According to Juan Otero, CEO of crypto-native travel booking platform Travala, many mainstream companies that attempted to use non-fungible tokens (NFTs) for customer or user loyalty programs may have seized the opportunity prematurely. Otero argued that at the time, Web3 companies “hadn’t even figured out the best ways to use NFTs in loyalty programs.”
Failures of NFT-based loyalty programs have tarnished Tech’s reputation
While their adoption of the technology marked a positive development for the blockchain industry, the apparent failure of such loyalty programs has tarnished the reputation of NFTs, Travala’s CEO argued. However, in his written responses to questions from Bitcoin.com News, Otero, a technology entrepreneur, emphasized that NFT-based loyalty programs failed because “they were largely run as trials alongside the main loyalty program, rather than as an integral part of it. .”
Otero argued that instead of using this approach, which significantly limits user participation and the attractiveness of the rewards, mainstream companies should have opted to onboard users by offering “crypto or NFT rewards (or a combination) to offer as part of a free membership. ”
Meanwhile, when asked about the prospects of the NFT market after a period in which many recognized brands withdrew or cooled their interest, Travala’s CEO argued that this market – and the metaverse in general – still holds promise in ‘ an increasingly isolated world’. The challenge, however, lies in figuring out how to deliver a valuable, engaging experience in the metaverse at scale without the need for an initial investment or expensive VR headsets.
Below you will find Otero’s verbatim answers to all questions sent.
Bitcoin.com News (BCN): After peaking in 2022, non-fungible tokens (NFTs) and the metaverse are no longer buzzwords. Both investments and interest in metaverse-related products cooled, especially during the so-called crypto winter. From your perspective, has the ongoing rally in the crypto market reignited interest in NFTs? Do you expect mainstream companies that have scaled back or shut down their Metaverse-related activities to make a comeback?
Juan Otero (JO): The NFT market in 2021/2022 was in many ways similar to the ICO boom of 2017. Now that the dust has settled, the NFT market has entered a period of maturation, with several Web3 projects exploring how the non-fungible element of NFTs with fungible tokens to provide real utility to users. The current rally in the crypto market will help generate some interest in these types of utility NFTs, but I believe NFTs are still largely in a period of innovation and exploration to determine how to best leverage the technology.
The metaverse still holds promise in an increasingly isolated world. Remote work and digital nomadism have been liberating for many, but these lifestyles often come with greater isolation from real-world communities. The opportunity lies in figuring out how to deliver a valuable, engaging experience in the metaverse at scale without the need for upfront expenditure or expensive VR headsets.
Those who create a metaverse model that can be replicated across different ecosystems and communities will have a significant advantage, and if this is done successfully in web3, we will see mainstream companies try to make a comeback in the space.
BCN: As you may know, some companies have attempted to use NFTs as part of their customer or user loyalty programs, but the success of this has yet to be determined. What do you think they did wrong, and what are some examples of NFT-based loyalty program models that are working? Are these rewards programs an easy stepping stone to mass adoption of Web3?
JO: Traditional companies that created NFT-based loyalty programs seized the opportunity too early, before web3 companies had even figured out how to best use NFTs in loyalty programs. The openness of mainstream companies to new technology has been a welcome sign for the sector, but has meant that the reputation of NFTs has taken a major hit.
The main reason they didn’t succeed, in my opinion, is because they were largely run as pilots alongside the main loyalty program, rather than as part of it, significantly limiting participation, awareness and the attractiveness of the rewards themselves. .
A great way to engage users with web3 through loyalty program models is to offer crypto or NFT rewards (or a combination) as part of a free membership that doesn’t require any upfront purchase of NFTs or tokens – the model being used through the AVA Smart program on Travala.com. This model provides a starting point for Web3 education because users are inherently more interested in something they already have, which can then lead to membership growth to higher levels as they begin their Web3 journey.
