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Interview

Interview: Crypto, Web3, Blockchain, NFTs: A Primer for Brands

The internet as we know it is in the midst of massive change. The buzzwords abound - blockchain, crypto, Web3 NFTs. It all adds up to a new way that people connect, interact and transact with each other digitally. It will have significant impacts on marketers, but many of those impacts and their timing are yet unknown. It seems like now is the perfect time to begin an extended conversation about what these shift and innovations are, and what they might mean for brands now and in the years and decades to come. Justin King, Chief Evangelist at Salsify and self-professed Web3 nut, dropped by the podcast with Lauren Livak and Peter to get the conversation started.

Transcript:

Peter Crosby:

Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age.

 

Peter Crosby:

The internet as we know it is in the midst of massive change. The buzzwords abound - blockchain, crypto, Web3 NFTs. It all adds up to a new way that people connect, interact and transact with each other digitally. It will have significant impacts on marketers, but many of those impacts and their timing are yet unknown. It seems like now is the perfect time to begin an extended conversation about what these shifts and innovations are, and what they might mean for brands now and in the years and decades to come. Justin King, Chief Evangelist at Salsify and self-professed Web3 nut, dropped by the podcast with Lauren Livak and Peter to get the conversation started. 

 

Peter Crosby:

So Justin, thank you so much for returning to the podcast. All right, I'm going to fess up here. I hear the words blockchain, crypto, Web 3.0 and NFTs, and my brain shuts down. I mean, seriously, I always wondered, as I aged, what would be the first big thing that my brain would just to understand, like my parents and cordless phones? And it turns out that this is it. So, I thought maybe some percentage of our audience might feel the same way. And apparently it might matter that we understand it. So, here we are. So, my first question is what in God's name is going on here?

 

Justin King:

Well, I'll tell you what, I mean, I'm a technologist, right? And I feel the same way. I think we're probably closer to age than some of our other colleagues. So, I feel the same way. But during COVID, I watched this big rush into crypto, from basically a bunch of people bull bored and stuck at home. Right? I saw a lot of activity, especially on Twitter. People like Gary V started talking about NFTs, and then there became this crypto Twitter part of Twitter. I don't know if you... I mean, there's corners of Twitter for every little niche, right? And crypto to Twitter started small and started getting bigger and bigger. And I didn't really start paying attention to this till about the end of 2020, but then I really started digging. I started researching. I started realizing, "Man, when e-commerce came, I was a little bit late when social media came, I was a little bit late. Like, how do I not be late to this thing?" Right?

 

Justin King:

So I started researching blockchain and crypto, and I really started thinking about it from the brand perspective, from the eCommerce perspective, like how does Web 3.0, NFTs, if any relationship to eCommerce? And what I found was a very, very technical world. I mean, this is a world run mainly by developers. So, it can be very confusing. So, I literally spent probably dozens, maybe hundreds of hours. I would start looking at it from 9:00, I would look up and it would be 2:00 AM in the morning. I mean, and that's how I do things, but-

 

Peter Crosby:

And you're still married.

 

Justin King:

I am still married. Yes. She doesn't remember me, but I'm still. But I really started digging in. I started to understand it. And I joined this group of brand managers and agencies and consultants that were all exploring how Web 3.0 impacts brands, how Web 3.0 impacts commerce. That group started as 25, 30 of us. Now, it's thousands of us. Which is a pretty incredible group. And what I really found is this new technical horizon. And I believe that this is where the internet is heading, it's where commerce is heading. And so, I'm really excited to start this conversation with you on this podcast. And I'll start where I started my conclusion with, which is if you knew what you know today, but it was back in 1997 and you knew what you know today about e-commerce, how would that have changed your career? How would that change the company you work for or the brand? Probably a lot, right?

 

Justin King:

I mean, e-commerce. In 1997. E-commerce was nothing. Now, that's a lot, right? If it was 2007 all over again, you know what you know today about social media, how would that change your career or brand? My guess is it would change a lot. I believe that this is the equivalent to that, that the major next technology shift is going to be to decentralization, to NFTs and the blockchain. And I think it's important that we all understand what all means, for all the implications that's going to have and all of our careers, our brands, and of course, eCommerce.

