In the evolving landscape of the Internet, the transition from Web2 to Web3 is set to bring about significant changes across all industries. Currently the version of the Internet that users are accustomed to is Web2, and Web3 is the next generation. Also known as the semantic web, and decentralised web, Web3 is based on decentralised technologies which allows users to access the Internet and resources without the reliance of a central authority. Currently centralised authorities operate e-commerce and other sites which present issues around security, censorship and data ownership. Nonetheless Web2 has built a number of different technological capabilities; some of the largest being the impact of social media platforms, streaming service, online marketplaces and more. Companies have been able to boost influence and power, but have been limited due to concerns over lack of power and autonomy, data privacy and cost.
Web3: Beyond the Hype
Unlike its predecessor, Web2, the main idea behind Web3 is to bring a paradigm shift in the way users interact with digital technologies. The promise is to bring an open, transparent and secure system of networks. Categorised by its decentralised nature, Web3 will move us away from the centralised platforms which host Web2. And so, users will have more ownership of digital assets and data – ultimately giving end-users autonomy and empowerment. This shift is imperative as the global population is becoming digitised and it is expected that by 2026, 25% of people will spend at least one hour a day in the metaverse, and 30% of organisations will have products and services ready for the metaverse.
Supply and demand, and the expansion of businesses is driving rapid advancement of technologies, as competition stiffens and there is a greater need for positive impact in e-commerce and customer experience. The adoption of Web3 is set to bring unprecedented levels of transparency, data accuracy and indestructible manipulation of data. These fundamental changes will bring numerous opportunities for businesses through:
Decentralisation and Trust
Web3 is bringing the concept of decentralised applications run via blockchain technology, which will in turn reduce the need for intermediaries and bring greater levels of transparency. Businesses will be able to leverage these technologies to create a system of trust and ensure secure and efficient transactions; thus reducing fraudulent activity and room for error.
Tokensation of Assets
With the main idea being ownership, Web3 will enable the speedy creation of digital assets and tokens, allowing businesses to tokenise physical assets such as stock, art and even tangible assets such as real estate. And so Web3 will unlock new revenue streams and democratise access to investment opportunities.
Moreover 70.19% of e-commerce customers have abandoned their carts in 2023, and so for e-commerce stores tokenisation can be adopted for one-click checkouts to improve user experience, reduce cart abandonment and facilitate a seamless checkout experience.
Smart contracts are programmes stored on a blockchain that will run automatically when predetermined conditions are met. The self-executing agreements are a cornerstone of Web3, allowing automation to eliminate time-consuming processes, currently driven largely by manual labour. Industries such as supply chain management and insurance will benefit greatly and see more efficient processes offered in a secure, speedy, efficient and more accurate manner.
Communities and bodies collectively make decisions to govern platforms and the protocols which moderate their functionality. Web3 will host decentralised governance mechanisms, such as consensus-based decision making or token-based voting; giving businesses and users influence over the direction and rules for the systems they use. Through self governance, businesses will have greater control over the operations of their businesses, and remove elongated processes which limit their autonomy.
User-Centric Data Control
End-users and businesses will have more control over their personal data, and be able to control its movement by denying or granting access to it. And so, Web3 will transform how businesses handle user data, and potentially reduce the risks associated with data breaches and privacy concerns. Unlike conventional data control in Web2, users will be able to control how much data is stored and who has access to it – giving them privacy. Data monetisation is also a large area of interest for many businesses, as they will be able to sell data directly to users or platforms which can be used to improve customer engagement, boost brand loyalty and offer personalised shopping experiences.
Banking-as-a-Service in Web3
Fintech products are notorious for their greater transparency in functionality and innovations which will transform the way in which businesses access financial products and services, and thus the way consumers shop and manage their funds. We have already begun to see fintech’s building innovations on blockchain technologies, and banks adopting said technologies to uplift their product offerings. Banking-as-a-Service APIs are built on cloud-based technologies which enable businesses to integrate banking and financial solutions seamlessly. BaaS will take on greater importance in the Web3 era because of its shared alignment to decentralisation. Whilst traditional banks may struggle to adjust to the decentralised landscape of Web3, BaaS providers can and will continue to leverage blockchain technology to offer secure financial services. And so in Web3, businesses’ reliance on traditional banks will further reduce as fintech products will continue to bring enhanced banking services whilst reducing transaction costs and streamlining financial processes.
Moreover there is a call for greater facilitation of alternative payment methods, such as the rising prevalence of cryptocurrencies and digital assets, as cross-border payment corridors widen and technologies advance. With Web3 being eagerly anticipated for its investment opportunities, asset management and commerce experiences; businesses looking to place themselves in Web3 can leverage BaaS products to shift them into a state of readiness for the open possibilities that will come in the revolution of the next phase of the Internet. And BaaS will provide crucial financial infrastructures to business operations whilst they navigate Web3’s decentralisation, asset tokenisation, user-centric data control and smart contracts. We anticipate that in the Web3 era, businesses will turn to BaaS providers to place themselves in the best position to embrace these changes and thrive in the exciting potential of the new digital landscape.