Identity Part 3: You are (literally) your (crypto) wallet for marketers in the metaverse.
What does pseudonymous even mean? Is that a word?
Pseudonymous.
Definition “writing or written under a false name.”
Hmmm… So this is my “final” piece on identity in Web3 and it’s by far the most confusing. OG metaverse people refer to one of the benefits of Web3 as its pseudonymity, meaning you are somewhere between your IRL identity and a totally obfuscated, untraceable identity. And what seems most likely to be is that we are going to be a whole host of people in Web3, publicly promoting and defining ourselves differently in different spheres. Which, of course, has huge implications for fashion and marketing, my favorite topics.
This brings up a whole host of questions, so many of which I won’t go anywhere near. But I will try to answer 3 questions about pseudonymity and why you might care.
Where did this pseudonymous idea come from and what’s the goal?
How does “pseudonymity” play out from a consumer/human’s point of view
And how does “pseudonymity” play out from a brand or marketers point of view, someone trying to to transact in these spaces?
A trusted advisor to this substack thinks my posts are too long so I’m instituting a TLDR. Web3 pseudonymity creates multiple identities for every consumer, making it harder for brands to connect with consumers to drive IRL purchases. Boom.
Also, if you want to hear my thoughts on Web3 marketing LIVE (novel!) I’ll be speaking at the PI Live Advanced marketing conference on brand and consumer identity in the metaverse, tickets here!
1. What is pseudonymity?
In a 2019 presentation The Pseudonymous Economy by Balaji Srinivasan, a definite OG in the space, he described the potential for a pseudonymous economy populated by persistent, non-real names that can accrue reputation, or as he calls it, “social wealth.” This goes back to the origins of Bitcoin and the idea that the nodes contributing the computing power are not able to be tracked down/identified.
In truth, we’re kind of already doing this with things like f-instas (aka Fake Insta, your second instagram account that isn’t as curated as your primary one), or different personalities we show on, say, LinkedIn versus Nextdoor, etc….
In the real world, identity, let’s call it your “real name” or your “fiat name”, is probably our most important asset: it’s literally who you are. Identity and authentication have always been a part of socialization and commerce, and this will need to evolve for the metaverse.
The goal is to allow people to choose how much information their share. All of this starts with your wallet, which connects to your different crypto accounts. If you are connecting to a platform or purchasing an NFT via your wallet, you can use multiple accounts, none of which are intrinsically linked to your real identity, to perform those transactions.
2. Consumers and their multiple identities
In thinking about this concept, I read a great piece by Sarah Guo where she mentions ”identity dispersion” - where individuals control the creation, separation and unification of their multiple online selves. This sums up the goal for me as a person enjoying Web3 innovations. I am untethered from many real world demands. So if I want to be a dragon, like Mark Zuckerberg, I can be a dragon. If I want to look a lot like me, I can do that. And if I want to look a lot like me only better? Well, I’ll definitely be able to do that. Think Instagram filters for your entire self. How does this play out as a dispersion?
Anything you do on a public blockchain like Ethereum is by default public. When created, an account is empty with 0 transactions. But, all of the account activity that follows (like signing transactions, sending money, or buying NFTs) can be analyzed (for example via Etherscan.io). Such an analysis also includes displaying all your assets, fungible (eg. cryptocurrencies) or non-fungible (eg. NFTs).
A savvy detective can link accounts, much like the journalism looking around celebrities' involvement in NFT projects. (the concept being that the money flowing into the accounts that bought certain NFTs was given to the buyers to imply their interest in a project not them actually laying out their own funds, and thus there are issues with advertising/sponsorship disclosure) (actually kind of fascinating)
In addition, some activities are explicitly revealing, like buying the yourname.eth domain (which is kind of like domain names, e.g. www.metaxmoda.com, but for Web3) can make it quite obvious that a specific purchasing address belongs to you aka "yourname."
So this all boils down to your wallet, which is how you access most of what we consider Web3. A wallet is anonymous. But your activities make it pseudonymous. Except when it goes beyond that. Bored Ape Yacht Club is brewing something new, but in order to get access, would be owner must submit their official passport or drivers license in accordance with Know Your Customer (KYC) laws. So not in-line with the foundations of crypto style but… no one wants to go to jail over a picture of an ugly monkey!
In my previous post, I talked about choosing your tribal identity. Consumers do that all the time with their apparel and beauty choices, not to mention the million other signaling choices you make each day; what restaurants you go to, what cereal you buy, what media you consume etc. Now you can divvy those up, and say which wallet account is which person. One is maybe your dragon personality, and “underground you” who buys studded horns for your avatar. Or more nefarious things you might want to pay for with Bitcoin. A you that is the farthest from your “fiat” identity. The person Web3 allows you to be. A second identity is your real you, where you handle “IRL” type transactions that don’t seem personal. And then there’s a third identity (and fourth and fifth and so on if you want), your “Instagram” you, a stunning avatar just a few shades nicer than your real self, who goes to parties in Decentraland and buys designer NFTs. Your aspirational identity if you will. These are just examples but you can see the benefit of separating all these “yous.’
In sum:
You are your wallet
You can have multiple wallets
You can make some choices about which wallets for which activity
This leads to multiple versions of “you”
3. So what on earth do brands and marketers do about this?
Let’s imagine everyone’s happily interacting and transacting in the creator-economy valhalla of Web3 and the big brands want to get in there and sell digital clothing, experiences, art, homes, you name it. But how?
For now, nothing. But if you’re trying to piece together someone’s identity to serve them the right ads at the right time or interact with them in a way that is decided by their previous interactions with the brand or other partners, it’s harder if you can’t link as many parts of their identity. Of course this happens now, with multiple email addresses or family members living at the same address. But this brings that mismatch of consumer identity to an entirely different level because it starts from a place of anonymity and you have to build from there.
Most marketers will have to embrace this chaos and market to the defined identity. Linking IRL purchase to metaverse purchases might be very hard. If my dragon self is into underground clubs but my IRL self is a millennial mommy, it might be hard to reconcile those two identities when trying to sell me sneakers and collagen
On top of that, the privacy questions that currently haunt marketers still loom large. Technically A pseudonym is still considered to be personal data according to the GDPR since the process is reversible, and with a proper key, you can identify the individual. So pseudonymous data is likely to be subject to many of the same regulations that markers contend with for digital marketing today.
One version is that marketers have a permissioned view of you in that wallet, based on the interactions you have had. From there, it’s possible to sync wallet to email or other “closer-to-fiat” identifier. Now they are patching together your web 3 identity, possibly merging social media (via say an NFT PFP) as well.
This also aligns nicely to a creator economy, focused more on 1:1 interactions between buyer and purchaser, decentralizing consumer good creation away from big brands. Nice in theory, but hard for me to picture how millions of smaller creators will achieve customer acquisition scale. And I don’t think larger brands will just acquiesce to this idea and sit the Web3 economy out.
So there we have it. Identity is confusing enough for us humans as we enter this new digital age. But say a prayer for the poor sods being paid to sell you things. They have one hell of a ride coming their way.