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Web3 use cases: authentication and subscriptions

This is the answer to @csallen post here. I wrote it as a separate post because it became too big for a single reply and maybe because it can deserve a unique identity.

Web3 is still a new tech but I finally slowling start to see real applications and potential for Indiehackers in the web3.

Intro

The web3 is changing the paradigm of authentication. Before my identity was defined by the account I made in an app, and in the case of bigger apps like Google, Twitter.. eventually extended to others by the OAuth protocol. E.g. In Indiehackers I can auth via my Twitter account.

The user needs to set his/her info again and again in each app or you, as the owner, code the OAuth vs the 1 to N social networks/apps.

In web3 my account is kept in my wallet, e.g Metamask. I enter your site, I connect my wallet with one click and I am authenticated on your site. Bye-bye temp-email generators and fake accounts. If I don't like your site, I just disconnect my wallet. You don't need to code your auth layer or OAuth vs 10 different external providers.

Subscriptions

Let's explore why this can change the paradigm of subscriptions. Let's add some utility to an NFT (Not Fungible Token).

You decided to bootstrap your new app with web3 auth and you mint an NFT that can be used as a licence key. If the account connected owns this NFT-licence is authorized to use your new app. e.g. at the beginning, you could mint 100 NFTs that give lifetime access for 0.01 ethereum. The early adopters buy it, you get cash flow. They get the NFT key in their wallet.

One of these early adopters uses your new app for a month then he changes his mind. Now he can do something that in the past was not easily possible with SaaS: He/she can resell the NFT-licence to another person and have the money of his/her subscription back.

We are witnessing the creation of a secondary market for subscriptions. This is already is happening right now for some bootstrapped tool apps for minting & buy/sell NFTs.
(e.g here I am NOT affiliated with them, but just as an example).

Now let's start to speculate.

Let's imagine that you were very good and you built a great app. After one year your price is 0.01 ether A YEAR.

Maybe now another of your early adopters can even earn something by reselling for a higher price his/her NFT-licence..
This is a really big value for your early adopters as you are potentially giving them a real possible gain.

We can even push even more this speculation.

Let's imagine that @csallen is the creator of the new app. We all know him and because he built in the past something very cool :) probably, people will buy the NFT-licence for his new app no matter what. @csallen is monetizing his reputation as Indiehacker. This is a weird hybrid situation where reputation merges with utility. It could be problematic for @csallen to understand if people buy because his product is valid or just because of his reputation. Interesting scenario..

Other thoughts

One can leverage the NFT-licence as a marketing tool. e.g. you can give free access to your app to the owners of the Cryptopunks NFTs, hoping in some return in image & PR. Or have partnerships giving discounts to the owners of other NFT-licences (and now the owners are increasing the value of their NFTs..)

The subscription is not anymore a "property" of the app but of the user and this can be a big change of paradigm if it will be widely adopted.

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    I'm a big fan of the "identity on the blockchain" aspect of web3. The ability to have a wallet (or multiple wallets!) that you simply plug into websites is super useful. I'd like to integrate that kind of functionality into IH sooner rather than later.

    Selling subscriptions on the secondary (blockchain-based) market is something I never considered. Pretty cool!

    If I bought a $1000/year subscription to something in NFT form, but decided in March I don't want it anymore, I could sell it to someone else for $500 and thereby recoup some of my costs at least.

    It could be problematic for @csallen to understand if people buy because his product is valid or just because of his reputation.

    This is so interesting to me. The question really is, do you want to create a project where the primary motivation for your users is to make money, rather than to derive utility from what you've built?

    If what your'e building is a fundraising app like AngelList, or a freelance job site like Upwork or Fiverr, or an auction site like eBay, or a creator site like YouTube, okay maybe. Your users are there to make money anyway.

    But let's say I were to add a social token and NFTs to IH. I don't really want people joining IH who aren't building startups, or at least interested in doing so. But if the token or NFTs looked like good investment opportunities, it would attract a much wider audience, who would then dilute the quality of the community.

    How do you get around that situation?

    One option would be to allow anyone to buy tokens or NFTs, but require more than that for entry into the community 🤔

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      I think what you want for that use case is non-transferable tokens. They’re unique to a user and stay with that user as their pseudonymous, reputation-accruing login identity.

      Ideally they’d be on a popular and inexpensive chain like Solana. Other networks could even give users partial credit for reputation accrued here. Eventually, something like this will replace LinkedIn.

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      If I bought a $1000/year subscription to something in NFT form, but decided in March I don't want it anymore, I could sell it to someone else for $500 and thereby recoup some of my costs at least.

      Absolutely. You are empowering your users. Eventually will be interesting to analyze the buy/sell behavior of your users: a wave of selling could be a signal that you are not satisfying your current user base.

      The question really is, do you want to create a project where the primary motivation for your users is to make money, rather than to derive utility from what you've built?

      Yes, not more a clear distinction. The brandization of the software creator. I imagine that this will have heavier effects on creators that are leaders in their niche and an initial help for the less known.

      I guess that some people will take advantage and others not. It is not necessarily bad, the freedom will make more clear who is more speculative oriented who is less, then the users will make their own decision.

      Maybe we will have more conceptual tools to deal with this in the future but for now consider that a NFT is managed and governed by a Smart Contract, that you can code to enforce specific behaviors, e.g. you could apply some rules to discourage the re-selling, like a penalty of 1/3 of the price in case of reselling or a price prize of the long keeping holders.
      If from one side you are empowering your users on the other you are also defining the immutable rules of the contract. The smart contract is smart as his/her coder :)

      IH use case is more articulate because is a community, so probably the NFT-licence or NFT-art piece, alone does not make much sense.

      If the utility of an NFT is reflected as privileged access to the app, for the IH use case you could forge the utility in a different way, e.g. by organizing a (virtual?) IH-Conference or any other kind of event exclusively for NFT holders.

      Each NFT could have a different kind of access or activities and will be proof of the attendance of the event (kind of collectible value for the future), e.g unlock a spot in an office hour session with other mentors or IH. or one on one sessions, etc.. The owner could have the right to buy the T-shirt with the image of his/her NFT..
      Gary vee is already experimenting something similar

      In the case of IH not necessarily all NFTs need to be bought, a percentage could be minted and distributed according to other parameters, while the minted part sold for paying the expenses.

      To discourage reselling, the smart contract could apply a high penalty like -25% on the selling price.

      Take it as a kind of mass-scale social experiment 🙂

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    wow that subscription thing is mind-blowing to me. I never even tought of that. But how could you implement a recurring subscription with that kind of concept? AFAIK it could only work with a a fixed sum, no?

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    Thanks for sharing this. Really interesting. 👍

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