Non-Fungible Tokens (NFTs), cryptocurrency and tokengating— buzzwords of the modern century, are witnessing a roaring success in the current market ecosystem. From the art segment, sports world to e-commerce – name any industry, and you’ll find tokenisation as the go-to move, and rightly so.
From acclaimed personalities to corporate giants, everyone is either gearing up or has already jumped on the NFT bandwagon. In fact, well ahead of nations like Canada and Australia, India ranks third in the list of countries with the highest number of NFT companies headquartered worldwide. It is third only to the United States (91) and Singapore (24), with 11 such establishments.
Naturally, for merchants, too, NFTs or tokenisation provides unequalled power to offer token holders access to their flagship products, services, content and other experiences. As the world races towards the integration of Web 3.0, NFTs, blockchain technology, and token-based economics will surely play a more prominent role in boosting industry growth. So, it’s only fitting that e-commerce retailers have begun experimenting with it to ensure they stay ahead of the curve.
But first, what is tokengating?
Upon first hearing the term tokengating, it might seem like a term out of a hacker’s book. However, tokengating is just a way of allowing NFT holders access to perpended perks like exclusive products, services and even phygital offerings. Sports-based companies use them to offer free VIP match tickets and one-on-one sessions with players. Merchants use this opportunity to ensure NFT holders can avail of special discounts, early access to new stores, members-only benefits, and much more.
Tokengating work module: The technical aspect
Authentication is essential to NFTs, blockchain technology and tokengating work modules. Recently, a leading provider in the e-commerce space has launched a new tokengating capability that gives verified NFT holders’ access to tokengated rewards.
NFTs are usually owned and stored in an individual’s crypto wallet. Tokengating works openinga linked crypto wallet to verify verify it contains a particular NFT. Once verified, the owner of the wallet can unlock gated perks and benefits set by the merchant.
How does tokengating assist e-commerce retailers?
Even today, there’s so much we don’t know about blockchain technology and tokengating. This entire ecosystem is still in its formative years of evolution. However, tokengating has already started offering brilliant benefits to industries in terms of adding an extra layer of security, improved customer engagement, and a dash of an enigma.
- Added security layer: Considering blockchain technology is used to verify NFT ownership in an iron-clad manner, it is next to impossible for an outsider to forge the keys. Therefore, only token holders with public-private keys can access the wallet or tokengated perks. It helps retailers to commit an extra layer of security to their customers so that their payment information is entirely secure and outside the grasp of cybercriminals.
- Improved customer experience: In the present scenario, we are witnessing exponential growth in the number of digitally native brands and companies born on the web, offering excellent online experiences. These attractive attributes ensure a solid and loyal bond with their target customer base. For retailers, exclusive access to products and services is the most crucial tokengating use case. Through this, customers holding tokens can get access to limited edition items as a way of additional perks or rewards.
- Dash of ENIGMA: NFT and tokengating are surrounded with so much mystery and buzz that everyone who knows about it wants to jump on this fast-growing bandwagon. Naturally, this FOMO (Fear Of Missing Out) among millennials and Gen Z is something retailers can use for their marketing advantage. With customer acquisition costs on the rise, things like customer loyalty programs and exploring new engagement channels has become increasingly important as brands invest in both short-term performance initiatives and long-term brand building to create lifelong customers and brand evangelists.
NFTs: The future of e-commerce?
The Indian e-commerce industry is growing at a rapid pace. By 2025, the sector is poised to increase 96% to USD 120 billion, according to the latest report by FIS. Naturally, the competition in this sector has grown infinitely more aggressive over the last few years. This is where tokengating applications provide merchants a competitive edge over their contemporaries.
NFTs are providing a power package for brands to provide experiences and build loyalty with customers.
This year, at least 45% of Indian consumers are likely to buy NFTs. This allows e-commerce brands and retailers to build a more refined relationship with customers via tokengated exclusive products, experiences, early access to store openings, or invitations to members-only events.. Simply put, tokengating and NFTs, in general, provide retailers with a chance to create a deeper connection with their customers, expand the utility and bring new and loyal customers onboard.
This is a really exciting moment in time for both brands and consumers. From crypto to NFTs and tokengated commerce, we’re witnessing the foundations of a world in which Web3 technologies are transforming the types of experiences brands create for their customers to build loyalty, community and connection.
Views expressed above are the author’s own.