Bertrand Chan, CEO at Global Shipping Business Network.
Today, blockchain seems to lurk behind every problem. When Elon Musk made his bid for Twitter, the blockchain community raced to speculate what Elon would do with a decentralized Twitter. Concepts such as decentralized social networks and the metaverse have reached mainstream consciousness and are used synonymously with Web3 in discussions about the next chapter of the internet. Much attention to date has focused on the consumer space, including the feverish activity in NFTs, the creator economy and the gaming space.
This article argues that the true potential for Web3 may lie less in consumer applications and more in solving the systemic challenges in global trade.
Why do the metaverse and Web3 matter?
Web3 is the next iteration of the internet, defined by a decentralized ethos in which platforms and data are owned by the people who build and use them. It will also be underpinned by a new concept for governance and digital asset economics.
Interestingly, this bears similarities to Sir Tim Berners-Lee’s original vision for Web1, in which the web would become a decentralized network of information systems with open protocols. However, as tech giants capitalized on the internet during the dot-com era, we saw a rapid shift toward Web2 business models, where platform ownership and control of data are centralized.
The emergence of Web3 has highlighted some of the shortcomings in Web2. Today’s social platforms have allowed users to freely create and share content. Yet the cost of this is their data being fully owned by centralized platforms to be extracted for profit.
Web3 offers an alternative to this extractive model. Users instead have greater control over the data they share and freely engage with others without rent-seeking intermediaries. The Decentralized Autonomous Organization (DAO) is one example of a novel governance model made possible through blockchain technology, where much like a cooperative, users are de facto shareholders and can make decisions for its future. Entrepreneurs are also experimenting to see how Web3 can be applied to existing business models. In other words, what would the Web3 version of “Facebook” or “Amazon” look like?
Consider a Web3-enabled Twitter. Tweets would be stored on-chain, encrypted and could be rendered differently based on different versions of Twitter clients. Each version will have different levels of moderation, recommendation algorithms and monetization models. Ultimately, the users and content creators will vote with their feet on the optimal combination of those parameters.
Not everyone agrees with the vision.
Although the promise of a more equitable, decentralized internet, or metaverse, sounds alluring, some critics remain doubtful whether the decentralized nature of Web3 can deliver the high performance and rich user experience consumers demand.
Perhaps NFTs offer a clue to what the intersection of Web2 and Web3 might look like. While NFTs are secured on decentralized blockchains, NFT marketplaces that interface with users remain centralized.
Thus, for the foreseeable future, we are unlikely to see the Web2 pantheon being fully replaced. Far from the decentralized ideal, we can expect a renaissance of centralized user data and extractive “winner-takes-all” modus operandi.
Web3 will unlock economic value in shipping where Web2 failed.
Little has been discussed about the implications of Web3 for B2B sectors. Yet when we begin to unpack this, a compelling case emerges.
Consider the global shipping sector, where Web2 has done little to drive digital transformation and unlock the level of economic value seen in other industries. It is one of the few remaining sectors in the modern world heavily reliant on paper. The “bill of lading” is an important document in global shipping, yet “eBL,” its digitalized version introduced more than 20 years ago, accounts for less than 0.5% of global trade.
This is due to the highly fragmented and complex nature of global trade. Supply chains involve disparate and often competing parties that must share data and coordinate with each other. The inherent distrust in data sharing leads to inconsistent, incomplete and often delayed information. This has become a significant barrier to digital transformation within the shipping sector. The net result is global supply chains that are inefficient and lack resilience, as personified in the ongoing global shipping crisis.
Web3 offers an alternative paradigm in which infrastructure and trusted protocols can be built to address these challenges. An independent platform, whose purpose is not to maximize value extraction but to incentivize market participants to share standardized data in a trusted manner, allows shippers to give consent to share their data with third parties while retaining control, as well as supporting new technology providers to use this data to develop new solutions. Everyone wins.
Of course, given the enormity and complexity of global trade, an independent platform built on the blockchain is not a panacea to the shipping industry’s challenges. Customers, shipping lines, freight forwarders, customs, logistics and financial institutions are among the many parties involved in global trade, each with its own unique set of challenges. But a Web3-designed platform can enable a trusted protocol for data sharing.
Parties retain full control of their data, as well as the ability to grant access to their business partners, large or small, thus creating new economic opportunities.
This is a shift away from the “winner-takes-all” modus operandi.
The shipping sector offers a compelling case for Web3. Its non-extractive ethos and technologies, such as blockchain, offer trust by design, enabling collaboration among disparate and competing parties. Unlike those born in the Web2 era that were incentivized under a “winner-takes-all” environment, the modus operandi will be “everyone who contributes wins.”
Web3 is certainly the foundation, but it will not be enough. The shipping industry needs a combination of both Web2 and Web3 to solve the problem. If embraced, this sector can finally digitize, unlock new economic value and enter a new golden age.