Google’s definition of Web3 is an idea for a ‘new iteration’ of the World Wide Web.

This will incorporate concepts such as decentralisation, blockchain technologies, and token-based economics.

A recent survey carried out but Checkout.com including 3,000 global merchants found that 67% believe Web3 tech will ‘meaningfully impact’ their business strategy in the future.

Additionally, 65% believed that that the ability for individuals to own their data more effectively as creators and data owners will disrupt B2C dynamics as well.

This means that, moving forward, every business will need to start thinking about how Web3 and crypto technology plays into their future.

Speaking at DIGIT Expo, Jess Houlgrave, Head of Crypto GTM & Strategy at Checkout.com discussed three major building blocks of Web3 technologies and the practical implications of crypto.

The evolution of Web3

Web3 hasn’t just appeared of our nowhere: it started with Web1. This was the early signs of the ecommerce we see today.

To put it simply, Web1 focuses on fetching and reading information. Web2 is about reading, writing, creating, and interacting with the end user, and Web3 is the third generation of the World Wide Web.

According to Houlgrave, 70% of ecommerce is going to be focused on peer-to-peer marketplaces by 2030 and will be an important part of how the internet is developing.

Moving on to Web3 and Bitcoin, which is where we are today, we start to embed value and see these two things combined.

Houlgrave touched on what she believes are the three really core building blocks: digital assets, cryptocurrency, and identity.

She said it’s important for firms to start observing what consumers are doing, but also bear in mind that this is this early and very experimental technology, so evaluating the risk that these things bring to your business is also important.

“There are about 300 million crypto users around the world, possibly slightly less today, but there is a lot of money being spent,” she said.

Around $2.5 billion worth of cryptocurrency has been spent just in thirst quarter of this fiscal year, Houlgrave noted, and that number has continued to rise over the last few months.

Engagement and NFTs

NFTs is now a well know use of blockchain technology. These ‘non-fungible tokens’ are unique digital asset that cannot be replicated.

Unlike a Bitcoin, where one person’s coin can be exchanged with another, an NFT cannot. The most recent example of the popularity – and money involved with NFTs – was the recent $69 million sale of digital art presented as an NFT in Sotheby’s.

Brands are starting to see NFTs to engage with their customers more directly. Tiffany, for example, started producing one-off pendants that were representative of the famous CryptoPunks NFT collection that someone may own. Up to now, it hasn’t been possible for firms to identify people in such a specific way.

“But Web3 is open, we can identify every single wallet address that has a CryptoPunk is in, and when we start to put those analytics together to target people in a more specific way from a branding perspective,” she said.

According to the Checkout.com research, 66% of businesses believe NFTs could bolster their loyalty schemes, while 62% plan to issue acquainted NFTs as part of their growth strategy in 2024.

More than three questers (76%) of consumers agreed that they want the option to make payments and engage with brands through loyalty schemes. However, 41% don’t think that NFTs will still be around in five-years’ time.

“I think like this is about a reality check,” Houlgrave said. “We are still very uncertain about the role that NFTs are going to play in the future. But many of the world’s biggest brands are deeply thinking about this.”

Payments

Houlgrave moves on to discuss crypto payments. She said that, when we discuss them, we are talking about two very different things.

The first area of discussion is around whether brand or business wants the option to accept cryptocurrency in the form payment for goods and services.

Currently, of digital currencies are still in their infancy and have proven to be extremely volatile. This will undoubtedly cause a degree or concern and trust issues for a consumer around using a digital currency to buy goods.

Houlgrave noted some drivers that currently exists. The first is whether a brand might want to be associated with being forward thinking, technologically advanced and interesting: “specifically, for the younger generation for whom cryptocurrency and Fiat currencies don’t have much delimitation in their mind. They think of these things very much the same way.”

In the future, Houlgrave eyed a spectrum of traditional fiat assets, cryptocurrencies, and central bank digital currencies that for people being born today will feel like one in the same.

Additionally, some brands are seeing ways to make massive profits through cryptocurrency, which has seen an increase in use over the last 10 years. This is a user group they want to tap into.

Lastly, Houlgrave said, current payments technology is very inefficient. When we talk about emerging markets and cross border movement, cryptocurrency has a way of moving much more effectively and efficiently and at a lot lower cost.

Nearly two thirds 70% of the matches surveyed said that they accept crypto as a payment method, and around 40% of consumers said they have a desire to use cryptocurrency not just as investment but as a payment method.

Additionally, 82% of merchants who have enabled cryptocurrency as a payment say it has brought them new consumers. On the other hand, 48% of merchants are concerned about the regulatory landscape, and that’s why they haven’t ventured into this space.

Identity

The final ‘building block’ is the idea of identity. Identity can take on many different forms.

A simple example would be enabling specific data points about an individual. However, it becomes a lot more than that, Houlgrave said. From tracking food through supply chains to make sure it’s coming from the source we are told it is coming from, to tracking of diamonds with blockchain, the tech has a variety of use cases.

“This immutable technology has more than just the idea of being able to issue something on blockchain and have it be secure. But it also has fundamental impacts for how we think about humans and their development, their security, and their freedoms,” Houlgrave said.

According to her data, 48% of firms said that they are interested in using blockchain based identity to perform KYC checks, which very complicated today. “If we can truly get to a place where we have blockchain enabled identity, that is going to solve some business efficiencies.”

Recommended

• Bitcoin declared ‘dead’ over 200 times in last 5 rears
• Employee engagement app Trickle gets new COO appointment
• How can the UK’s first lithium refinery help us reach net zero?

67% of leaders said that blockchains can make supply chains more efficient, while 81% agree that they’ll help with traceability and supply chain. However, only 3% are now deploying this technology at scale.

“This is an example of where that is a lot of promise, and a lot of potential for this technology in terms of business development and strategy,” she said.

“But the reality is often hard; who do you partner with; what technology do you implement; how do you do it to generate real ROI to your business rather than a nice publicity statement that says you’re doing it.”

She added: “Particularly in today’s macroeconomic environment we are all being judged by a much higher standard, and we have to actually deliver returns to our business as well.”

What is next?

Houlgrave said that the future depends on how people start implementing this technology and experimentation around it.

“Even five years ago, we had many hypotheses about how these technologies would play out within business, and some of the use cases that have emerged were very surprising.”

Houlgrave ended her talk with three key topics that are going to drive change in this space over the next few years: regulation, risk and security and further use cases.

“For me, once you’ve mastered these three basic building blocks of how this technology might impact your business, starting to think about governance and starting to think about privacy enabled technology that allows you to build and preserve data in a different way I think is important.”

Get the latest news from DIGIT direct to your inbox

Our newsletter covers the latest technology and IT news from Scotland and beyond, as well as in-depth features and exclusive interviews with leading figures and rising stars.

To subscribe, click here.