Is Web3 really improving mainstream industry and products?
Web3 has been gaining ground in mainstream industries with the rise of Web3 business models based around nonfungible tokens (NFTs), blockchain technology and crypto. But it’s still an open question whether it’s actually improving mainstream industry and products.
According to a June Coinbase study, over half of the top 100 United States companies listed in the Fortune 500 have pursued Web3 initiatives since the start of 2020.
Around 60% have either been in the pre-launch stage or already launched since the start of 2020. Out of the surveyed Fortune 500 executives who are familiar with blockchain, 83% say their companies have either current initiatives or are planning them.
Speaking to Cointelegraph, Pat White, co-founder and CEO of digital asset platform Bitwave, believes there has been progress in successfully marrying Web3 with the mainstream.
“It has the potential to drive innovation across so many industries — and we’re just starting to see some of the early use cases outside of the crypto economy,” he said.
He cites eliminating intermediaries, reducing costs, improving data integrity, supply chain transparency, enhancing cybersecurity and creating new ways of interacting with customers as particularly useful in sectors like finance and healthcare, among others.
Related: How smart contracts can improve efficiency in healthcare
Healthcare already has some promising use cases for Web3 in these areas, including services that now appear in the metaverse, specifically for those seeking mental healthcare.
Some companies are also experimenting with medical records being stored and managed using blockchain. One company even released a COVID-19 medical certificate on the blockchain.
It’s all still in the early stages of research, though, and it remains to be seen whether Web3 in healthcare will be more effective than systems already in place.
Just because you can doesn’t mean you should
More than a few high-profile companies in the mainstream have started to use Web3. For example, Starbucks has rolled out an NFT-based rewards program.
Goldman Sachs and Microsoft have been developing new blockchain networks aimed at financial institutions as well. Elon Musk has also been teasing a crypto payment option on X (formerly Twitter) for some time.
White believes that while there are use cases for Web3 in mainstream industries, that doesn’t mean everyone can immediately drive efficiency with Web3 tools.
Earlier in 2023, high-performance sports car manufacturer Porsche found this out the hard way with the failure of its NFT project, which it had to halt abruptly after backlash over high minting prices and the lack of utility.
Our holders have spoken. We’re going to cut our supply and stop the mint to move forward with creating the best experience for an exclusive community. More info in the next hours.
— PORSCHΞ (@eth_porsche) January 24, 2023
“Organizations can get into deep water quickly when they try to leverage only their existing legacy tools and processes for managing digital assets. New technologies require new ways of operating,” White said.
“With the recent downturn, we’ve actually seen companies that aren’t sustainable moving out of the Web3 space.”
White says using Web3 tech shouldn’t be taken lightly, and any foray into the space should be “a strategic decision” orchestrated across every operational department.
At the moment, he sees Web3 at a similar stage of development to the internet in the late 90s. Speculation is rife, and many companies are looking to incorporate the new tech without a plan.
“The nature of innovation cycles is that during hype cycle periods, a lot of people will try the tech for a lot of purposes, and some may not actually be helped by the innovation,” White said.
Brendan McKittrick, founder and chairman of decentralized aviation platform Aerobloc, told Cointelegraph he thinks Web3 holds the promise of enhancing everyday products and services in areas such as supply chain transparency and data security.
The extent of this improvement depends on how effectively Web3 is implemented. McKittrick says there have been hurdles and challenges for mainstream companies using Web3, just like any new tech.
“Some mainstream businesses may adopt Web3 to ride the hype and attract investors, potentially resulting in superficial integration that fails to deliver significant benefits,” McKittrick said.
“These missteps can be valuable learning experiences, helping industries refine their approach and maximize the benefits of Web3 in the long run.”
In some cases, adopting the tech is out of the company’s hands, as with French gaming giant Ubisoft, who had to cool on plans to use NFTs and blockchain after player backlash.
Related: Ubisoft launches Ubisoft Quartz platform for playable and energy-efficient NFTs
Overall, McKittrick believes Web3 isn’t just about tech; it’s a mindset that includes decentralization, trust and rethinking ownership — all of which could benefit the mainstream industry.
However, he believes that in some cases, the systems already in place might be more effective, and while Web3 holds “significant potential for a wide range of applications,” its suitability “depends on the specific needs and characteristics of each industry.”
