interests.
Before making any purchase of digital assets or trading NFTs, you have to connect or log into your wallet. By connecting your wallet, you are openly sharing your wallet information with that brand or user.
Creating separate wallets allows you to manage what data you want to share with other brands or users, like your web3 transaction history and more. For example, when you purchase an NFT from a brand, they have access to your wallet address and can see what is in your wallet. This information helps brands personalize your experience and tailor it to your preferences.
Your personal data is not public on-chain.
Your web3 data is open on the blockchain, but your personal data is not.
Wallets don’t contain any PII data (personally identifiable information) like your name, email, phone number, address, etc.
Because of this, you have more privacy and data protection as a consumer. Web3 brands cannot find your address to send you mail, your phone number to text you spam, or email to send you 1,000+ newsletters.
If you decide you want an identifier attached to your wallet address, such as your name, you can create an ENS domain.
What is an ENS domain?
An ENS domain is extremely similar to a web address domain — it stands for the Ethereum Name Service, a distributed domain name service built on Ethereum.
ENS domains take long 0x Ethereum addresses
(like 0x437316b9A71E183D4097409438C5F8A8F27c0F33) and turn them into human-readable names like ‘holderxyz.eth’.
Not only are ENS domains easier to remember than a 42-character address, but you also get to choose the unique identifier for your wallet.
Brands and users set up ENS domains for their public-facing accounts. If you want to be more identifiable in web3, setting up a branded ENS domain only takes a few minutes!
In the web3 ecosystem, both users and brands win.
Customers control where they connect their wallet information and brands can learn more about their customers. As a result, brands have more opportunities to create fair and customized web3 journeys for their customers.
Learn more about the evolution of consumer privacy and ownership.
Check out the video below or read, For the First Time, Consumers are in Control, to learn more about consumer privacy, ownership, and wallet personalities in web3!