Have you noticed? Something is happening to the World Wide Web, and it’s happening fast. Perhaps you’ve read about teenagers selling “digital assets” for millions of dollars and anonymous cryptocurrency founders turning traditional concepts of money upside down. So, what’s all this new, exciting, and yes – often weird – stuff really about?
Well, there’s not one straightforward answer because the future is growing increasingly complex. But it’s about leaving the internet as we know it behind and venturing into new and uncharted territories. It’s about embracing concepts like Web3, crypto, blockchain, and NFTs.
Experts predict that NFTs and Web3 transactions will most likely be commonplace in ecommerce within less than five years, so if you don’t want to fall behind – it’s time to start planning ahead.
Admittedly, it can be tricky to wrap your mind around these concepts. But once you do, you will also start seeing the potential they hold in ecommerce.
Related reading: NFT Art Sites – A New Revenue Channel for Ecommerce Merchants?
What is Web3? – The Next Generation of Internet
Before we dive into the more detailed aspects of these new trends, let’s look at the more overarching concept of the next generation of internet. Web3, also referred to as Web 3.0, represents a whole new iteration of the World Wide Web. Often, Web3 is contrasted with our current Web 2.0, also known as the participatory web.
In Web 2.0, data is centralized, meaning it’s mostly owned and controlled by a limited group of big players. These big corporations are often called “Big Tech,” a term coined by one of the co-founders of Ethereum. The centralization of power in Big Tech companies that we see today is pretty much the antithesis of the digital world that Web3 enthusiasts are envisioning.
Web3 is a potential new digital universe based on blockchain and typical blockchain concepts like decentralization and token-based economies. The appeal of Web3 lies in its decentralized nature, which removes Big Tech and any intermediaries from the equation. Instead of accessing the internet through platforms like Google, Apple, or Facebook, in Web3, it’s the individuals who own and control their pieces of the internet.
Web3 eliminates the need for “trust” and the need for intermediaries facilitating virtual transactions. Instead, safe transactions and reliable payments are guaranteed through the blockchain. And, at least in theory, Web3 would also better protect user privacy, since today it’s mainly Big Tech who are collecting potentially sensitive information and user data.
Characteristics of Web3:
- Information is mainly free and open-source
- Transaction information is unique and authentic
- Each person owns their data
- The centralized monetary system is replaced by DeFi (Decentralized Finance) and cryptocurrencies
- Transactions and ownership are anonymous
All that Glitters is Not Gold
Of course, this is the idealized and somewhat utopian vision of Web3 presented by hardcore blockchain enthusiasts. In reality, Web3 may not turn out quite that egalitarian. For example, one aspect of Web3 that’s currently seeing a lot of traction is decentralized finance, or DeFi. DeFi is all about financial transactions on the blockchain without assistance from banks or the government. And while that may sound good, DeFi has unsurprisingly attracted several large companies and VC firms that are already investing significant sums in building out Web3. It’s hard to imagine that their involvement will not amount to a different kind of centralized power.
An Increasing Demand for NFTs
But even though Web3 is still an emerging concept, and Big Tech is very much alive and kicking, some trends are already ultra-relevant from an ecommerce perspective. An example is the frenzied appetite for NFTs or Non-Fungible Tokens. The desire for digital assets is already spurring crazy bidding wars for everything from the Nyan Cat selling at almost $600,000 to an original tweet from Twitter CEO Jack Dorsey being sold at a staggering $2.5 million.
Before we explore this further, let’s rewind and explore the category of NFTs. NFTs are a particular type of crypto asset. They’re part of the Ethereum blockchain, and NFTs are distinct, one-of-a-kind digital objects, ranging from music and art to games and even tweets. NFTs are bought and sold online, typically using cryptocurrency. And while currencies like traditional money and bitcoin are “fungible,” which means they can be exchanged one for another, NFTs are unique (hence the name, “non-fungible”). Each NFT has a digital signature that can’t be altered, and owners can verify ownership using that signature.
