Though it appears to have been a recent buzzword, the term Web3 emerged in 2014 to describe new types of protocols that enable decentralised consensus. According to Technopedia, it is the next evolution of the internet. Overall, the definition centres on the fact that Web3 interconnects data in a decentralised way to better deliver a fast and hyper-personalised user experience securely, via blockchain.
What is to be expected?
As explained by Dev.to, if Web1 was read-only, Web2 considered read-write, then Web3 is read-write-own; the new trendy name for the decentralised web. However, the foundations for Web3 and by extension the metaverse were laid by the gaming sector and cryptocurrencies. The very first virtual assets were in-game tokens that could be bought and sold, which have existed in the popular games, Life, and World of Warcraft since 2004.
In the lead-up to our current development of Web3 and the expansion of the metaverse, we were given Bitcoin in 2008 as a result of the global financial crisis, and later the popularity of Ethereum in 2015 gave us smart contracts and blockchain. With the rising confidence in blockchain technologies, expansion has enabled further developments with things such as NFTs.
In 2019, COVID-19 happened and the world was forced into lockdown, and consequently went online. This represented a big shift in user activity and user behaviour, particularly in such a concentrated timespan. Meme stocks grew and the crypto market increased tremendously in market cap due to the huge growing interest in this new industry and the subsequent benefits.
Organisations, brands, and businesses needed the most optimal way to engage with their consumers in the online space, where consumers are spending an increasing amount of their time. Eventually, these spaces will, in essence, replace our ways of experiencing things. This can be seen with virtual concerts, like Travis Scott who took home $20 mill from a 15-minute concert, as reported by PC Gamer. The concert is an example of a shift in consumerism, drawn to accepting virtual presences as a norm, in addition to gaming and NFTs which had already accelerated the adoption of the metaverse.
The reality is that whilst mainstream brands and pop culture have the vision to place themselves into the metaverse, they rely on regulated institutions to facilitate entry and act as their custodian. AKA, banking as a service (BaaS). Businesses are empowered by their partners who offer swift access into the realms of Web3, making BaaS an unparalleled extension of our virtual universes and technologies.
Brands as a Service
So why is this important? And how is BaaS interconnected? These are virtual worlds where brands’ users can engage and are encouraged to interact. This requires knowledge of new technologies or at least safe, secure, and low-friction access to these types of technologies. And what brought this about? Crypto and the birth of decentralisation. Bitcoin and Ethereum were key to bridging this divide. The metaverse’s popularity commercially comes from the range of new opportunities it offers. A JP Morgan report shows the potential it brings from new business models and methods of engagement to new content formats and ways to interact with gamers in the virtual space.
Moreover, in the metaverse, if you hold Bitcoin or Ethereum, you need to be able to buy and sell it at a certain time. Holders can then purchase and sell currencies, or exchange for fiat currencies for daily life. This ability to convert fiat and spend crypto, and vice versa, is critical and this is why when fintechs develop banking as a service solution, they need to make sure to focus on solving this issue.
This opens huge new opportunities for users and for businesses to tap into this value. BaaS is a regulated industry and for businesses and consumers to interact with these financial services they need to gain access to bank and payment accounts to be able to pay at the point of sale. They require a licenced banking or payment institution to be able to provide them with basically the infrastructure and the regulatory empowerment to navigate through and this is where BaaS providers step in.
BaaS helps connect businesses with Web3 and the metaverse, enabling them to win new customers and capitalise on Web3. This will allow customers the convenience of offering crypto and NFT features giving businesses the ability to differentiate themselves.
Distinguishing your brand from your competitors, and addressing further customer segments enables businesses to tap into new revenue streams by, for example, embedding crypto services into your product. They can generate leverage, and additional revenue potential and most importantly, drive customer engagement. This is one of the core aspects that every business is seeking to continue to do. Digital asset services boost the number of touchpoints you have with your users and extend your customer lifetime.