What does Web3 mean for the future of business?
The insights published in this article were provided by Mark Monfort, Co-Founder at NotCentralised, and Kate Cooper, Executive of Digital Assets at National Australia Bank, at Stone & Chalk’s national event What does Web3 mean for the future of business? The full recording of the event is available on our Stone & Chalk YouTube channel.
During our recent Web3 event, there were a number of points raised around the positive and negative impacts of Web3. We’ve summarised the key insights from the expert panel session, as well as further exploring each point below.
Key takeaways:
Australia is an emerging crypto hub due to regulatory engagement, active dialogue with government, participation from major banks and an active community.
Traditional organisations such as banks can play a positive role in Web3, operating as a constructive part of the ecosystem and not as a controlling force looking down on a decentralised world.
Blockchain technology can help increase trust in business transactions through its security, transparency, and easy value transfer.
Mass adoption of blockchain will not occur until the user experience is improved.
There is a middle-ground approach to using blockchain technology.
Global and local collaboration are essential in the Web3 and blockchain world.
When using Web3 technologies, it's important to balance security, transparency, and accessibility.
Australia is an emerging crypto hub.
We’ve always been a home for experimentation, thus attracting big global firms, thanks to regulatory engagement, active dialogue with government, and participation from major banks. Australian businesses have welcomed regulators' involvement and guidance on how digital assets will be treated moving forward.
"The fact that there's a healthy dialogue, a very active dialogue with [the regulators] is a contributing factor," Cooper said. She believes Australia has an active community in this space and that it's incumbent on players in the space to foster and invest in talent because that will be the pathway to success.
Mark Monfort echoed Cooper’s sentiment, adding, "A lot of people and businesses can come here and be safe in the assurance that what you try out here in Australia, if it does work and you do get traction and get clients, it is much easier to share that across the globe." Many startups and even big companies are coming together to figure out how they can take advantage of the manpower, using open-source blockchain technology to develop faster.
Banks can play a positive role in the Web3 ecosystem.
While Cooper thinks Web3 could be a threat, she believes recent events have shown that there's still a role for banks in this space.
"The trust nature of distributed ledger technology absolutely is part of the core tenets of why it's being adopted," Cooper said, "but the role that traditional organisations have in helping to fulfil that potential is really important." She also raises the need for banks to operate as a constructive part of the ecosystem and not as a controlling force inhibiting the innovation made possible by Web3.
Blockchain can help increase trust in business transactions.
In a trustless system, rules are made by code instead of trusting people or institutions to follow the rules.
"Trustless means that we have code that governs how things are done," Monfort said. This means the system can automatically enforce rules, such as only allowing certain types of transactions, without relying on human trust. This can make things more transparent and fair.
After all that is said and done, Web3 has suffered quite a reputational damage due to the bad activities happening within the crypto space. Yet, Monfort states that if the crypto industry had used more smart contracts, there would be less fraudulent activity and broken promises. Despite the current craziness in the industry, he still believes that it could be a positive thing.
"In some way, maybe it is a bit of a blessing in disguise because we're stronger now," he said.
Cooper adds that governance and regulations will help the crypto industry. "It will provide some certainty to the market and hopefully dispel some of the bad actors that are giving the industry overall a bad name," she said. Right now, the industry is going through growing pains, but it can learn from its mistakes and continue solving problems. As long as we take the learnings forward, and keep it grounded in the problem we’re trying to solve, we'll see enthusiasm resurface, albeit in a more responsible way.
Mass adoption won’t occur until we improve the user experience.
Cooper points out user experience as one barrier to entry for Web3.
"The user experience within the space is still incredibly clunky. It's a hugely high barrier to entry," Cooper said. She also stresses that the presence of bad actors is another barrier to adoption. Yet, she maintains that there’s potential for high-friction, high-value use cases for blockchain technology, especially from a lab perspective in our corporate and institutional client base, where blockchain technology really does solve a real-world problem. The goal is to build capability and be ready to serve the marketplace when there is a real appetite for it.
Decentralisation isn’t an “either or” situation.
Monfort, in remaining pragmatic, emphasises the importance of centralisation in some cases. He thinks it's important to improve on what has already been built by governments and corporations, rather than casting it aside.
"We are so quick as a space, especially in Web3, to just throw away what governments [and] corporates have built up instead of looking at certain things that don't work. We can improve that with blockchain tech. That's the middle-ground path that I align with," he shared.
He believes that blockchain and Web3 alone are not enough to shape the future, that these technologies need to be combined with others like AI, quantum computing, and nanobots, to be effective.
Cooper focuses more on using blockchain technology to improve property transactions, especially when it comes to the tedious process of sending paper copies of property titles.
"There's some really low-hanging fruit there and some big customer pain points that need to be solved, and smart contracts can help," she said. Nonetheless, when it comes to access to home ownership, especially for the future generations, she argues that Web3 alone can’t completely solve the problem, though it may enable us to find a solution.
Collaboration and openness are essential in a decentralised world.
Monfort believes that the emerging tech space is still at an early stage and that by working together, everyone can benefit and reach the market faster.
"We need to actually band together, group together, and collaborate," he said. Startup founders may be used to building their products in stealth mode, but in the world of Web3 and blockchain, collaboration and openness is everything.
Cooper agrees on the importance of collaboration but also advises not to focus solely on the technology.
"Focus on the problem you're trying to solve," she said, "and every time you get challenges from internal stakeholders, which happens every day, if we bring the conversation back to what's the customer value and the problem we're solving, then there's very little they can do to argue."
Web3 implementation is a balance between security, transparency, and accessibility.
For the banking industry, transparency is a dilemma due to the need for confidentiality.
"We find ourselves challenged with the public and permissionless nature of blockchain, but the requirement to hold commercial confidentiality, customer privacy, etc., is at the heart of our business and what we do," she shared. For a financial institution, the element of know your customer is important. It's incumbent on banks to fundamentally know what's happening with the money that they’re helping to distribute.
Monfort further explains this challenge, raising three important things we should consider when implementing these technologies: security, transparency, and accessibility. He views them as a trilemma of levers; if you pull too much on one, you lose a bit of control on the others. It's important therefore to understand how they work and where to use them.
Are you a Web3 startup or scaleup founder looking to expand your business? Stone & Chalk and the Australian DeFi Association have teamed up to launch Australia’s very first Web3 Innovation Centre. Find out how you can apply to join and access the support you need to grow.
