Is crypto dead? Finance in Web3 needs neither crypto nor ER
No need for cryptocurrency for the internet to exist on Web3
Is crypto dead? This impression may be created by the recent decline in the market, especially in Bitcoin. Meanwhile, last month saw Google Cloud partner with Binance, a cryptocurrency exchange that has run into legal trouble in several different countries, on a smart contract blockchain service. Perhaps no surprise, Binance is barely mentioned in the statement and the entire focus is on the redesigned BNB chain. But according to a Deloitte report from June, which surveyed 2,000 retail executives, 85 percent of them want to be able to accept bitcoin payments. While 83 percent of respondents believe cryptocurrency will become legal tender within the next 10 years, 54% have already invested more than $1 million to enable digital currency payments.
In more recent news, the first stablecoin backed by the pound was created in the UK with KPMG as auditor, effectively giving cryptocurrencies the stamp of corporate legitimacy. But when one sees cryptocurrencies as the first wave of something new on the horizon, it may be a question of whether it survives or fades into the ether. This new technology is known as Web3 or Web 3.0 in some circles. Web3 is hailed as the next generation of the internet, a decentralized version of the existing internet that uses distributed ledger technology (DLT) as its foundation.
Cryptocurrencies, blockchain, self-contained identities (SSI) and decentralized finance are all products of DLT (DeFi). The last item on that list could either pose an imminent existential threat to today’s financial institutions or present an opportunity for reinvention to today’s more nimble bodies. The COO believes that blockchain, a technology currently in certain businesses’ toolkits, is the critical component of this transition. Shane Rodgers, an experienced investment banker and CEO of payments and digital banking platform PDX Global, describes to ERP Today the significant inroads technology has made in the financial sector. Corporate CFOs are now using payment platforms that make use of the architecture because they want to save costs by speeding up conventional digital payments and getting rid of fees that usually go to middlemen, he says.
The current supply chain crisis has found uses for blockchain outside of banking. Supply chain and operations manager for Accenture UK, Stephane Crosnier, uses the example of a major global energy company seeking to create a more interconnected supply chain throughout its ecosystem and the implications for financial structures. According to Crosnier, the project’s goal is to develop a common data platform for the industrial sector that will facilitate the business partners’ workflow while improving the purchasing experience. Through IoT and track-and-trace functions, product movement data, stock levels and storage capacity are collected.
He explains that the blockchain layer uses these inputs to build a common record of product origin, which has significant consequences for the existing financing models. “Most cases of transaction mismatches and reconciliations are eliminated by integrating with partner systems and using data from purchase orders and deliveries. Smart contracts’ codified business logic significantly shortens the procure-to-pay timeline and reduces the need for manual intervention. By enabling zero-day funding and freeing imprisoned working capital from the supply chain, this cycle time reduction paves the way for the transformation of trade finance models.
Peer-to-peer digital transactions reduce the risk of lost cards and stolen PINs, eliminate intermediaries in the payment process that increase risk exposure, and are securely recorded on the blockchain. According to Jaco Vermeulen, CTO of BML Digital, the Web3 concept as a whole is characterized by a similar sense of security. According to him, “Web3 tools are likely to push credit/debit cardless techniques and link accounts to specific identities via NFTs and biometrics.” “This will be used for transaction validation as well as payment account identification. As a result, it is no longer necessary to know account or credit card numbers, which increases security. Using Web3 on such a large scale could help the technology eventually replace the internet as we know it know it today However, a lack of integration will for now keep companies using Web 2.0 for a while longer.
With years of experience in investment banking, Rodgers agrees, saying there is “little need for fear” because “a good crypto conversion solution will completely bypass the old system with all its integration problems, and instead offer a parallel system that simply spits out the result . back to their enterprise software.” Financial institutions are already looking at replacement payment systems. He believes that early adopters of financial institutions will benefit from providing customers and merchants with more payment options.
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