 

Lauren Livak:

And Justin, for our listeners, can you just clarify what Web 3.0 is, so everyone who's listening understands exactly what that means before we move forward?

 

Justin King:

We'll definitely define NFTs in a second. But Web 3.0 is a broader categorization of what's happening now. In fact, it started around 2017, 2018. Web 3.0 is all about decentralization. So, what does decentralization even mean? When the internet was first conceived, decentralized was the major appeal of the internet, right? Anyone anywhere could build, communicate, transact without the need of large companies to do so. I mean, that didn't exist really, right? And to be able to do that worldwide or nationwide, was this incredible appeal. But over time, corporations became the centralized distributors of capital, technology, media content, even social capital on the internet. I mean, we talk about FAANG, Facebook, Amazon, Apple, and Netflix, and Google. They centralize the internet. And anytime centralization happens, most of the time control comes with it. Naturally, control comes with it.

 

Justin King:

Many have categorized this as Web 2.0. So, Web 1.0 was the birth of the Internet's self. And Web 2.0 was really from about 2002 to 2018. Where we had e-commerce and social media, but then really controlling factors in that as well. And Web 3.0 really is about decentralization. Web 3.0 is really about being able to own what you create. So, I think we have to start by understanding blockchain, because blockchain is really the foundation of Web 3.0. And to understand blockchain, we have to understand what Web 2.0 was. And Web 2.0 was really about centralized ledgers. And everybody understands a centralized ledger whether you understand the term or not. I mean, we can and think about movies. I love Shawshank Redemption, where Andy Dufresne had the warden's ledger and he sent the ledger to the FBI, right?

 

Justin King:

That was a handwritten ledger, it just recorded the transactions. Databases are centralized ledgers, accounting systems, CRMs, ERPs, these are all centralized ledgers. And when we all understand that the problem with centralized ledgers is they can be changed, right? They can be modified, they can be deleted, they can be hacked. And that creates a general distrust. Along with that, you have control, anybody that has a centralized is ledger and owns that centralized ledger, they have control over that centralized ledger. Meaning, they control what goes into the ledger, what goes out of the ledger. I mean, Facebook, Instagram is a centralized ledger, right? Someone controls what you're allowed to post to Facebook, what you're allowed to post to Instagram. Blockchain is different. Blockchain is a decentralized ledger, meaning no one person controls it. It's also immutable, it's another big word used in Web 3.0.

 

Justin King:

So, immutable just means it can't be changed. Blockchain is unique in that it can only be added to, it can never be updated, modified or deleted. So, it creates a true chain of events of what has happened inside of the blockchain. And Bitcoin was the very first practical use case for blockchain. Bitcoin is an unbreakable, unchangeable, unhackable currency. And believe me, thousands have tried to hack Bitcoin, right? And you can prove who owns what Bitcoin, where they own it, and it can't be changed, it can't be deleted. And because it runs on thousands of computers, you can't shut it down, and nobody has centralized control. Nobody can go in and say, "Peter, you said you own two Bitcoins. Now, you own one." Or I said, "I own two Bitcoins. Now, I own a hundred." Nobody can do that. And that makes Web 3.0 decentralization so powerful, because no one organization owns it.

 

Justin King:

It also makes it kind of scary, right? Because anytime... I mean, control is not a bad thing in all cases, right? Control often is about censoring bad things, right? And censoring things that we might not want to have on the blockchain. So, there's this balance and it's an interesting and fascinating balance between centralization, decentralization, control and no control. And really, honestly, what's better, right? What's a better situation to be in? And I think we're going to, in the future, see a mix of those two things, control, no control, decentralization and centralization.

 

Peter Crosby:

Okay, I'm with you now. And I keep seeing in the news, what seems to be where the connection to brands is really starting to heat up, which is... Apparently there are apes that are bored, and there's something called NFTs. So, why are the apes bored? And no, just, you can just go to the NFTs part. What the heck is going on there?

