The Digital Frontier and why businesses need to pay attention to web 3.0 Banner

The Digital Frontier and why businesses need to pay attention to web 3.0

Alex Pryor – Head of Digital Innovation at EOH

June 2022

Technology is changing at a rapid pace, and those who do not educate themselves on the changes are liable to be overtaken by them. Although the ideas surrounding the likes of blockchains, web3.0, NFTs, cryptocurrencies, and decentralised organisations are often confusing when you start out, it is important for businesses to start thinking about how the mass adoption of these technologies will affect them.

Here are some questions that businesses should be asking themselves now:

How will the new Central Bank Digital Currencies (CBDCs) affect my business?

CBDC Central Bank Digital Currency banner logo for business technology, financial, blockchain, exchange, money and digital asset. Futuristic vector landing page concept background.

Per the South African Reserve Bank: a CBDC can be defined as a form of money that is denominated in fiat currency (central bank money), in an electronic form, and which is a liability on the central bank’s balance sheet similar to cash and central bank deposits. In the context of SARB’s current CBDC feasibility study, it could be considered as “smart cash” with unique attributes enabled by its digital form.

South Africa is currently in pilot with their own CBDC, including a cross-border payments solution with Australia, Singapore and Malaysia.

Businesses will need to adjust to adopt technology to allow them to accept this smart cash according to SARB guidelines once the project moves forward.

How will the mass adoption of NFTs change your operations and value proposition?

NFT stands for Non-Fungible Token, and it is a unique digital asset that is supported by a blockchain. Currently NFT projects exist predominantly in the Art and Fashion worlds, but the technology offers so much more than jpegs of monkeys. NFTs stand to overhaul multiple industries including the legal industry as a replacement for physical or pdf contracts.

And there are many financial use cases too, which could potentially include NFT-backed loans, insurance, investments, ownership of rights, and debt management.

NFTs have seen massive adoption over the last 18 months, and as the technology progresses and more use cases become available they will serve to be a massive disruptor in the way we do business.

How will greater adoption of an extended reality “Metaverse” affect how you connect with customers?

A metaverse is a digital world that you navigate via an avatar and which you can access from mobile to web to full virtual reality.

McKinsey’s report on the Metaverse suggests that it has the potential to generate more than $5-trillion in revenue by 2030 and Metaverse projects are being undertaken by some of the biggest tech companies in the world including Meta (Facebook), Google, Apple, Microsoft, and more.

With the younger generations already being so digitally enabled, companies need to explore how to interact and engage on these new platforms. It’s also important to consider the benefits that virtual training, customer service, or even digital identity could have on your business.

Do I really need to use Blockchain or Distributed Ledgers Technology?

The Digital Frontier and why businesses need to pay attention to web 3.0 Banner

The underlying thread of the previous questions is, of course, the Blockchain. Blockchains are designed to be immutable, verifiable, transparent, auditable, and to provide disintermediation, which in turn reduces costs. Various flavours of blockchain exist, from private blockchains which include identity and access management, to fully permissionless public blockchains.

It is important to note that use cases for blockchain should be carefully considered as it is not a panacea for all tech woes. However, with over $11.7 billion expected to be spent by businesses on blockchain solutions in 2022, it is becoming more and more apparent that businesses ignore this technology at their own peril.

Indeed, Deloitte’s 2021 Global Blockchain Survey affirms that banks should embrace their inevitable digital future. In a seismic shift from previous years, financial leaders increasingly see digital assets as the future.

How will the rise of DAOs (Decentralised Autonomous Organisations) affect my business and my employee value proposition?

How will the rise of DAOs (Decentralised Autonomous Organisations) affect my business and my employee value proposition

DAOs are a new type of organisation that runs according to a top-down hierarchy, but rather through voting rights of all individuals in the organisation, which is formed to work towards a common vision. No idea is excluded, no individual is left out. Ideas are proposed, voted upon, and approved and implemented or rejected. Voting rights are determined either through shares in the organisation as tokens earned or bought, or through level of contribution to the DAO.

These are truly global organisations and as employees grow more and more frustrated with the current ways of work, they will start flocking to DAOs, first as side hustles and eventually as their full-time occupations.

Businesses need to consider their own employee value proposition against what is being built in this space if they hope to attract and retain talent going forward.

So what now?

These trends and technologies can seem incredibly daunting when you first encounter them, but a little education goes a long way.

More and more use cases are emerging every day. Adoption is still in its relatively early days, but more and more businesses and individuals are investing millions of dollars into one or many of these areas. Governments and countries are preparing regulations and guidance for this space, preparing ledger-based financial instruments, and even adopting cryptocurrency as legitimate currency.

In essence, like it or not, these technologies will grow more and more prominent. The final question you should be asking yourself is: “Can I afford not to understand what’s going on?”