The fastest path to B2B trust.

Why Web 3.0 is the enabler for a new generation of B2B data sharing solutions.

There has been much criticism lately about Web3, especially in the last few weeks, as the cryptocurrency market plunges and crypto exchange companies are laying off employees. Many see Web3 as an over-hyped phenomenon fueled by massive VC investments, offering little more than NFTs for digital art and unstable cryptocurrencies.

Crypto companies layoffs in the last 2 months, as of Jun 15, 2022

But remember that blockchain technology, which is driving the Web3 ‘revolution’, has more uses, and cryptocurrencies and NFTs are just two.

When looking at a Web3 landscape, as seen above, one might believe that there’s not much more to the blockchain than some payment, NFT, and entertainment applications (putting aside companies that work on Web3 developer tools and Web3 infrastructures for the proliferation of blockchain-based apps).

So are there any practical use cases for Web3 applications?

The answer is yes — there are more practical uses, but before we jump to some examples, I would like to lay out the criteria that make the adoption of blockchain the right choice for an application and can lead to its success.

Firstly, let’s examine the core advantages that blockchain has to offer:

1. Data security — Existing records in the ledger cannot be altered (that is, cannot be altered without investing an enormous amount of resources that are supposedly beyond the reach of any single entity or organization).
2. Protocol transparency — Everyone can see how the protocol operates (open-source projects) and examine how the smart contracts (e.g., Ethereum; Solana) operate.
3. The data on the ledger is decentralized — No single entity owns the data.
4. Pseudonymity — All activities are publicly available on the ledger, but revealing someone’s identity on the ledger is not easy (but achievable, using solutions such as Cookie3) unless that entity reveals itself.

If we condense all four advantages above into a single word, that word would be Trust.

Trust is extremely important for expediting processes between any two entities.

If two enterprises decide to form some sort of partnership merely for exchanging data on a regular basis, then the process of establishing trust (legal agreements, bureaucracy, creating transparency mechanisms) and establishing the mechanisms to exchange the data (getting the required software infrastructure in place, establishing agreed-upon software protocols and contracts) could take months. Now imagine how long that would take for three or more parties to do the same — it could take years. But if the parties were to blindly trust each other and the software mechanisms were in place, the whole process would take a fraction of the time rather than months or years.

This is where Web3 applications can shine — successful Web3-based products will be those that offer solutions where trust between entities is a critical element for success.

Now that we understand that trust can be established more quickly using Web3 and that forming trust between different entities and organizations is hard, we can outline the criteria that would justify a product being built using blockchain and increase its chances of success:

• Managing non-tangible assets —The assets should be digital. If the assets are tangible (physical off-chain assets), then you have no real control over ownership since there’s no hard link between the Web3 networks and the physical world. This criterion is a must.
• Trust cannot be established quickly using conventional (non-Web3) solutions — Web3 applications are transparent, meaning the logic and data of these applications are available for examination by anyone. The usage of open-source software (blockchain network, smart contracts) and decentralization of data (open ledger) ensure the transparency of processes and transactions. No single entity can alter the data without the other parties knowing about it — hence, trust is established more quickly and with less bureaucracy.
• Silos prevent the adoption of conventional solutions — Silos are created due to different cultures, protocols, rules, and regulations. This is mainly apparent in products that need to operate cross-state, cross-country, cross-organizations, and sometimes even cross-departments in large enterprises. Web3 would help break these silos.
• Operating in a field with little to no regulation — This is generally true for any product. If regulations apply to the field in which the application operates, then it would take significant time, months or sometimes years, for the product to reach the market, and that could jeopardize its success. (This is why cryptocurrencies are thriving at the moment since they are not regulated, but they won’t thrive for long — they will be around to trade with, just as you can trade assets for gold, paintings, or baseball cards, but they won’t go mainstream unless regulation addresses them and accepts them.) This should not be confused with products that help companies comply with regulations, like greenhouse-gas emission regulations.
• The current solution is not centrally managed by the government — If a government already has a centralized solution, then there’s a very low chance it will adopt a decentralized solution (Web3 app). The government has a good reason for wanting to control the data. Firstly, it will not switch to another solution if the current solution already works. Secondly, there are some issues related to fraud that the government won’t be able to control if all the data is on a public ledger. (Imagine the Department of Motor Vehicles, the DMV, moving all their data to a blockchain network; on one hand, the data would be publicly available for anyone, but on the other hand, fraudsters may create websites that claim to help you find and examine data on the open DMV ledger but in fact, they alter the data presented to the users.)

So what are some practical uses of Web3 in B2B?

Here are some examples that adhere to the above criteria:

• Data sharing platforms such as Vendia, used by BMW, can help supply chain data sharing and transparency. (see additional work done around that area by HyperLedger)
• Personal health info on a decentralized network, such as AiGIA — will allow doctors and clinics to share and update it if the patient allows it.
• Carbon offsetting marketplaces such as ClimateTrade, FlowCarbon, and more.

And here are a few more ideas to ignite your imagination:

• Cross-border payments - today, companies making cross-border payments incur many currency exchange fees. Traditional payment gateways charge a fee of 1.5%-3%, while cross-border payments are even higher. The global cross-border payments volume has surpassed $150 trillion — a reduction of just a fraction of a percent would save billions of $$ for businesses worldwide.
• Publicly publishing governmental/judicial meeting protocols — while such protocols are publicly available today, they are centralized. What if a database administrator decides he wants to alter the historical protocol? That could have severe implications for any future discussion or trial that uses the protocols for decision-making.
• Proof of shared digital work for cloud infrastructure resource sharing. (such as storage or CPU)
• Allowing clients to quickly switch vendors that are on a shared infrastructure grid (such as electricity manufacturers, water providers, and telecommunication providers) — sharing data between vendors on a decentralized network would help clients and businesses switch more easily from one vendor to another.
• Allowing freight, cargo, and transport vendors to share logistical data.
• Allowing cross-country border control to share passenger info for security purposes.
• Allowing insurance companies to share customer claims history data.

There are probably web3 companies that are already building some of the above ideas, but the point is that all these ideas require that all the business parties that are involved can trust the system that delivers them the information, and that’s where Web3 will show its true value.

Thanks for reading! I hope you enjoyed the article.

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