 

Justin King:

NFTs. I think this is an exciting area for brands, and maybe not for the reason everybody might think, right? I mean, NFTs as art projects are interesting, but I think it's important to understand the basics here. Because I do feel like these are the brand's biggest opportunities. So NFT, first of all, what the heck does that stand for? What it stands for does not help you in any way. So, an NFT stands for non-fungible token. Is it clear? No, it's not clear at all. Right?

 

Peter Crosby:

This is why you know this is developer run, not-

 

Justin King:

Exactly a hundred percent.

 

Peter Crosby:

I remember there was a book written called The Inmates are Running the Asylum, which was about why user interfaces were so bad. Because there were just no visual people involved in this. So, anyway, I just have to point that out.

 

Justin King:

The inmates are a hundred percent running the Asylum in these.

 

Peter Crosby:

Yeah. For better, for worse.

 

Justin King:

We have huge marketing problems in Web 3.0, huge UX problems and huge word problems, semantic problems. Well, let's start with it. So, I think instead of thinking about an NFT, let's start with a core concept of a token. A token represents ownership on the blockchain. A token says, "This person owns this token. This token represents ownership of this thing." And because that's put on the blockchain, nobody can change it, nobody can delete it. Right? We can just add to it and say, "This person now sold it to this person. And now, that person owns it." Right? So it's additive. Let's talk about the different types of tokens. So, instead of talking about non-fungible, let's talk about a fungible token. A fungible token is a token... Bitcoin, is a type of fungible token.

 

Justin King:

Many of these Bitcoins share the same identification, meaning, if I give you a Bitcoin and you give me a Bitcoin back, Peter, we've exchanged equal value, right? They're I go to each other. So, fungible is identical, right? It's the same as something else. Non-fungible token is unique. It's got a unique identification, unique metadata it's completely unique from anything else. The first major use case for NFTs is art. Right? So, I mean, artists have struggled selling their pieces of work for decades, maybe hundreds of years, and certainly, they have seen centralization as a bad thing for artists.

 

Justin King:

So, now artists can create unique things, unique pieces of work and embody that in a token called an NFT, a non-fungible token. And the owners that purchase the NFT can prove that they own that piece of art. Because they own a token and tokens represent the ownership of something. So, when you look at a NFT, it says, "This is the token number, and this is the owner of that token and here's the piece of artwork." And that piece of artwork is also stored in the blockchain. So, it's completely unique from anything else out there.

 

Peter Crosby:

But when I think... So this is where I start to get a little confused, because for me, art is something that you want to enjoy in the physical world, as well as the digital world. So, I buy art, I hang it on my wall, I own it. So, if it exists only on the blockchain, is it really enjoyable in the same way? Is it like...?

 

Justin King:

This is where our age starts to play in. Right? It is. And I have the same struggle, okay? I don't live my life in the digital world. But there are lots of people that live their life in a digital world. For example, they play video games, and their video games are representations. People will spend thousands of dollars to buy outfits in their video games, because they want to create an identity in that video game. That might seem silly to me, but it is a real thing to many thousands, hundreds of thousands, maybe millions of people... Truly millions of people, not maybe, millions of people having an identity represented digitally is important. I mean, think about this, so on Twitter, where this started showing up a lot, people started using their NFTs as their avatar. What were they doing here?

 

Justin King:

They were saying, "This is my identity. I purchased this NFT. This is who I am. Look at me. And this is the type of projects that I'm engaged with. This is my identity." Right? And identity for all of us is critical, and a very powerful thing. And people are starting to represent that in very digital forms. It's also about community. It's about saying, "Hey, me and this group of people all own this piece of art, we have an identity with it." It's no different than any type of collectible.

 

Justin King:

I mean, why are baseball cards valuable? I don't know. I mean, yeah... There's a small number of them, but why are they valuable? Well, they're valuable because the market says that they're valuable. Why aren't ticks valuable? Why is any art valuable? Why is music valuable? It's because the market determines that these things are valuable, because a bunch of people want that piece of art. And that's the same thing with an NFT. Does that make sense?

