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NFTs, or non-fungible tokens, have appeared almost everywhere on the Internet, and every company is willing to spend money on what’s called “Web3.” This is a fictitious future version of the net based on blockchain technology.
As they do, Hang, a new B2B startup in emerging areas, is trying to help some of the world’s largest brands use technology to replace existing membership and loyalty programs with NFTs. is.
With the rise of the Internet, anyone can watch images, videos and songs online for free. People buy NFTs from the belief that they can prove ownership of virtual items through blockchain technology that acts as a digital ledger for transaction history.
Last week, the company announced that it had raised a $ 16 million Series A funding round led by crypto venture Paradigm, which has invested in some of the largest crypto players such as FTX, BlockFi and Coinbase. Other Hang investors include Tiger Global, eyewear company Warby Parker, shoe retailer Allbirds, and Kevin Durant’s Thirty Five Ventures. Early clients include Budweiser, Bleacher Report, Pinkberry, and the music festival group Bonnaroo and Superfly.
“For most brands of a particular size, it’s pretty hard to offset the increased cost of acquiring customers,” Hang co-founder and CEO Matt Smolin told CNBC. “The best way to do this is to increase the lifetime value of our user base and leverage loyalty,” he adds. This is often done through a hierarchy-based reward system. Customers often buy something or interact with a particular brand. You get more benefits and in some cases you can “level up” to a particular type of customer status.
“With blockchain technology, NFTs not only incentivize brands to take users to new levels in the program, but also allow them to actually assess the value of their assets and resell them later. Create a method. [NFT] The market, “said Smorin.[Brands] You can also get loyalty or percentages from each resale transaction if you keep track of your loyalty status quickly. This inevitably makes the user more consistent with the brand. “
But it’s not without risk.
NFTs are unique digital assets, often collections such as artwork and sports trading cards, validated and stored using blockchain technology, but given the energy-intensive nature of cryptocurrencies. Critics consider them too exaggerated to be harmful to the environment. Many NFTs are built on the network behind Ethereum, the second largest token.
CNBC’s Eamon Javers recently reported that criminals have used Discord to steal $ 22 million in NFTs since May. This is a social platform that has become a hotbed for crypto traders to communicate in recent years. Analyst TRM Labs discovered last month that at least 10 accounts were compromised within the NFT channel of the Discord platform. These hackers use what the company calls “social engineering” technology to create false urgency around certain digital assets and buy or sell NFTs.
Hang Co-Founder and CEO Matt Smolin
“Much of what we do isn’t for your typical crypto audience,” Smorin said. “We are working with some of the world’s largest brands to help them solve real problems in their business. Yes: If. [the brand] What they want is to get customers to pay with Ethereum and other crypto tokens, but in most cases many of these brands actually allow customers and users to sign up by email and credit card. Is selected. “
Of course, this involves the brand converting customer payments into cryptocurrencies and completing NFT transactions that support the redemption of certain rewards. However, Smolin argues that Hang’s long-term success and widespread adoption of NFTs as well as artists and collectors depend on the integration of transactional technologies that consumers are already familiar with, such as “email and credit cards.” increase.
Investors have quickly argued that the long-term value of digital assets comes from their usefulness. Institutional investors digest as collectable artwork such as the prominent Bored Ape Yacht Club and similarly hyped CryptoPunks continues to experience dramatic price volatility in parallel with the recent “Crypto Winter” downturn. Is a difficult message.
“The Bored ApeYacht Club model is about an exclusive and limited supply, which works very well for them, but for most brands, hundreds spending 10% more a year than getting 10,000 people. Capturing as many as a million people is far more influential. People spend $ 400 once or twice. ” “Many futures we are building are that these NFTs are free and users will actually get them in stores, websites, or apps, and the number of NFTs for sale It’s not lacking, it’s just a leveling system. “
This is a fresh perspective within the struggling crypto industry. In the “Cryptocurrency Winter”, major names like Three Arrows Capital and lenders like Celsius and Voyager Digital all filed for bankruptcy. And that has shaken confidence in the sector.
Still, Ethereum and other coins rebounded this week, with Ethereum reaching its highest level in almost a year after a long plunge that fell nearly 70% from its peak last November.