With digital assets powering entirely new industries, Web3 is just one of the new concepts that promise to shake up the world of B2B transactions.
Media coverage of Web3 generally focuses on its role in facilitating seamless cryptocurrency transactions and non-fungible tokens (NFTs), but there’s much more to it than that. It’s also a key enabler of decentralized finance or DeFi, and if its many advocates are to be believed, it also presents a vision for a more democratic and privacy-friendly iteration of the internet. The truth is, that we don not yet know for sure how Web3 will turn out since the concept is still very much in its infancy.
What is Web 3?
Web3 was conceived by Gavin Wood, one of the creators of the Ethereum cryptocurrency, in 2014. It is a concept rather than a specific technology. It depends heavily on the blockchain network to create a new iteration of the web in which privacy, decentralization, and ownership are baked in by design. In a Web3 world, all data, including your personal and financial information, is stored in secure digital wallets on globally distributed blockchain networks.
What are your potential benefits of Web3?
When it comes to B2B transactions, Web3 facilitates decentralized finance and transparency between your chosen counterparties and stakeholders, rather than with the broader internet or third parties. As such, it ensures you security and privacy while enabling you cheaper multinational transactions by way of cryptocurrency and by relying on fewer intermediaries like banks.
As a cutting-edge concept, Web3 also focuses on customer-centric experiences and efficiency born from automation. Furthermore, it is highly tailored to interoperability by allowing you, as a clients or stakeholders, to access confidential data across multiple devices and apps using only your digital wallet addresses.
What about the drawbacks of Web3 for you?
As is the case with any innovation that promises to enhance your privacy and anonymity, there is a significant image problem with Web3 and cryptocurrency. As it is inherently difficult to regulate, the adoption of Web3 may lead to a serious rise in cybercrime, just as untraceable cryptocurrency is widely used by cybercriminals. In light of the risks, government and industry regulators are facing a constant battle to remain in some degree of control, which also presents barriers to its adoption.
From your perspective as an end users, there is also quite a high barrier to entry to Web3. Devices used to utilize Web3 services will need to be considerably more powerful than those used to access today’s typical online apps and services. Also, if you are new to Web3, you will have difficulties understanding and working with it in the beginning. The learning curve is quite steep.
What does Web3 mean to the fintech industry?
Although Web3 is envisaged to be the third major iteration of the internet, it is not intended to replace Web2, which is also known as the social web owing to the role of social networks and user-generated content.
Instead, Web3 runs in parallel to Web 2.0 to grant additional privacy and security options to end users. This has profound implications for the business world, not least because most organizations now depend heavily on digital assets.
Cryptocurrencies play a central role in Web3 since they’re also built on blockchain networks. Blockchain, in turn, is instrumental in the so-called digital asset revolution, which is especially important to the fintech and broader finance industries. These digital assets include currency exchange tokens, securities originating from traditional financial entities, governance tokens, and natural asset tokens backed by real-world commodities.
What does the future hold for Web3?
Web3 is a rapidly evolving concept with startups in the space commanding billions of dollars in funding and today’s crypto networks reaching a total market value in the hundreds of billions. In the near future, B2B payment platforms will likely increase their support for Web3, such as by giving enterprise users the means to securely store digital assets like virtual cards or tokens used in smart contracts. Mazepay is currently looking into implementing Web3 features in its procurement and invoice-management platform as a means to give your enterprises greater control over their digital assets.