 

Lauren Livak:

So, Justin, can I play out this example here? Let's say I'm an artist, right? So I've created this form of digital art and I have put it on the blockchain and it now exists as an NFT. Now, you, Justin, are searching in, let's say OpenSea, which is a platform to search for NFTs, and you see my art and you love it and you want to buy it, you have to have cryptocurrency, correct? To buy my NFT. So then, when you purchase my NFT, the ownership shifts to you and you are the only person who owns my piece of art, correct?

 

Justin King:

That's right.

 

Lauren Livak:

And then, someone else would have to purchase it from you, and then the ownership would shift. Is that an accurate representation?

 

Justin King:

That's correct. And all represented on the blockchain, all transparent. So you can look at what I have in my wallet, Lauren, and I can look at what you have in your wallet. And we can see on the blockchain who owns what things in a very transparent way. Right? That's the power of that. But...

 

Lauren Livak:

So...

 

Justin King:

Go ahead.

 

Lauren Livak:

Sorry, go ahead. No, keep going.

 

Justin King:

I think in the other areas of NFTs, if you think about a token representing ownership, you have this... you have other types of use cases that I think are more interesting. Art is a first use case, but I think it's going to be the smallest in the future. Because ownership represents potentially access to something. Right? If I own this NFT, I might get access to something. I might get access into a community. I mean, brands start thinking about, "Okay, if a customer of ours owns a NFT, they might get access to a customer community."

 

Justin King:

A community dedicated to customers. And why would someone want to do that? Well, they love your brand, they want to identify with your brand, they want to have this identity in a community, a digital community, so they'll purchase that NFT to be a part of this new community. And all that is stored in a wallet. And the wallet tells you what you have, what you own, and what I own and what I have in my wallet as well.

 

Lauren Livak:

So, when you say wallet, when I think of the word wallet, I think of private, right? I don't want anyone to know what's in my wallet or what I own. Now on the blockchain, does that mean that anyone can see how much cryptocurrency you own, how many NFTs you have, and everyone can see what's owned in your wallet?

 

Justin King:

So, the inmates are running the Asylum, like Peter said. This is a bad name for something. Because a wallet automatically means money. So, if I give you access to my wallet, Lauren, you would think that I'm giving you access to take anything from my wallet, right?

 

Lauren Livak:

Right.

 

Justin King:

So, it's a bad name, and I've tried to influence people to change it, but it's not changing anytime soon. So, what's a wallet? A wallet is a digital wallet that represents your place on the blockchain. It is transparent. So, yes, to answer your question, Lauren. If you know my address, if you know my wallet, you can look and see how much cryptocurrency I have, all the coins I have and all the tokens and NFTs that I have. It's transparent. Right? It's the beauty of the blockchain, also scary about the blockchain. Right?

 

Justin King:

Wallets, what's cool about this is we have the removal of cookies everywhere. And as cookies are being removed, wallets are starting to replace that. So, with wallets, wallets are actually starting to replace login. So, no more user names, no more passwords, you just connect your wallet. My wallet contains tokens that identify myself to you, right? For example, this is not in place today, but here's a practical example of how this might be used. I bought a brand new car. The car comes with an NFT. The car comes with an NFT that represents the VIN number of my car. So, now I'm going to an auto parts website to buy some new brake pads or to buy some new third party things for my car.

 

Justin King:

The website, all I do is connect my wallet. I don't log in through a username and password. All I do is connect my wallet, the website scans my wallet to see if I have an NFT. Once they recognize the NFT, that's unique to my VIN number. It says, "Hey, here's all the parts for your car. Here's all the service recommendations, all of the warranties for your car." So, that NFT represents the ownership. It says, "Justin owns this car. So, show him parts of it." Right? That's a fascinating use case. And that's where it starts to get exciting around commerce, because now we can say, "This person owns this unique product."

