No need for cryptocurrency for the internet to exist on Web3
Is crypto dead? That impression might be created by the recent decline in the market particularly in Bitcoin. In the meantime, the previous month saw Google Cloud collaborate with Binance, a cryptocurrency exchange that has run into legal issues in several different countries, on a smart contract blockchain service.
Perhaps no surprise, Binance is barely mentioned in the statement and the whole focus is on the redesigned BNB Chain. But according to a Deloitte report from June, which surveyed 2,000 retail executives, 85 percent of them want to be able to accept bitcoin payments. While 83 percent of respondents think that cryptocurrency will become legal cash within the next 10 years, 54% have already invested more than $1 million to enable digital currency payments.
In more recent news, the first stablecoin backed by the pound was created in the UK with KPMG serving as auditor, effectively giving cryptocurrencies the seal of corporate legitimacy. But when one regards cryptocurrencies as the initial wave of something new on the horizon, whether it survives or disappears into the ether may be a moot question. This emerging technology is known as Web3 or Web 3.0 in some circles. Web3 is being hailed as the next generation of the internet, a decentralized version of the existing internet using distributed ledger technology (DLT) as its foundation.
Cryptocurrencies, blockchain, self-sovereign identities (SSI), and decentralized finance are all products of DLT (DeFi). The last item on that list might either provide an impending existential threat to today’s financial institutions or present an opportunity for reinvention for today’s more agile bodies. The COO thinks that blockchain, a technology that is currently in certain businesses’ toolkits, is the crucial component of this transition.
Shane Rodgers, a seasoned investment banker and the CEO of the payments and digital banking platform PDX Global, describes to ERP Today the substantial inroads that technology has made into the financial sector. Corporate CFOs are now using payment platforms that make use of the architecture because they want to save costs by expediting conventional digital payments and getting rid of fees that usually go to middlemen, he says.
The present supply chain crisis has found usage for blockchain outside of banking. The supply chain and operations head for Accenture UK, Stephane Crosnier, uses the example of a major global energy company seeking to create a more interconnected supply chain throughout its ecosystem and the implications for financial structures. According to Crosnier, the project’s goal is to develop a common data platform for the industrial sector that will facilitate business partners’ workflows while also enhancing the purchasing experience. Through IoT and track-and-trace capabilities, product movement data, inventory level, and storage capacity are gathered.
He explains that the blockchain layer uses these inputs to build a common record of product provenance, which has significant consequences for the existing funding models. “The majority of cases of transactional mismatch and reconciliation are eliminated by integrating with partner systems of record and using data from purchase orders and deliveries. Smart contracts’ codified business logic substantially shortens the procure-to-pay timeline and lowers the need for manual intervention.
By enabling zero-day financing and releasing imprisoned working capital from the supply chain, this cycle time reduction paves the way for the transformation of trade financing models.
Peer-to-peer digital transactions reduce the danger of lost cards and stolen PINs, eliminate middlemen in the payment process that increase risk exposure, and are securely recorded on the blockchain. According to Jaco Vermeulen, CTO of BML Digital, the concept of Web3 as a whole is characterized by a similar sense of security. According to him, “Web3 tools are likely to push credit/debit cardless techniques and link accounts to specific identities via NFTs and biometrics.” “This would be used for transaction validation as well as payment account identification. As a result, it is no longer necessary to know account or credit card numbers, increasing security. The use of Web3 on such a large scale could contribute to the technology’s eventual replacement of the internet as we know it today. However, for the time being, a lack of integration will keep businesses using Web 2.0 for a little while longer.
With years of experience in investment banking, Rodgers concurs, stating that there is “little need for fear” because “a good crypto conversion solution will completely sidestep the legacy system with all its integration issues, offering instead a parallel system that simply spits the result back into their enterprise software.” Financial institutions are already looking for replacement payment systems. He thinks that early adopters of financial institutions will benefit from giving customers and retailers more payment options.