The internet is connecting billions of people and is part of our daily life. Now that we are on the brink of the next iteration of the internet and moving to a token economy, we will have a closer look at web3 and how it will impact the payment infrastructure and your business.
Web 1.0 – Read Only
World Wide Web’s first stage was a collection of web pages. A small group of users with enough knowledge of creating an HTML document published information about a wide range of topics. Users could access the website and read the data. However, the interaction was limited because of the lack of controls, forms, and visuals.
Web 2.0 – Engage and participate
Web2.0 is the internet as we use it today. Web 2.0 is more focused on the user, engagement, and participation. On Web 2.0, anyone can create a blog, comment on a friend’s status on Facebook, post a video on YouTube or ask a question on a forum.
With the advancement of technology, the introduction of smartphones and faster connections made it possible to interact with brands, play online games, compare product offerings and buy products and services online.
According to Statia, there are, in April 2022, more than five billion internet users worldwide, which is 63.1 percent of the global population. Of this total, 4.7 billion, or 59 percent of the world’s population are social media users. With more people having access to the internet and the adoption of buying online, e-retail were as high as 5.2 trillion in 2021 and is likely to surpass 8 trillion U.S. dollars in 2028.
Web 3.0 – Decentralized and sovereignty
There are some distinct flaws in how the internet operates at the moment. The centralized character of distribution and ownership of data is one of them. Internet giants such as Facebook, Google, and Microsoft not only collect your data and sell it to advertisers but also own the user-generated content. Web3 has the promise of a more decentralized internet that offers users sovereignty over their data and intellectual property.
Users will have more control over which personal data they share and with whom, without risking exposing personal data without their explicit consent.
How will web3 and the token economy impact my business?
With an estimated market size of USD, 3.2 Billion in 2021 and a predicted market size of 81.5 Billion in 2030 Web3 is going to have an impact on businesses. Already millions of users are interacting with Web3 via dApps, NFT marketplaces, DeFi, play-to-earn games, and the metaverse. Web 3 will change how customers buy products and services online and will have a big impact on e-commerce in the near future.
The Metaverse is one of the most compelling new channels to interact with your customers. The metaverse is a combination of many technologies such as AR, VR, blockchain, crypto, and social commerce. Learn more about: payments in the Metaverse.
Brands that go digital can engage with fans regardless of their location and even in the absence of live events, brands, clubs, and artists can connect digitally. From loyalty programs through fan tokens to NFT-based digital collectibles and streamlined payments, there are numerous opportunities on a new way to interact with fans while diversifying and boosting revenue generation.
In a traditional e-commerce flow, there are three to five parties are involved. Each party has its specific role, working together to process the transaction from the beginning to the end. The parties involved are the user bank, the merchant bank, the payment processor, and the issuer. All parties together create a trusted payment rail to manage and transfer money.
The payment processor needs to check if the customer’s card can be charged; then the transaction needs to be validated, and the merchant wants to have the certainty that he receives the funds. The payment service provider receives the money from the customers’ bank account and pays the merchant in the next few days.
While the transaction can be validated automatically, it can take up to 3 to 5 business days before a merchant receives the money. This creates a cash flow problem for the merchant and high transaction costs because each party adds a markup.
Web3 building blocks and use cases
Blockchain transactions over the internet do not need an intermediate and are borderless, faster, and safer than traditional methods of transferring value over the internet. This is beneficial not only for the user but also for organizations. It reduces counterparty risks, lowers transaction costs, and increases customer satisfaction.
Tokens and smart contracts enable near-instant payments without a go-between, improving efficiency and reducing costs. Token transactions are final and irreversible, eliminating the risk of chargebacks.
Web3 Challenges and risks
Although many users have heard of blockchain, DeFi, NFTs, iGaming, and the Metaverse, for novice users, it is too technical to set up an account and deal with private and public keys, seed passphrases, and more technical jargon.
Another obstacle for users is how to buy specific tokens that a Web3 application uses. Users have to go to a cryptocurrency exchange to buy cryptocurrency with euros, convert the cryptocurrency to the token that is used on the platform, and then send it to the correct wallet address. This is cumbersome and far too complex for the average user. Buying (and selling) tokens should be as easy as buying any other product or service online.
Customer protection should be a focal point for any Web3 application, including cyber security and customer data protection. To prevent fraud and the loss of tokens, the token infrastructure should comply with the highest security highest levels of security, confidentiality, and availability.
And most imporrtantly , the user needs to know that the activity is not illegal, complies with all the rules and regulations, and has the approval of local financial authorities. Mass adoption of mainstream users, merchants, financial institutions, and investors alike will not happen before these risks and challenges have been resolved.
Get in touch to discuss how we can help you
Henri de Jong
Chief Business Development Officer
3526 KS Utrecht
Registration number: 86401386