How the Web3 stack will automate the enterprise

Web3 not only informs entire verticals and industries, it automates the core technology stack of companies, including those once thought of as disruptors.

Blockchain skepticism has turned into curiosity. Those on the front lines who rejected blockchain technology and yearned for viable use cases are now accepting that they were wrong. One of them is Nigel Morris, Managing Partner of fintech firm QED Investors and co-founder of Capital One. In a recent blog post, Morris admits that he was a crypto skeptic and that “two years ago I didn’t get it this time. I didn’t understand the use cases for it and I honestly never knew if it would be adopted globally. I was wrong.” Leaning further, he says, “We believe that all of our portfolio companies need to develop a positive view of crypto and Web3 in a short space of time, for both defensive and offensive reasons.”

In a letter to shareholders, JPMorgan CEO Jamie Dimon praised blockchain technology and DeFi, a striking contrast to his previous crypto statements. Dimon now believes that there are “many uses where a blockchain can replace or enhance contracts, data ownership, and other enhancements.” Ramsey El-Assal of Barclays Corporate & Investment Bank said at its summit in March:

“We see the potential of blockchain technology on a scale similar to the transformative decades-long IT shifts from mainframes to PCs to the internet to mobile. We also believe that the transition from “centralized” to “decentralized” technology will be the dominant theme in FinTech for the next few decades.”

Gartner estimates that blockchain could generate up to $3.1 trillion in new business value by 2030 – this could come in the form of new product/service launches in B2B and B2C verticals around the world. Currently, blockchain technologies have impacted the financial sector the most due to its obvious use case – to enable a safer, more transparent and more efficient global economy. In addition to this infrastructure, however, blockchain technology will permeate all business functions to redesign today’s processes and operations. It will be critical for businesses to harness the power of decentralized technology by understanding how it compares to today’s systems.

Businesses, especially FinTechs, want to be at the forefront of finance and provide comprehensive functionality digitally in one place. 40% of current FinTech clients are expected to trade crypto next year (Activate Consulting). As crypto popularity continues to grow among their users, so does the need to adapt their platform to be crypto-ready quickly. Organizations focus on retaining current users by providing a premium user experience and increasing active users. To keep innovating at the forefront, they need to have a marketplace where users can discover all types of financial products, including crypto.

On Web2, consumers are increasingly seeing banking-as-a-service solutions embedded in consumer products. Target partners with the digital payment service PayPal and with the “Buy Now, Pay Later” service Affirm to provide point-of-sale financing. Uber Cash is home to the Uber Visa debit card through a partnership with Go2Bank. The Web3 stack combines technologies, typically connected via APIs, consisting of each blockchain network and the apps and tools developed to interact with it. The Web3 stack includes multiple layers: Access, Use Case, Infrastructure and Protocol. Regardless of the industry or their market position, companies can drive innovation, revenue streams and improved customer experiences on the blockchain thanks to Web3-Enablers.

Web3 is only partially present in companies, but it is already having an incredible impact and changing strategies. Cross River Bank, which has just raised $620 million at a $3 billion valuation, powers embedded payments, cards, lending and crypto solutions for over 80 leading technology partners. Cross River CEO Giles Gade plans to offer more crypto-related products and services and align with a crypto-first strategy. Investors are excited about the opportunity. “As Web3 continues to gain attention from consumers and businesses alike, we believe Cross River is in a unique position to serve as the infrastructure and connecting fabric between the traditional and regulated centralized financial system as it slowly transitions to a decentralized one,” said Lior Prosor, General Partner and Co-Founder of Hanaco Ventures, in Cross River’s press release.

In many ways, this time is no different than when financial institutions and VCs years earlier recognized the disruptive potential by investing in FinTech innovations – analogue to digital. If FinTech is the fusion of technology and finance, Web3 is the fusion of crypto with the web. This is a step function better than the current financial system we work in today, which is one of the reasons companies are now integrating Web3 from the ground up via robust API solutions.

Below are some examples of how we believe the Web3 stack automates the business:

Staking Participation

Cryptocurrencies are more than traded assets; They are used to interact with blockchain networks and their app ecosystems. Cryptocurrencies serve a variety of purposes. Most people know that cryptocurrencies can be traded on exchanges, used to pay for transactions, buy products, or generate income. Few also know that you can use cryptocurrencies to vote on code changes, secure a network, or act as a key to access legitimate communities. Earning rewards for your digital assets shouldn’t require an engineering team. Sometimes, for economic reasons, it just makes sense to start your own node and stake your cryptocurrency. Boot up a node in just a few steps – no coding required.

Trading & Custody

For companies adopting blockchain technologies, the secure storage, management and transaction of cryptocurrencies will be an important consideration. There are integrated solutions that offer secure custody, advanced trading platforms, and top-notch services so you can manage your crypto assets in one place.

analytics

A truly data-driven company has yet to exist due to the limitation of data access. Although data is a core component of business processes, technical inefficiencies and lack of interoperability have limited data access trust. Solutions that focus on decentralized storage or enable data indexing, querying and transactioning will be critical to unlocking new value in many business functions. This and the use of smart contracts will have a huge impact on secure enterprise automation and decision making. AML is the backbone of these important product offerings. Analytics enable organizations to connect crypto transactions to real-world entities using public blockchain attribution data, monitor risk, and investigate fraudulent activity.

Trading & Payments

Consumer demand for accepting online and retail payments in digital assets is increasing. Legacy payment systems have embedded transaction costs that are also passed on to consumers. Businesses and consumers alike are embracing the economics of digital assets as an alternative medium of exchange. Turnkey APIs for merchants like accepting multiple cryptocurrencies or ways for consumers to buy crypto from a crypto wallet make the process smoother for everyone involved.

data interaction

Currently, Web3 APIs can be leveraged by companies to start exploring implementing blockchain technologies to perform accounting functions, improve IoT connectivity, access real-time and auditable data to automate decision making, and self participate in different networks. With read/write nodes, organizations can quickly access business-critical data and insights from blockchains. A single API can help your engineering team eliminate the need to build and maintain their own indexers, access data faster, and reduce development times.

Businesses need blockchain protocol specialists to truly understand how blockchain can help improve their current processes/operations and to provide insights into how participating in different networks can add value to their business. Just as we have seen a “mobile app” version of a website, we will see a Web3 version of a Web2 platform – ranging from Google and Salesforce to Facebook and Tiktok.

Some points to consider when evaluating your Web3 stack to automate your business:

• Leverage the combined crypto-native and traditional third-party financial experience.
• Bring your crypto offerings to market faster with flexible, mature, robust APIs and infrastructure.
• Scale securely with standardized APIs to operate and own the crypto experience across a range of fully integrated white label solutions.

While there is a general need for more regulatory guidance, crypto-first companies are working to provide their partners with the best possible regulatory-compliant framework while expanding their reach. Web3 products have achieved mainstream acceptance and will not be discarded this time. “As the FinTech sector continues to grow along with the popularity of cryptocurrencies and blockchain, companies will continue to adopt digital asset technologies,” according to The Block Research.

There will be a Web3 version of every Web2 service provider that supports businesses and that’s just the beginning.

Harry Alford manages institutional sales for Coinbase Cloud.