“Its universality is tempered by the need for careful consideration of each industry’s unique requirements and constraints,” McKittrick said.
“Some sectors may not benefit as much from decentralization or blockchain technology, and traditional systems might still be more cost-effective and efficient for them,” he added.
Some mainstream industries are successfully using Web3 already
Kadan Stadelmann, chief technology officer of blockchain platform Komodo, told Cointelegraph that, in his opinion, Web3 tech is already improving products in mainstream industries such as music, gaming and real estate.
Related: Web3 is transforming the music industry — Here’s how
On the music scene, he says Web3 tech helps artists eliminate intermediaries, such as record labels and streaming services, allowing artists to connect with their audience directly.
“Web3-minded musicians retain control over their creative works, helping to ensure fair compensation for their efforts because decentralized music platforms provide transparent royalty systems,” Stadelmann said.
“Artists receive instant payments for their streams or downloads without delays or complex contracts with flaky independent labels or overbearing major labels.”
Web3 tech has been very active on the music scene, from democratizing song rights royalties and blockchain licensing to legacy companies like Sony Entertainment filing patents for NFT-authenticated music.
Artists have also begun exploring new ways of driving fan engagement using wallet-based loyalty incentives and token-based communities. Earlier in 2023, Harry Styles fans opened a crypto wallet through a third-party app.
Empowering true ownership for music fans.
Innovative teams like @tryevntz are plugging in & delivering personalized fan-first experiences — fueled by @usecocreate flexible APIs.
Starting with @Harry_Styles https://t.co/q5AeHF8FCU
— Polygon (Labs) (@0xPolygonLabs) June 26, 2023
In gaming, Stadelmann says a central authority can’t control platforms powered by Web3; instead, they operate on decentralized networks such as blockchain.
“This shift toward decentralization has numerous implications for gamers; it enhances ownership and control over in-game assets,” he said.
“Players can truly own their virtual possessions and even trade them with others in a secure and transparent manner,” Stadelmann added.
For the real estate industry, Stadelmann said Web3 can offer a framework allowing peer-to-peer transactions and smart contracts without intermediaries. Tokenization also allows properties to be divided into digital tokens representing ownership shares.
“This enables fractional ownership and opens up real estate investments to a wider range of individuals who may not have had access before,” Stadelmann said.
“Transparency and immutability in property transactions reduces fraud and increases trust among parties involved. Web3 also empowers individuals to monetize their properties through decentralized finance platforms,” he added.
Stadelmann believes the fashion industry has benefited from an injection of Web3 tech as well, with the ability to direct peer-to-peer interactions between designers and consumers.
He says designers can protect their intellectual property rights and receive compensation for their creations through smart contracts, authenticating products and combating counterfeiting.
“Unique digital identities can be assigned to each garment, allowing consumers to verify its authenticity with a simple scan,” Stadelmann said.
“This not only protects brands from revenue loss but also ensures consumer confidence in their purchases,” he added.
Web3 has potential but still needs more development for mainstream
Speaking to Cointelegraph, Bradley Allgood, CEO and co-founder of Fintech company Fluent Finance, said he thinks Web3 tech does have the potential for use in the mainstream finance world.
However, he says the on-chain and legacy worlds need to come to a consensus on a trusted gold standard medium of exchange that can flow frictionlessly between on-chain and traditional financial ecosystems.
“Until then, it will be more of the same gimmicky adoption efforts and marketing hype,” he said.
“It’s just like every other technology based on value: it needs a sound medium of exchange and financial infrastructure in order to support commercial applications,” Allgood added.
Related: Web3 gaming still a long way from mainstream adoption: Survey
At the moment, Allgood says in his experience, Web3 integration processes can be clunky and inefficient and create inferior user experiences because the middleware and interoperability infrastructure isn’t there just yet.
There have been attempts to marry Web3 and blockchain in finance already. Major payment processor PayPal announced its PYUSD stablecoin, and payment giant Mastercard is exploring crypto benefits through a new collaboration with crypto payment platform MoonPay.
Allgood believes until there is robust custodianship and issuance of a stable-valued asset with adequate, real-time transparency in place, Web3 in the mainstream will continue to be held back.