 

Peter Crosby:

But, does that mean that... Going back to Lauren's privacy question, does that mean the auto parts website now also knows how much Bitcoin I have, the pieces of art I own, that seems... If I'm understanding it correctly, is that true?



Justin King:

And so, it's kind of true. So, what we're moving to in Web 3.0 is protected identity. Where, you will allow the person looking at your wallet to only see different parts of your identity, right? So, if you think in the future, I might want to expose my medical records to this doctor, but when I log on to the DMV, I don't want them to see my medical records, I just want them to see my cars that I own. Right? So, we're moving to this place of exposed identity or identity attached to your wallet. You can decide what parts you expose to a company and what parts you don't expose to your company. So there are parts of this that we hid. Now, listen, the blockchain is transparent. So, they find your address, your specific address and you could have that segmented, but if they find your specific address, they can know that someone owns this NFT or someone owns this piece of art.

 

Justin King:

Now, it can be encrypted, right? So obviously medical records aren't going to be transparent. You're not going to be able to look at anybody's medical records. So, there's heavy levels of encryption here, but you can see where I'm going, where a digital wallet contains things that I might own, contains things about my identity, that allow me anonymously or not anonymously to be able to interact with brands and vendors.

 

Justin King:

Now, you think about all the analytics. Now we have connected wallets. And you think about all the analytics that companies can do to figure out, "Okay, how do we serve this customer better?" And especially if someone chooses to expose part of their identity, maybe their name, their email address, their social media profiles, it becomes pretty powerful.

 

Peter Crosby:

So, the car illustration was helpful. It starts me thinking about a more streamlined user experience, the joys of password protection and all that stuff and creation and special characters, all that, potentially, goes away. When you think about how this might apply to brands, to our listeners of, "Well, how should we start to think about this?" It's a long conversation, we're not going to unpack this here, but I think just a little... Can you give us a little hint?

 

Justin King:

Yeah. I think there's a couple really good examples of practical things that brands are doing to take advantage of this new technology without going crazy. Right? Without going all the way into the deep end of this. I believe that tokens will be the new websites or URLs, that your ownership of tokens, that your creation of tokens will be just as prolific as websites and URLs are today. That you will use tokens for everything in the future to prove you own something or to exchange something of value. But there's some short term concepts that many brands are starting to employ. Web 3.0 is about descend and community. Brands are starting to build communities that are gated by a token. And I started to allude to this before. Meaning, if a customer has an NFT, whether they get it for free, whether they get it by buying something or whether they actually buy the NFT by itself, it gets you access to a customer community.

 

Justin King:

Most are going beyond that and saying, "You as our customer, we don't own this community. You as our customer owns this community, we want to work with our community to do that." I mean, we do that in Salsify, right? Whereas, we have our customer community that we work with, we don't necessarily want to own that customer community, we just want to work with, directly, with that customer community. So, a great example of this is The Hundreds. The Hundreds is a streetwear brand of clothing. Bobby Hundreds, one of the owners, wrote this amazing book about 10 years ago where he said, "My customers are my biggest advertisers. They walk around and advertise my clothes, but they never get compensated." When Web 3.0 came around, he realized he could finally compensate for his walking billboards. So, he created a community, owned by the customers and for the customers. To access this community of 10,000 people, you had to purchase an NFT.

 

Justin King:

He created 10,000 unique NFTs based on a drawing of their logo. They have a logo called the Adam bomb. The NFT got you into a community, in this case, it was more of a discord community. A discords just a community technology that's free to use out there. But to get into that discord, you had to have this NFT in your wallet. And the perks of this community are amazing. If you like The Hundreds, you get early drops, tons of free stuff. The Hundreds works directly with the community to build new products. The Hundreds funds all kinds of events, in person events, special events for the people in their community. They have gone above and beyond, so much in fact that the value of the NFT or the value of owning access into this community has risen significantly and has gone through the roof, because other people wanted in.

