5 November 2024, Tue |
4:48 PM
Prakash Somosundram, Co-Founder and CEO, Enjinstarter
It’s not just about technology, it’s about embracing a new mentality
One of the common misconceptions about Web3 is its characterisation as a set of technologies that, if implemented, will automatically result in organisational transparency and decentralisation. While there may be some truth to this, the narrative doesn’t paint a complete picture. Web3 is just as much about the adoption of a mentality as it is about a technology.
While NFTs and the metaverse have garnered most of the headlines, other Web3 technologies have gone through a maturation process. Once considered difficult to use, technologies such as DAOs and smart contracts have now become a lot more user friendly and accessible. Given the paradigm shift in stakeholder engagement that is underway, this maturation couldn’t have come at a better time.
But this is only half the battle. Organisations and their supply chain partners need a change in mentality to truly leverage these technologies and “future-proof” themselves. It’s this mentality shift that will enable organisations to leverage Web3 to adapt to changing customer needs and become better corporate citizens that are capable of confronting some of our most pressing global issues.
Web3 is much more than just NFTs and the metaverse. At its core, Web3 represents a philosophical shift towards decentralisation, transparency, and user ownership—the idea that our experience with the internet in all of its forms should not be controlled by a select few. And while that meant clunky implementations and unproven concepts in the past, the last few years have witnessed a remarkable rise in the number of usable Web3 solutions. The kind of solutions that any organisation can use without needing specialised knowledge.
Smart contracts – We have only begun to scratch the surface of the potential of smart contracts. When combined with AI, data oracles, and bots, they enable a level of transparent and traceable automation that can do things like pay out a flight delay insurance policy immediately upon learning that a flight has been delayed or release an escrow payment if conditions are met.
Decentralised autonomous organisations (DAOs) – In their simplest form, DAOs are a way for a group of stakeholders to collectively govern a treasury. They have emerged as an ideal way for organisations to introduce greater transparency, particularly around CSR initiatives such as carbon offsets and charitable donations. But they also enable the decentralisation of ownership and voting rights. DAO shares can, for example, be distributed to customers or other key contributors.
Decentralised storage – Cloud storage has traditionally been the domain of tech giants and their massive datacenters. Web3 tech has now made it possible to store data in a secure, redundant, and anonymised way. It works by allowing people and organisations to “rent out” their unused storage space. All transactions are accounted for on the blockchain, so the storage owners can be accurately remunerated in real-time.
Asset tokenisation – The representation of physical assets on-chain brings with it a number of benefits, liquidity and efficiency being at the top of the list. You can imagine, for instance, how much easier it is to sell a tokenised property compared to its physical counterpart. No paperwork or intermediaries, just the transfer of a token from seller to buyer. Of particular interest to organisations is the possibility of tokenising assets such as accounts receivable invoices to unlock liquidity.
After two decades of the inequitable Web2 value proposition, customers are demanding more transparency, greater influence, and a bigger slice of the economic pie. It’s on organisations and their supply chains to find ways to meet these demands.
NFTs and the metaverse have acted as a kind of gateway by providing new avenues for brand interaction. We’ve seen communities spring up around NFT launches and customers rewarded for engaging in branded metaverse-based games. And while these two technologies offer transformative user experiences, so much more can be done with Web3.
With COP 28 being held in Dubai later this year and the UAE’s commitment to sustainability, Web3 tech for climate action is one use case we are watching closely. With carbon credits now available on-chain through asset tokenisation, organisations and their supply chain partners can form DAOs to pool funds and transparently purchase and retire certified carbon credits without the need for a broker. Every DAO vote and expenditure is publicly available, so customers can verify carbon offset activity without having to trust the organisation’s own reports.
These same principles can be applied to other aspects of an organisation, whether it be inviting customers to participate in and take an ownership stake in a DAO created to launch a new product or renting out unused storage space to diversify away from the over-reliance on Web2 tech giants.
We all know that the value of new technology can be difficult to predict. We saw it with the most recent iteration of VR tech, and we are now seeing it with ChatGPT, Midjourney, and other AI apps. Organisations the world over spend significant resources trying to figure out how to leverage these new innovations to avoid falling behind and “future-proofing” themselves.
I would argue that future-proofing is a mentality, not just a technological implementation. It’s a keen understanding of how stakeholder needs change and how best to adapt new technologies to those changing needs. It’s the desire to prioritise transparency over profit maximisation. It’s the awareness that customers deserve a better value proposition.
Web3 technologies are designed to support this mentality. They are the tools that organisations need to adapt to changing demands and become better corporate citizens as we confront global issues such as economic inequality and climate change. But it won’t be the technologies alone that save us. We must not forget that a mentality shift is just as important to meeting the demands of the future.