BCN: You have been operating your crypto-native travel booking service for over six years. During this time, the travel and hospitality industry faced a challenging period after the spread of the COVID-19 pandemic forced countries to ban travel across national borders. For Web3 companies, the so-called crypto winter proved to be just as grueling, with many of them falling by the wayside. From your experience, which of these two periods was the most difficult for crypto-first OTAs like Travala.com?
JO: Not long after our origins in 2017, we entered a long crypto winter starting in 2018, which was then exacerbated by the pandemic in early 2020 before any significant market recovery could be achieved. In contrast to market cycles, COVID-19 was an unprecedented once-in-a-century event, and the global uncertainty it created proved difficult to navigate across sectors.
While it’s difficult to separate the two events due to their overlap, the pandemic forced more operational adjustments, not to mention the influx of cancellations and changes. Travel sales were hit more drastically by the pandemic than by the crypto winter, although this downturn lasted only a few months before sales rebounded sharply as the domestic travel trend took off due to pent-up demand.
In both cases, we took the opportunity to focus on building and improving the platform in anticipation of both the travel and market recovery that would eventually follow.
BCN: Some reports suggest that 80% of Travala.com’s business-to-consumer (B2C) customers are millennial travelers who choose to pay exclusively with crypto, while only 10% would pay with credit cards. How long has this been the case and do you expect the share of crypto-paying customers to rise further? What is the most popular digital asset used by your crypto-savvy customers?
JO: As a crypto-first OTA, the majority of our bookings have always been made in crypto, typically accounting for 70-80% of all bookings. Credit cards represent only 5-10% of our bookings, with the rest made up of travel credits (booking credits that can be purchased, received through refunds or earned as rewards). There will always be a small percentage of users who make fiat bookings for those who own their crypto for the long term but still want to take advantage of crypto rewards offered on the platform.
In terms of payment options, USDT is by far the most popular payment option, accounting for approximately 30% of all bookings. This is followed by BTC and ETH (approximately 10% each) and then AVA (approximately 5%), which offers up to an additional 3% discount on the final booking price.
BCN: After the halving, the cost of the Bitcoin network increased significantly, making the crypto asset an expensive payment method. While fees have fallen somewhat, the jump in Bitcoin network fees underscored why users are opting for stablecoins or less volatile tokens. As someone who has been in the Web3 world, how important is it that Bitcoin costs remain low, and what is the likely impact on the industry if they were to rise permanently?
JO: Many now view Bitcoin primarily as a store of value, and users are increasingly turning to other assets for more cost-effective networks to use as regular payment methods. This has been a gradual evolution of the network, and whether it was originally intended or not, I believe high network fees will cause users to more carefully separate their assets into spending assets and long-term holding assets.
Bitcoin as a payment method is still viable for larger purchases, but users who make regular Bitcoin purchases will most likely look for alternatives. If this happens en masse, the number of daily Bitcoin transactions could ultimately decline from current levels in the long run, even as the number of holders grows.
Travelers specifically have a few options to reduce their Bitcoin network fees: use the Bitcoin Lightning Network, deposit Bitcoin into their platform wallet to eliminate network fees when booking, or purchase travel credits with Bitcoin for a one-time network fee. supported on Travala.com.
BCN: You have been involved in or advised on several blockchain and crypto projects in your career. How helpful do you think the U.S. Securities and Exchange Commission’s approval of crypto exchange-traded funds (ETFs) has been for the crypto industry? Do you see the approval of an Ethereum ETF having a similar impact on the crypto industry?
JO: The adoption of Bitcoin ETFs was a turning point for the crypto industry. Its adoption will help bridge the gap between web2 and web3, further legitimizing the industry from a mainstream perspective. It wasn’t that long ago that this was a pipe dream that many thought would never happen, and hopefully we see other regulators around the world follow suit.
The approval of Ethereum ETFs is another big moment for the industry. Given the differences in the nature and use cases of Bitcoin and Ethereum, it once again sets a strong precedent for other blue chip crypto assets and is another much-needed step towards greater regulatory clarity in the crypto space industry.
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