 

Justin King:

But now, they had this exclusive group of only 10,000 people. So, the value has truly soared. Now, The Hundreds, works almost primarily and exclusively with that community when they build new products. They get feedback from this community. When they build a new product, they send it to the community, everybody gets one inside of the community and they get feedback. Do you like it? Do you not like it? What ideas do you have? They run contests all the time where the community participates. And again, that's not too far off from Web 2.0. I mean, a lot of people are trying to build that. But ingrained in that, the ownership that you're token getting access to becomes pretty key. There's another great example of LG, just this past week, they gave NFTs to people that passed a specific certification exam inside their company.

 

Justin King:

And the NFTs said, "Hey, the person that owns this, in fact, the person's name, they actually passed this certification." Imagine that into the future, right? When you're looking for someone that's a LG certification that you want to employ, imagine not looking forward to their LinkedIn profile, but looking into a true ownership blockchain that says, "This person passed this exam." And that in that case, the NFT couldn't be transferred. It wasn't allowed to be transferred to someone else. It's a pretty powerful concept.

 

Justin King:

And I think, for brands, what's practical, right? First of all, start experimenting with this. I mean, download a wallet, download MetaMask, which is a wallet. Download... There's other ones like HashPack, for another blockchain. Download those wallets, just see what the process is. You don't have to spend any money. Just see what the process is of logging into OpenSeas. So you can go to opensea.io and to log into open sea.io, you have to connect your wallet. So, download MetaMask and just see what the experiences are. Notice...

 

Peter Crosby:

Just to be clear, Justin, at Open C the letter C or?

 

Justin King:

Oh, I'm sorry. Open S-E-A.

 

Peter Crosby:

Open S-E-A.

 

Justin King:

.io. That's right.

 

Lauren Livak:

And Justin, the first question I always think of when we talk about this for brands, and as an individual is the barrier to entry. So you just shared, you can go and you can open a wallet, you can go to these places. But I always hear people are buying things for millions of Bitcoins or spending all of these dollars to get Bitcoins. What is it to play in this space? Do you have to?

 

Justin King:

No. I mean, obviously the people that are doing that are doing it for a reason because they believe the value's going to go up, which means those things are more expensive, just like a baseball card would be. However, you can buy today's baseball cards, right? In packs for a dollar and get probably 15 different baseball cards. I don't know if that's the price of baseball cards anymore. But you can buy it for cheap and knowing. So, you can experiment and research without having to spend a lot of money. And I think that's key. In fact, you can do a lot of research without spending any money. So, I think there's lots of avenues for people not to go down or down a super deep rabbit hole thinking about it. I also just encourage you to talk with your community.

 

Justin King:

How are NFT being represented inside of your community? Does your community... Does your customer base... Is your customer base into this at all? How are you building your community itself? And do you have opportunities to look at building some exclusivity in there, to build a true community that has some identity for themselves that might look at something like token gating for that? Don't take... There's lots of tools out there to do that easy, Lauren, and cheaply, Lauren, without having to spend a lot of money or do a lot of research. You could start this internally with just a couple employees. Or you could start it just with a small group of customers and see how they interact. There's easy ways of getting into that, and there's great tools out there to be able to do it well, easy as well.

 

Peter Crosby:

Well, Lauren, because you're the one in charge of the Digital Shelf Institute's community, I just can't wait to see what you're going to do next.

 

Lauren Livak:

I have many ideas now.

 

Peter Crosby:

Justin, so thank you so much for coming. I have a feeling this conversation's going to continue. So, I warn our audience and myself that there's more to come on this. I think, because it's something I think we need to keep stepping through to talk about what the opportunities are here and I'm particularly interested in understanding the way forward and what is the scale of this, and what brands is it right for. So, there's a bunch of questions we can talk about. We'll get other guests to help us explore this over the next several months, years. I don't know. But Justin, thank you so much for... Sorry, what'd you say?

 

Justin King:

I said I can't wait.

 

Peter Crosby:

Yeah, me neither. Me neither. This is going to be super fun. And thank you for walking me past the cordless phone, into the world of blockchain and we really appreciate it. Thanks to Justin for being the patient guide through the new internet wilderness. More to come. Thanks for being on this journey with us and thanks for being part of our community.