How Web3 Will Change Business as We Know It
The internet has come a long way since its early days. In the days of Usenet and IRC, early internet users could never have imagined that they would someday carry supercomputers in their pocket. If someone had told them that every cafe would offer free, super-fast wireless internet connections, they would have laughed at you.
Today, the internet is still experiencing rapid changes. As we speak, the web is transitioning towards something called ‘Web3’. In this article, we will explore Web3 and how it will radically change the future of business.
What is Web3?
The term Web3, first coined in 2014 by Ethereum co-founder Gavin Wood, refers to the next stage in the evolution of the internet. Web3 is a decentralized ecosystem of applications, cryptocurrencies, blockchains, and other innovations that will change how we use the web.
One of the main components of Web3 is decentralization. Many internet platforms today are centralized, meaning that a central entity like Facebook or Amazon is in control. This centralization can lead to censorship or discrimination against users of a platform.
In the Web3 ecosystem, applications run on a decentralized network of computers that prevents a single entity from having control over the platform.
While some companies will be quick to dismiss Web3 as a fad, the reality is that a large number of Silicon Valley tech talent are jumping into the Web3 space. Many developers, artists, and high-level corporate executives have been making career switches to Web3 native organizations. Additionally, a handful of major corporations are already starting to dip their toes into Web3, including Microsoft, Samsung, Budweiser, and others.
How Web3 will change businesses in the future?
The decentralized nature of Web3 applications means they are immune to the whims of centralized entities. This provides a huge advantage for businesses as it gives them complete control over their operations on the web. Decentralized control eliminates the possibility that they could be censored or shut down by a third party.
Web3 will also provide a number of new opportunities for businesses to monetize and engage with their customer base. Digital tokens, NFTs, smart contracts, and many other innovations will provide businesses with unique ways to create long-term value for their users. Here are a few of those innovations:
1. Marketing and Advertising
Companies can leverage unique Web3 functionalities to help engage and market their products to consumers in new ways. A few of the ways that companies can take advantage of Web3 in their marketing efforts include:
Airdrops
An interesting new form of customer acquisition enabled by Web3 is a tactic called an ‘airdrop’. An airdrop is when a company distributes digital assets in mass to a specified list of wallets.
These wallets could have interacted with the company in the past or could even be completely random. Companies can send cryptocurrencies or NFTs to a targeted set of wallets to spark interest in the recipients. Airdrops can be an effective way to quickly boost awareness of an up-and-coming project.
Metaverse Billboards and Virtual Events
Companies have already begun engaging in virtual experiences and events in the metaverse. A recent example is Budweiser becoming the official beer sponsor of Zed Run, an NFT-based horse racing game on the Ethereum blockchain. Budweiser also purchased the beer,eth domain, further solidifying their position in the emerging Web3 space.
Branded Digital Products
Another way that companies can monetize and engage their audience in the Web3 ecosystem is by developing branded digital products. Companies have created digital wearables, launched branded cryptocurrencies, and held virtual events in metaverses like Decentraland.
2. Secure Permissionless Global Payments
In Web3, cryptocurrencies replace fiat currencies (like CAD) for conducting transactions with individuals or businesses.
Cryptocurrency payments simplify the process of transacting with customers across the globe, since no currency conversions are required. Payments can also be made in stable coins, or cryptocurrencies with values pegged to the value of another currency.
Cryptocurrency payments often cost a fraction of what traditional payment processing costs today. Payments with crypto typically settle in just minutes, not days or weeks like many traditional payment processors.
Conducting transactions with cryptocurrencies can also help businesses curb fraud, since cryptocurrency transactions can’t be charged back. Once a transaction takes place on the network, it is final and cannot be reversed by any individual.
3. Transparency
On the blockchain, every transaction is recorded and viewable by the public. This allows a greater level of transparency, which could help boost trust amongst consumers. For example, customers are able to verify that funds are being used in an ethical way, or in accordance with their personal values.
4. Community and Customer Support
In the Web3 ecosystem, community building is a major component of a successful business strategy. Many companies in the Web3 space have aggregated their communities in Discord servers, which provides companies with a handful of interesting opportunities.
For one, building a Discord server is similar to growing an email list – but can be a much more powerful tool. Customers ultimately become ambassadors by feeling a sense of involvement in the company’s day-to-day activities.
Companies can use Discord as a central location to make announcements, organize events, and get feedback in real-time.
Discord can also be a better way for users to get support or ask questions. Many times, other Discord members will respond to customer support questions posted to the server faster than community managers hired by the company are able to.
5. Data Security
Blockchain technology can also help improve the security of a business’s sensitive data. Records on the blockchain are immutable, meaning they cannot be tampered with or altered.
Potential Drawbacks and Challenges of Web3
While Web3 introduces many exciting opportunities, there are still some potential challenges that should be considered. Today, smart contracts are still limited in their functionality and user experience. There is also the potential for bugs in the code, which could cause massive financial loss if they go unchecked.
Additionally, Web3 is still a long way from being user-friendly, and often requires users to be technically savvy to perform many actions. Luckily, this is changing quickly as companies like Coinbase and Moonpay have begun creating easy-to-use platforms for everyday people.
While Web3 is undoubtedly the future, it must overcome these challenges before it can reach widespread adoption amongst businesses.
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