What is Web3 and How Will it Impact My Business? Web3 may seem too new for usability, but here are five ways it can transform your business.
By Atul Jindal Edited by Micah Zimmerman
Opinions expressed by Entrepreneur contributors are their own.
Technological developments have always had profound effects on the way businesses operate. The proliferation of the internet led to the introduction of digital marketing. The development of artificial intelligence changed how businesses interact with their customers. And now, Web3 is set to revamp how the internet works as a whole.
Web3 is touted as the turning point of the modern internet and is expected to rehaul cyberspace as we know it. What should a business expect from the successor of Web2.0, the internet we have grown accustomed to?
Related: Web3.0: The Next Big Thing?
What is Web3?
Before we dive into how Web3 is expected to influence small businesses, let's first talk about what Web3 really is. It is a blockchain-driven internet that offers a decentralized alternative to the web as we know it.
While still in the early stages of development, Web3 solves what seems to be the most difficult problem with the internet today. It offers better data privacy by eliminating central organizations and allowing users to keep their data stored in their personal crypto wallets.
So, while Web3 may not entirely replace today's internet, it may offer a safer alternative and may trigger an exodus of users from the second to the third generation of the internet.
Benefits of Web3
Web3 is still in the making. So all its benefits are currently rooted in theories and the potential of blockchain technology. If the technology develops like Big Techs have assumed it would, these benefits might be realized, leading to a massive shift in business processes.
1. No-third party involvement
Small businesses rarely have the resources to collect their own data, hence resort to third-party data mining companies.
Such third-party data is costly and rarely accurate. 86% of the companies using third-party data think it is inaccurate. And inaccuracy of data adds to the cost of data-driven operations. This is why "dirty" data is said to impact 88% of a company's bottom line and lead to an average company losing 12% of its revenue.
Blockchain eliminates third-party involvement, just like how cryptocurrencies have largely eliminated banks' participation in monetary transactions. Similarly, Web3 is expected to eradicate third-party data brokers by enabling P2P connections and decentralized systems that allow businesses to connect with their customers directly.
In this way, businesses might be able to collect data directly from the source, either free or at a smaller price compared to what data brokers demand. The accuracy of data, that too at a lower price, may lead to better strategies, which may eventually reflect in a business's bottom line.
2. Reinforce cyber security
Cyber security is a menace in the online shopping arena. People are skeptical of sharing their information lest malicious actors steal them. And businesses are at risk of hefty fines due to failure to comply with regulations.
British Airways faced a whopping $26 million fine in 2018 for its failure to protect sensitive consumer data. Proponents of Web3 claim that this next generation of the internet will eliminate this problem.
Since the entire infrastructure is decentralized, Web3 does not have a single point of weakness that hackers can exploit and get their hands on critical information. Blockchain technology makes it difficult for cybercriminals to penetrate networks and tamper with or steal sensitive information.
3. Well-built customer trust
Web3 will eliminate third-party data brokers who rarely regard consumer privacy. These companies often mine data without informing the users and then monetize it. Businesses that buy this data then leave their customers skeptical of trusting them.
Web3 solves this issue by removing data brokers from the equation. If everything goes as theorized, businesses can collect data from the customers themselves and practice better operational transparency.
94% of shoppers remain loyal to companies that operate with transparency, while 73% are willing to pay a higher price to businesses that stay transparent. Therefore, Web3 may enable businesses to build and retain consumer trust, which is a significant revenue driver in every era.
4. Better customer experience
Customer experience has and will always remain among the key variables in a business's success equation.
Regardless of how critical it is, 63% of digital marketers struggle with developing a good customer experience, even with the easy availability of data. With browser cookies crumbling, data acquisition is expected to become much harder than it is today, which may make personalizing the customer experience even more of a challenge.
Web3 may solve this problem with its easy availability of data. It can help marketers acquire critical customer data without offending them. And if used right, this data can then help deliver a more personalized experience that the users crave.
Since 48% of buyers are more inclined towards businesses that personalize their communications, this may lead to improved customer acquisition and, eventually, more profit.
5. Enhanced supply chain
57% of businesses have poor visibility across their supply chain.
Blockchain technology, the backbone of web3.0, distributes data across all the nodes present within a network. This eliminates informational siloes and enhances data transparency across the supply chain.
Once the supply chains are more transparent, businesses may experience a dip in relevant costs and a hike in supply chain efficiency due to increased traceability.
Related: Web 3.0 Is Coming, and Here's What That Really Means for You
Final words
The next generation of the internet is on the horizon, ready to rise and trigger a new era of business operation.
Small businesses need to keep up with the latest trends and learn about blockchain technology as best as possible. Additionally, they must try and innovate their processes according to the available technologies so they might be better positioned to adopt newer technologies that may arrive in the future.
This might help them avoid being left behind by the big tech companies that are already investing massive amounts in these futuristic technologies.
