Web3 from digital ownership to better customer engagement - Interview with Alex Solomon
Primer: Alex Solomon is passionate about digital incentives and brand engagement. He has successfully launched Microsoft’s NFT rewards program. Today, he is building Myntflo, a project that will onboard brands into Web3, using NFTs to generate strong customer/fan engagement. Read about his thoughts here.
Background
Has spent his entire career at Microsoft
Learned about crypto starting in 2016
Decided to leave Microsoft at the end of 2020 to focus on Web3
Founder and Managing partner of Genesis Network GmbH, a Swiss blockchain consulting practice
Building Myntflo, an NFT brand engagement project
History Of The Internet
Web1: A term retrospectively applied to the mid to late 90s when the internet first came out
Web1 was about content publishing and creating static websites to push information out
Web2: Users can now interact on the internet (e.g. they could buy things, do online banking, etc.)
Web3: Gives users the ability to reclaim control of their data and democratizes your online experience
Web3 unlocks new models of governance where users can interact with brands and have ownership
Why Do We Need The Blockchain?
Most use cases do not require a blockchain and are better suited to centralised storage
Projects that make good candidates for public blockchains are those requiring open access, neutrality, censorship resistance and transaction immutability
Blockchains are very good at preserving history and guaranteeing immutability
“That's a super important trait [immutability], because that essentially gives you the ability to make trustless transactions where you don't have counterparty risk, because you're not relying on an intermediary or a third party to preserve that data for you.”
- Alex Solomon
Private chains, consortium chains, and CBDCs are not really blockchains as they replace it with their own consensus mechanisms
Any sort of central service you use could prevent you from using it. Hence, considering counterparty risk and when to use a blockchain is important
Banks’ Reactions To Blockchain
Some banks have been fairly progressive with one leg in the old world and the other in web3
In the future, most TradFi assets will be tokenized and traded on public blockchains
So most banks see blockchains as a direct threat, competing with their services
Bitcoin And Ethereum
Their Differences
Bitcoin was the first coin. It was created by Satoshi Nakamoto
Bitcoin was designed to be used as digital cash. Today, it’s considered more of a digital gold/store of value
Bitcoin is a decentralised network not capable of smart contracts
Ethereum is also a decentralised network however it was designed to be programmable and supports smart contracts
Anyone can write an app on Ethereum using the Solidity language, which is similar to JavaScript
Instead of hosting it on a traditional web hosting platform, you push the app to the chain/execution environment and it becomes available for everyone
Ethereum has a different consensus mechanism (Proof of Stake) compared to Bitcoin (Proof of Work)
Proof of Stake is more energy efficient and secure than Proof of Work
Tokens
Bitcoin is a decentralised network that uses Bitcoin as its native coin
Ethereum is also a decentralised network with its own coin (Ether) but also supports smart contracts and the creation of other tokens
NFTs
NFTs - Generally, we can say that tokens fall into two categories:
Fungible (think coins)
Non-fungible (think NFTs)
Fungible tokens mean that one unit is completely interchangeable with one another
Non-fungible means that they are unique and not interchangeable
NFTs that have value are just not as liquid as fungible tokens though they can be sold and traded
Are Bitcoin And Ethereum Not ESG Friendly?
It depends on who’s making the designation
For example, the EU has changed its rules on what is considered ESG friendly
At the time this was recorded, Bitcoin was consuming over 100 Terawatt hours of power per year. Looked at out of context, it seems crazy
But... creating, delivering, storing, securing and insuring cash notes costs many times more than securing Bitcoin
Digital Ownership
Ethereum was created by Vitalik as he was unhappy that the online game he was playing could arbitrarily change the rules
People put in time and money into games
The idea that people could have assets that they control mean that other parties could not take it away from them
Use Cases For Smart Contracts
Digital Incentives
Particularly passionate about digital incentives and the future of customer engagement
Building Myntflo to help onboard brands to Web3 and to engage their fans using NFTs
People have been buying and selling NFTs, but have largely not been used as a customer engagement tool
Businesses can give away NFTs to customers to enable them to access certain privileges that come along with it
Non-profits could fundraise by issuing NFTs with special features such as royalty sharing
Loyalty programs such as frequent flyer miles are low-hanging fruit that can be disrupted with NFTs
“Why not convert legacy loyalty programmes into Web3 enabled next-gen digital experiences? It's an opportunity to make your customers happy, giving them digital assets they actually own.”
- Alex Solomon
Other Use Cases
Other use cases include DeFi, digital fashion, the Metaverse, and social platforms
Digital identity is a huge area as companies have not done a good job protecting consumers’ data
We still have some challenges specific to identifying unique humans on the blockchain
In the next 10 years, we will see new use cases that we have not even thought of before
Building An Ecosystem
He's passionate about helping organisations integrate web3 digital incentives into brand and product marketing
While at Microsoft, he built a NFT rewards program called Azure Heroes for the global developer community
After a successful launch, he realised he wanted to focus full time on this space and decided to leave the company to create Myntflo
NFTs can be given to customers in exchange for things like engagement or attendance
It’s not just about selling NFTs for revenue any longer
If you succeed in gamifying your brand using NFTs, you will build better brand engagement and provide fans with real ownable assets
You will gain insights and more direct channels to your heavily engaged customers
NFTs must have strong utility and community following to ensure that people will continue to hold and use them
“You want customers and fans to be able to mint an NFT for provable acts. But for even more value (and to foster loyalty), you give them the option to stake these coins and earn coins that could be redeemed later for merchandise or swag.”
- Alex Solomon
Thoughts On Regulation
The EU is going to pass a law called Markets in Crypto-Assets (MICA)
Not sure what the final outcome will be
One thing is sure - this type of regulation is primarily designed to protect the incumbent financial industry
And it looks like NFTs will also be included in the law
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