Blockchain and the general Web3 industry has been seeing much drama in the last few years. It is one of the fastest moving areas of technology, yet also involve much controversy amongst traditional financial and technology sectors. But is it all noise, and what can we find, pushing through all the front-end distractions?
Loosely speaking, Web3 is the general revolution of the current internet technologies that we refer to as Web2. It encapsulates a wide-ranging number of components, of which Blockchain, Smart Contracts and Cryptocurrencies are some of the most well-known. One of the most fundamentally important concept of Web3 is its ability to facilitate ownership in a decentralised, trustless way. This is pivotal to the core understanding of Web3 as true trustless ownership is something that is not possible, or near impossible, to achieve in Web2.
As Web3 is still early in comparison to Web2, there are a lot of artificial economies around with models that aren’t sustainable in the long-term. Countless number of tokens have been minted out of thin air, given an artificial valuation, with the promise of future innovation and measures such as “burns” to create fabricated demand hence driving up prices based on speculation, whilst the fundamentals backing these tokens are weak or non-existent. Although what is happening may not necessarily be positive, it is also a normal part of adoption and growth, which is largely driven by speculation at first (the Dot-Com started out much the same).
Moving beyond the obvious benefits and current pitfalls of Web3, there are diverse arguments surrounding why it is controversial in nature. The closeness of Web3 and the disruption it has caused to the fundamental principles of the current monetary network is a concern for governments and corporations. Intermediaries like banks, powerful social media corporations like Facebook and Google, are amongst many that stand to be most disrupted due to the nature of what Web3 is attempting to provide a solution for; custody and ownership without a middle-man.
Let’s dive deeper into below areas where Web3 is poised to provide a new way to transact and express ownership.
The blockchain does one thing: It replaces third-party trust with mathematical proof that something happened.
Adam Draper
Tokenisation of Real-Estate, Automotive and Big Ticket Items
Non-fungible tokens (NFTs) have its most common use-case carved out in tokenising digital art. This has been its primary road to fame with hugely popular global collections such as BAYC and CryptoPunks. However, as people start to fatigue from digital art NFTs, the NFT technology is ripe for real-world adoption. The underlying fundamental of NFTs is to tokenise and represent ownership of a particular item, and this is not limited to digital items, as real-world items can just as effectively be tokenised on-chain to reap the Web3 benefits.
The tokenisation of Real-Estate and cars are at the fore-front of real-world use-cases for NFTs. Using NFTs as a direct digital representation of these big-ticket items make sense because:
- Its ownership can be transferred with relative easy, almost instantaneously, with minimal fees, in a transparent, and verifiable way without an intermediary
- Ownership can be verified on-chain easily, but anyone, in a pseudo-anonymous manner
- Buy / sell transactions can be even more seamless by utilising on-chain transactions together with a smart contract to ensure ownership transfer only happens when certain conditions are satisfied
- Possibility of fractionalising the underlying asset for timeshare, co-ownership or other governing purposes
Whilst it seems like a natural fit to tokenise physical assets on-chain, the barrier that needs to be crossed for true adoption is that regulatory authorities that currently have governing powers over the “database of ownership of real-estates or automobiles” need to recognise and agree that the blockchain is the single source of truth, replacing the current private database which they have full control of.
Supply Chain Transparency and Efficiency
Since 2020, the global supply chain has been disrupted in an unprecedented manner due to the pandemic. Governments restricting the movement and flow of people has resulted in a crumbling global supply chain, which is all interconnected at some level.
Whilst Blockchain and Web3 isn’t “one solution solves all” to the underlying problem, it can definitely assist in ensuring that as we attempt to recover to pre-2020 state, the infrastructure has a better foundation to grow on in the years to come. Disruptions like the one we experienced in 2020 is bound to re-occur some time in the future, so the world needs to ensure they are better prepared and do not make the same mistakes.
One of the primary advantages of having an end-to-end supply chain on the Blockchain is its transparency of data and ability for currently siloed processes to now be part of a bigger process, working coherently towards a common goal. On-chain operations are not necessarily as fast as off-chain private databases and systems. However, as the end-to-end process is covered, the efficiency gain from the devised interoperability of all steps in the chain will largely out-weigh the slight inefficiency of on-chain operations as the Blockchain will be the single source of truth end-to-end. This then results in the potential of eliminating discrepancies, debates and other risks that were previously oblivious due to the lack of transparency.
Identity Management
Identity and privacy is becoming an increasingly heated topic as the biggest flaws of Web2 is now being highlighted by many analysts. In Web2, we implicitly put our trust in big corporations like banks, social media companies, or technology corporations (Apple, Amazon, etc…). Money is merely a paper stating IOU, and our identity and all our data is controlled by governments and corporations. If our money is merely a bunch of IOUs, and our identity as well as data isn’t really in our own custody, then what do we truly own in this world?
Web3 aims to solve this problem by putting ownership back in the hands of its rightful custodians, not intermediaries. Even though the technology in Web3 is not yet mature enough to fully replace the sheer size and infrastructure requirements that Web2 can today, this should not stop us from seeking out solutions that can help people take the first step towards the right direction.
There are many parts to identity management, some of the most commonly discussed are:
- KYC (Know Your Customer)
- KYB (Know Your Business)
- Wallet-First Logins
- Username / Password Logins
Whilst far from an exhaustive list, the future of identity management in Web3 will be drastically different from those in Web2. Web2 typically focuses on a centralised database / entity that has ultimate control over the identity, whether it is login credentials, or KYC / KYB details. Web3 will provide a decentralised way, free from an intermediary, to preserve, custody, and use one’s identity in a secure and pseudo-anonymous way.
Concluding Thoughts
There is huge potential for Web3 adoption to skyrocket in the next decade. We are seeing the early signs of adoption, with a lot of speculative behaviour within this yet-to-mature technological area. This is normal during early stages of the adoption cycle for any technology, and in a way expected.
Here at Multiconomy, we strive to build products and provide services to projects that are making an impact in the real world. We foresee mass adoption accelerate when there’s a strong foundational cross between Web2 and Web3, which will in-turn ensure that onboarding into Web3 can be seamless and pain-free.