Source: Forbes
Shopping for products online isn’t always the most personal experience — regardless of our consumer data being monitored, stored, and even manipulated in hopes of delivering just that. While the feeling that our phones are listening to us has been debunked as a myth, it’s no coincidence that what we see on our feeds mirrors our online and even IRL habits in eerily accurate ways. This Big Brother-esque feeling is more of a result of tracking than spying. It ultimately helps contribute to the gold mine market of how e-commerce brands and social media platforms rely on our online activity — and data — to sell us products.
While the mysterious journey of our data helps power a 270-billion-dollar industry of social media ad spending, it’s often the result of a broken and increasingly ineffective system. The opportunity for e-commerce to be revolutionized by web3 technology, focusing on credentials, user verification, and decentralized ownership, can mean a whole new world of opportunity for brands and users. Let’s learn how this new era is one that’s built on web3’s pillars of trust, transparency, self-sovereignty, and privacy.
The (broken, centralized) journey of our data
Step one: go online. This action can mean opening your laptop or, more likely, unlocking your phone. If you’re like most, you tap into your favorite social media app. From there, your Internet Service Provider (ISP) assigns an IP address that logs your online activities. Whether it’s Instagram or even this website, your data gets collected through tracking scripts or cookies (which you have to accept and are reported on their way to getting phased out).
Collected data includes everything from browsing history to interactions with ads and purchasing preferences — and it’s almost entirely stored on platforms’ databases, often on cloud servers provided by corporations like Amazon AMZN +0.5% AWS, Google GOOG -0.4% Cloud, or Microsoft Azure. Advertisers commonly rely on data management platforms (DMPs) and customer data platforms (CDPs) to continue personalizing and serving you ads. In tandem, e-commerce platforms use cookies and session data to track your browsing behavior, which also helps personalize your shopping experience.
Across these centralized intermediaries where our interactions help guide the nature of our online experiences, the journey of data is heavily fragmented — and it rarely belongs to us. From Meta’s (then Facebook) infamous Cambridge Analytica scandal to 23andMe and Amazon, a lack of ownership and transparency into our data has made being an online user far more fragmented — and often dangerous.
Many fail to understand that it’s also made it less efficient for brands and platforms requiring consumer analytics to grow engaged and loyal communities, retain customers, and improve their products. Gone are the days when traditional, increasingly expensive CRM tools like Hubspot or Google’s AdTech products were the only option. NFTs might very well be the new cookies, and web3 credential systems could be used similarly to help brands better understand and connect to their customers.
From broken to open networks
Instead of solely relying on centralized data platforms and social media platform’s ad tech, why not connect peer-to-peer with consumers to understand and reward their engagement and loyalty?
Enter the power of collaborative, onchain credential networks, where e-commerce brands, online communities, and even individuals can recognize and reward others for the nearly endless activities and accomplishments that make up one’s digital identity.
Do you regularly engage with a brand’s marketing campaign? Are you a power user of a particular product? Do you attend branded pop-ups (in the metaverse or IRL) and purchase products from a specific retailer? With web3 credentials, users are issued tokenized credentials (often in the form of an NFT NFT 0.0%) for these kinds of actions, which can be used by issuers (often brands) to understand their habits without having to mine and manipulate their data (and identities) through a centralized third party.
This is where next-generation technology like zero-knowledge proofs becomes so powerful. The benefits of zero-knowledge proof technology enable composability for everyone to have onchain credentials and use it everywhere with full ownership, but with privacy protection at the same time. Due to these factors, onchain credentials help create an open, fair, permissionless, and centralized network. And because it’s all onchain, users have complete visibility—and ownership—into their data credentials. Anyone can participate in this network, and the users gain the power to get out what they put in. From solutions like ZKPass to Sismo to Galxe Protocol, we’re already witnessing what’s possible when web3 technology reimagines what’s possible with one’s online identity in a secure and collaborative way. Once the tech is in place, the use cases come to life.
Once users gain more credentials on their digital profiles, they can be easily verified by brands in online shopping or IRL settings (assuming the user opts in). Instead of requiring cookies or other forms of tracking and analytics, credentials are like a secure and user-owned trail of breadcrumbs that benefit both parties. The more credentials you gain, the better a brand can understand what type of consumer you really are and how you spend your time online. And because the credentials live onchain and connect to your digital profile, they aren’t susceptible to CRM price hikes, data leaks, or other unwanted activities.
Credit where credit’s due
In today’s world wide web, user and brand relationships can feel cold, one-sided, and even intrusive. While personalized ads or tracking might make our online shopping experience faster, they are at the detriment of our privacy, and they usually fail to do what all brands and platforms often desire most: to make consumers feel like they’re a part of something that understands them.
Through the power of web3 credentials, the brand-to-user relationship goes from transactional to something far more rewarding: a community.
