The Web 3 Revolution: The re:invention of Opportunities in Retail
Original article appeared on GK Africa
July 2022 insights from Block Markets Africa Co-founder Tobie van der Spuy.
Web 3 is the evolution of the World Wide Web where each netizen has their own online transactional identity and is mainly based on blockchain technology that incorporates concepts such as decentralisation and token-based economics. There can be no metaverse without an economic model to support it, and Web 3 transforms your customer beyond just a consumer – using their online identity to increase their participation in your products/services or marketplace as a stakeholder and potentially even as a shareholder. A Web 3 payment infrastructure uses the network identity for each and every customer to facilitate direct transactions – in the form of a wallet address that serves as the customer’s account with which they can operate across financial and social spheres using tokens/digital assets to send money, make payments, own unique kinds of assets like NFTs, play games, participate with friends, participate in social causes, holding brands accountable for their sustainability commitments, and track the provenance of goods.
The idea of provenance is becoming increasingly significant in a world beset by supply chain issues and a thriving counterfeit industry. Proving where something came from and proving a chain of custody is essential as customers are willing to pay a premium for the real thing – or provides proof that the goods were sourced ethically and did not exploit marginalised communities. Tying into sustainability conversations, opening up the supply chain allows the consumer to have instant access to ESG information of the product they are purchasing, driving a whole new level of accountable interaction with customers.
Making this possible are things called Non-Fungible Tokens (NFTs). Each #nft is technically just a little database on the blockchain, and what makes them different from other digital payment instruments is that they store a little piece of unique information on each token. This makes NFTs an open register on a public record (the #blockchain ) that can publicly assign a right to or ownership of something to the holder (like the copyright and commercialisation rights of a particular artwork). Using this as brands and retailers, we can issue a proof of purchase as a public guarantee that the person who holds this token on the public record has the right to call on us for maintenance/support or whatever is applicable.
What’s interesting about NFTs is they lend themselves to building games, e.g., rewarding customers for behaviour with digital collectables in the form of NFTs, which they can start trading on a public marketplace. As these NFTs are exchangeable for digital assets, you can start developing real-world economies within games. And what makes NFTs so incredibly lucrative is that you don’t have the production cost that you do with physical assets: you can give content, you can give entertainment, collectables, limited edition art, and games to your customers, creating whole economies and new forms of engagement for a fraction of the real world production price that we see with physical rewards and physical loyalty programs. The other benefit is for your e-commerce customers, as you can reward them instantly when they purchase with digital assets, incentivising them with assets that are on permanent record. These transactions will likely take advantage of another Web3 invention – the Stablecoin.
Stablecoins (Euro or US Dollar-backed #cryptocurrency ) as a payment mechanism drive about 80% of the daily transactions on the global cryptocurrency market while accounting for only about 15% of the market value. In real world application, we are seeing Stablecoins starting to be used around the world for #ecommerce payments and, together with that, for things like gift cards and loyalty programs. The likes of Walmart and Amazon have begun engaging in these activities because they realise that this is just another payment rail serving a new audience who’s adopting this.
Digital Assets are becoming mainstream as evidenced by VISA and BlockFi’s 2021 credit card launch that rewards their customers in Bitcoin for their spending habits, kick-starting a new loyalty model that simultaneously removes a barrier to entry for customers - in this instance, a credit card issuer is helping the customer bridge the gaps of figuring out where to register for a digital asset account, how to fund the account, and make the sometimes confusing decision of which #digitalassets they should choose.
The ability will soon exist to give your customers access to the digital world and be their custodian and wallet provider. Essentially, your customer will no longer need a banking relationship to have a transactional account: as their relationship with a brand or retailer will extend to include the provision of such an account. And in that account, they can store real digital asset value that is exchangeable instantly for value in store, in e-commerce, in the #metaverse – or even for good old cash where applicable. Regulators have accepted these activities around the world with extensive guidance already published on current applications and finalised licenses being issued imminently. Licenses which are enabling retailers and brands to become providers of a new level of financial services directly to their customers and unlocking a whole new world of value for customers.
