As funding for web3 projects cools during the crypto winter, startups in the space are increasingly focused on building bridges to mass adoption and exploring revenue opportunities to stay afloat. The key to driving mass adoption? Deliver experiences that are so seamless that users don’t even realize they’re on blockchain.
One company that is demonstrating how blockchain can be useful in real life is based in Kansas. redeem, which allows users to claim non-fungible tokens using phone numbers instead of having to set up crypto wallets. On the back of its recent $2.5 million pre-seed funding round led by Kenetic Capital, the startup is deploying its NFT solution to run a VIP dinner at the SXSW tech festival this week.
Co-founder and CEO Toby Rush is a third-time entrepreneur who, in 2016, sold its EyeVerify biometrics company to Ant Group, Alibaba’s fintech subsidiary, for $100 million. Few other companies in the world are as adept at creating intuitive fintech products as Ant. Together with its nemesis Tencent, Ant popularized the use of scan to pay among more than a billion people in China.
Rush was later hired by Ant’s corporate risk team, focusing on blockchain deals. It was an experience that paved the way for finding practical use cases for blockchain.
“As you know, cryptocurrencies are not allowed in China. The NFTs we have here are not really a thing in China. But the toughest business use cases are. How can blockchain improve businesses? That was my investment approach,” Rush told TechCrunch in an interview.
“So when I started learning about blockchain, it was very practical, realistic. It’s not about how we trade NFTs, how we create a new token, it was actually much more what I would call serious business cases,” she added.
Rush finally identified a use case for NFTs and started Redeem early last year. He was fascinated by technology “not as images, but as a digital asset that can live outside the walled gardens of Apple, Google, Facebook, Ticketmaster or Visa,” he admitted.
“When I can own a small piece of data outside of its walled gardens, many other people can participate and collaborate with me in an open ecosystem.”
The challenge of using NFTs, he considered, is that the onboarding process and even using them after onboarding is really difficult. Rather than build an NFT infrastructure from scratch, Toby sought an established, ubiquitous global directory system: phone numbers.
“Carriers have spent billions of dollars to make sure there is only one device in the world that can use my phone number right now. There are already 6.8 billion smartphones deployed, so take advantage of that – if you have your phone, you have a wallet,” he explained.
This is how Redeem helps bring users to web3 by opening their first wallets, the gateway to all things crypto. Let’s say they attend an event that distributes NFT as loot, they will first scan a QR code with their phones. Two links will appear: on board via SMS or WhatsApp. Let’s say users choose WhatsApp, Redeem will then automatically create wallets for them on the backend, place NFTs in their wallets, and send them a message on WhatsApp with a link to their newly created wallets.
Basically, Redeem uses users’ phone numbers to authenticate who they are and create unique wallets. Instead of having them go through the process of signing up for a wallet and writing down the 16-word recovery phrase, take advantage of the popular methods of QR code scanning and text messaging.
“When you send a message, there is only one device in the world that can send a message from your phone, and that is you. When you can choose your preferences, you’re creating a message, so you’re pre-populating who you’re sending it to, and this is the NFT you want to claim. When you hit submit, your phone number claims this NFT. So we create a wallet and send you a response, and you’re on board.”
The system can be used in a similar way to authenticate people’s access to events. At the VIP dinner at SXSW hosted by Arkive, a company building a decentralized museum, Redeem’s solution is helping to verify the identity of around 200 attendees. Once they scan the QR code at the gate, the Redeem backend will check if they have the required NFT ticket in their wallets that is linked to their phone numbers.
Redeem is not trying to be a wallet itself, but rather a layer of connectivity through a B2B2C strategy. Users can link their wallets, either Metamask or Phantom, to Redeem as their default solution.
And why should event organizers use NFT instead of the traditional ticketing system? The differences lie in the control. In existing practices, centralized ticketing enablers like Ticketmaster control user data. In web3, any group can interact with an audience via NFT without having to ask Ticketmaster for permission.
Redeem is already getting traction from event organizers. While Rush declined to reveal who the company is talking to about him, he hinted that it’s “brands that do a lot of sponsorship, marketing and live events.”
“So they want to do activations on the site, but they don’t want the activations to stop on the site. If they get NFTs, there’s a way they can participate long after the event,” Rush said.