The NFT Market – To The Moon
NFTs can increase in value, just like any other asset. And right now, they seem to do so without any limits. It’s not uncommon to see buyers paying thousands, and even millions, for the most popular NFTs of the moment, which has turned the NFT category into a new kind of speculative market.
What Are The Implications For Ecommerce?
Web3, crypto, and NFTs are already impacting ecommerce, which is a development that will only accelerate. And as startups keep innovating at high-speed, the use cases for blockchain keep expanding. Let’s look at some real-world examples of how this impacts the ecommerce landscape.
A Trustless Ecommerce Landscape Based on Blockchain
In the near future, consumers will most likely be buying products in webshops through innovative, contract-enabled, and distributed applications (dApps) over the blockchain. Self-executing code will make these transactions immutable and trustless, leading to reductions in returns, chargeback fees, and fraud. While today, trust is the primary driver in ecommerce, that will be of less importance in Web3, where it’s the blockchain that guarantees the transactions. Paying with cryptocurrencies in ecommerce will be just as common as paying with credit cards or PayPal.
Ecommerce Loyalty Reward Programs Based on NFTs
One of the most popular use cases for NFTs in ecommerce is the monetization of loyalty programs. Typically, these programs reward you with points for every purchase you make. Points that can be redeemed for products or discounts or add up to bigger bonus items.
NFTs allow companies to offer far more valuable loyalty rewards. Instead of giving customers arbitrary points, companies can issue NFT-based tokens with a predefined value.
Customer Experiences in the Metaverse
As with many emerging technologies, there’s yet no universal definition of exactly what the Metaverse is or what it will look like. But we know that it’s coming and that, in part, it’s already here. The Metaverse is a combination and extension of many existing and emerging technologies, such as AR, VR, blockchain, crypto, and social commerce. One definition often used is that the Metaverse is an ever-expanding world of real-time, virtual spaces in 3D that are not just additional selling channels but become an economy of their own. Building customer experiences in the Metaverse is an exciting challenge and opportunity for ecommerce brands today – and even more so in the future.
Related reading: Digital Experience Strategy: Customer Data in B2B Ecommerce
NFTs to Build and Monetize Communities
One example of how innovators are expanding the concept of NFTs comes from the startup POAP. The abbreviation is short for Proof Of Attendance Protocol, which is exactly what their business idea is all about. The startup recently raised a $10 million seed round to develop this concept, which is basically about turning participation at events into NFT assets: “proofs of attendance.” The idea is to use NFTs to create communities based on shared experiences. POAP is based on badges as visual signifiers of their protocol. This means, for example, that you could scan a QR code IRL and receive an NFT memento, which in turn gives you admission to an online community.
B2C Companies Already Embracing NFTs
The appeal of NFTs lies partly in building online communities of digital art holders and offering member perks such as real-life events, meetups, and special offers. Companies like Nike, Taco Bell, and Coca-Cola have all taken their stabs at this booming NFT market. Some have launched their own NFT art, often tied to fundraising campaigns. Others are making investments in blockchain technology. One example is Reddit, which uses Web3 and blockchain technology to enable users and contributors to own parts of the communities they’re a part of.
Vaimo’s partner, Threekit, which helps brands deliver ecommerce experiences in 3D, has recently debuted their ability to offer product NFTs for their brands. According to Marc Uible, VP Marketing at Threekit, “This exciting addition will allow customers to purchase unique 3D NFTs right from a brand’s ecommerce site. It is an opportunity for brands to future-proof themselves for an ever-growing, perhaps one-day ubiquitous Metaverse.”
HOW VAIMO CAN HELP
At Vaimo, we’re constantly exploring new strategies to help our clients build out new revenue streams. Web3 and NFTs come with endless potential for ecommerce applications, and we’re happy to help you navigate this new landscape and discover where you could apply new technology to drive your business forward.