Web 3.0 is the next stage of the internet that will redefine our everyday digital experience. How far and how quickly companies and users will adopt the technologies and their uses remains unknown. Looking into some uses and what makes up Web 3.0 can help companies to affiliate themselves with and get started.
The Backbone of Web 3.0
So what makes up Web 3.0 and how does it help to build the fundamentals of the web? First, the web builds on blockchain technology, which helps to store all the data on the ownership and the history of conducted transactions on a decentralised platform.
Second, an embedded “smart” contract on a blockchain also plays a part in building the web. It is a program with written logic and rules that runs tasks independently when predetermined conditions are met. The tasks executed by the “smart” contract here could be the buying of non-fungible tokens (NFTs), transfer of funds or ownership, and anything else related to Web 3.0.
Last, the building block of Web 3.0 includes digital assets that represent anything of value. These digital assets will then engage with the smart contract to become “programmable”. This means that users can now participate in the governance and operations of protocols as shareholders.
How does Web 3.0 work?
One way Web 3.0 will work in the future is through a decentralised app (dApp). By eliminating the central authority, the web will instead run on a peer-to-peer network such as blockchain and use smart contracts to facilitate any transactions and agreements between parties with no pre-established trust. Using dApp ensures a more secure environment for making transactions, as the platform does not hold a physical device for scammers to attack. Therefore, dApps are incalculable for attacks and form a competitive advantage.
Another way Web 3.0 will work is with a decentralised autonomous organisation (DAO). DAO is a community-led entity that is collectively owned by a group of people who will partake in decision-making to achieve a shared mission and is based on blockchain technology and smart contracts. DAO is created to function as a governance for the web’s initiatives, apps, or communities since there is no central authority or specific person or company that controls the network. Hence, giving an equal amount of power to all members and the ownership back to the users.
How to get your company ready for Web 3.0?
One way is to offer payment tokens to its customers, shifting into a “user-owned” model. Payment tokens are a process that protects a customer’s vulnerable data, such as their credit card details, from being exposed to the company. The act of tokenising in this case will take place by replacing the sensitive data with a non-sensitive one, with a temporary token number that is randomly generated to ensure a safe transaction. Therefore, safeguarding and restricting the company’s access to the actual customer’s credit card details. The benefits of security, convenience, and speed value-add both the customer’s experience and the company’s reputation. Some existing examples of companies using tokenisation to safeguard transactions include widely used mobile wallets, such as Apple Pay or Google Pay.
Another way a company can do this, especially businesses in the financial industry, is to integrate Know Your Customer (KYC) into their operations. KYC is a process that can aid companies in identifying and verifying the legitimacy of their customer’s details. KYC can prevent identity theft, which can make one unwittingly become an accomplice to money laundering, and also protect the company from fraud, money laundering, and terrorist financing. This integration will preserve the decentralised nature of Web 3.0 and allow the companies to embrace automation while keeping track of everything and protecting their customers.
Web 3.0 is not limited to the examples given, and there are other ways to enter the market as well.
The Challenges of Web 3.0
By getting into the Web 3.0 space, companies should be aware of the continuous challenges.
An example is regulatory scrutiny. Since Web 3.0 is decentralised in nature, transactions made are kept anonymous to safeguard customer data. However, this also makes it hard for companies to trace the scammers. To balance the risk and innovative potential of the web, regulators around the world are on the lookout to issue new guidelines. However, the situation remains uncertain. More often than not, the regulations come unexpectedly, making it difficult for companies to comply with it within a short amount of time may be difficult. Companies can consider working with regulatory compliance companies like Regtank to support and complement their business.
The prevalence of fraud and the security in the early stages of Web 3.0 raises concern and prevents customer adoption. While integrating KYC and anti-money laundering (AML) procedures is one way to detect fraud early and allow for prevention measures, the money loss is unrecoverable. Companies coming into the space should be cautious and prepared.
Another example is the delivery of satisfactory user experience in this ecosystem. As the underlying nature of the technology is still too cumbersome and the user interface is still in the developing stage, companies may not be equipped to deliver a seamless experience for its customers yet. Thereafter, companies can only overcome this challenge with time and by educating their customers.
As Web 3.0 advances, there will certainly be more challenges for companies to address and overcome.
Despite the innovative potential of the web currently, such as enhanced privacy and user ownership, the journey to transition into Web 3.0 is still proven to be bumpy and unclear, with increasing challenges that include fraud and rapidly changing regulatory compliance.
Despite a long way to go, there is a predicted massive growth for Web 3.0 by Emergen Research. Companies should look into this space and contribute to the adoption of the web. The growth is expected to be valued at $81.5billion in 2030 and has a compound annual growth rate (CAGR) of 43.7% during the forecast period.