Why Web3 Wallets Are The New ‘Cookies’ for Digital Marketers
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As the next evolution in internet technology, Web3 promotes individual data ownership, privacy, and user agency through technologies like blockchains, cryptocurrencies, smart contracts, and digital wallets. A key player in this decentralized ecosystem is the Web3 wallet, which serves as a users account for sending, receiving and storing cryptocurrencies on the blockchain. With the potential to transform the digital landscape, Web3 wallets are seen as the gateway to this new age. As the decentralized web provides a wealth of data on customer behavior and preferences, traditional brands have an unprecedented opportunity to directly engage with and understand their customers. In this weeks #LearnWeb3, we delve into the value proposition of Web3 wallets for such brands, elucidating how they can leverage this new technology to strengthen their customer engagement and loyalty.
#What is Web3?
Web3, the decentralized web, is the next phase of internet evolution, adding an "ownership" layer to the earlier Web 1.0's static pages and Web 2.0's interactive user content. It aims to decentralize power from a few tech companies to individuals using technologies like blockchains, cryptocurrencies, smart contracts, and digital wallets. This promotes data ownership, privacy, and user agency, fostering a digital democracy. The technologies allow transparent, verifiable interactions, enabling users to authenticate and own their data. For example, blockchain, a shared database maintained by a user network, creates a transparent, tamper-proof record to verify data ownership, including digital assets. Web3 envisions empowering users through decentralization and open-source technology, transforming online information exchange and power dynamics towards individual control.
#What is a Web3 Wallet?
A Web3 wallet, sometimes referred to as a public key or wallet address, functions as a user's account on a blockchain. It's comparable to an email address and is used to send, receive and store cryptocurrencies or tokens.
Paired with this public key is a private key, which acts similarly to a password or secret code. This private key is specific to the individual user and is vital for authorizing transactions, such as sending coins out of the wallet. The private key must be kept safe and confidential, as anyone possessing it can manipulate the associated public key and carry out transactions.
The public and private keys are interrelated, yet due to encryption techniques, it's virtually impossible to derive the private key from the public key, thereby ensuring the user's funds and identity remain secure on the blockchain.
Here's a simplified breakdown of Wallets & Keys:
Public Key: It's a cryptographic code linked with a private key. It's used to receive cryptocurrency transactions and is usually represented as an address, a shortened form of the public key. Despite being open to receiving transactions, the private key is needed to "unlock" and claim ownership of the received cryptocurrency.
Private Key: It's a secret code allowing you to demonstrate ownership or expend the funds tied to your public address. This key should never be shared with anyone, as losing it equates to losing your cryptocurrencies permanently.
Wallet: It's a digital account required to store your cryptocurrency. Wallets can be online-based, software on your device, or a specific hardware device. All these wallet types store your public and private keys, facilitating transactions on the blockchain.
Custodial vs. Non-custodial Wallets: A custodial wallet is controlled by a third party, usually an exchange or a web-based platform. On the contrary, non-custodial wallets allow users to control their private keys independently, offering more security at the cost of increased responsibility.
#Wallets are a ‘homebase’ for first-party data
Web3 offers a rich data environment for brands to understand customer behavior and target customers based on their blockchain(or ‘on-chain’) activity. Unlike in Web2, where customer behavior is assessed by tracking browser activity, Web3 naturally aggregates this information through the user's digital wallet.
The wallet represents the first point of entry into the on-chain ecosystem. It is also considered a homebase for customers’ digital assets, transaction records and dApp connections.
As all this information is public, the need for brands to bid for access to consumer data via third parties is eliminated. Instead, brands can choose to interact with customers to produce first-party data (data that companies collect directly from their audience, such as purchase activity, social media interactions, feedback comments or survey responses).
By identifying and targeting holders of specific NFTs, such as PFPs, In-game NFTs, or Proof of Attendance Protocol (POAP) NFTs, brands can determine customer preferences. Brands can then airdrop NFTs to current or potential customers' wallets based on their NFT holdings and track conversions to their website or checkout page to evaluate the success of their campaign.
This essentially makes wallets the new ‘Cookies’, as stated by Marc Mathieu, co-founder of Salesforce's Web3 studio.
#Magic’s Web3 Wallet-as-a-service
Magic's Wallet-as-a-service or WaaS provides a comprehensive set of tools for user authentication, white-labeling, and third-party service integration, allowing customers to effortlessly create instant Web3 wallets via email, social, or SMS logins. Trusted by both Web3 startups and Fortune 500 companies alike, Magic has added over 20 million wallets and 130,000 developers today.
Our SDK solution reduces the friction of setting up a wallet, enabling brands to launch token-based loyalty programs in which non-crypto native customers can instantly create a wallet and claim rewards with no download, password or seed phrase requirements.
We believe these developments will have a massive impact on customer acquisition and retention. By using a branded wallet to onboard customers, brands can become the first point of entry for non-crypto native consumers to move on-chain. We can compare this to companies like Microsoft, Google, and Apple that have historically served as critical access points to the internet through their operating systems, search engines and smartphones. This has allowed these brands to remain a permanent fixture in all of our lives as we increasingly spend more time online.
As Web3 becomes more dominant and consumers spend more time on-chain, the brands that offer a first-time onramp through Magic-enabled branded Web3 wallets will similarly become a permanent fixture in their customers' lives.
#Powered by Magic's Wallet-as-a-Service (WaaS)
To learn how Magic's Wallet-as-a-Service (WaaS) can enable seamless user onboarding for your web3 project, visit https://magic.link/enterprise and book a demo.