Trendspotting: Web3 in Action in 2023
One tech idea that has taken the world by storm in recent times is ChatGPT. The technology blitzkrieg helped create buzz about blockchain technology in generative artificial intelligence and its wider use cases in the Web3 space.
In fact, the technological potential somewhat helped revive a sagging prospect in this space. The result is increased activity in 2023.
It’s apt to look back at several developments in this radiating sector. The growing adoption of blockchain technology is simply amazing. We try to assess the reasons behind its success and causes.
We are doing a quick check on hits and misses in 2023 and trying to predict the key sectors to watch in the year to come.
We begin with the most sought-after sector: The Retail
The sector’s potential will be a perfect playground for growing use cases. We experienced two distinct types of blockchain adoption in the retail sector through 2023: consumer-facing marketing activations and back-office efficiency projects.
Marketing Activations
From a marketing perspective, the highest-profile 2023 example is no doubt Starbucks’ NFT-powered Odyssey loyalty scheme. The value proposition isn’t entirely obvious.
The special functionality that blockchain offers is the ability for consumers to sell on their loyalty rewards rather than use them themselves, but this raises a couple of questions.
Firstly, how good would those rewards need to be for them to be worth the hassle of selling them? Second, when loyalty points can be bought and sold, it somewhat undermines the value of the word loyalty and the purpose of the scheme.
The very Web 3.0 purist dream of fully interoperable so-called “coopetition” does carry with it a fundamental tension: while consumers would not doubt enjoy and benefit from it, the notion of rewarding consumers for shopping around is contrary to the underlying business model of many brands, especially those at the luxury end of the market.
Many retailers, however, know that they have to offer new, engaging, and innovative experiences to maintain their service offerings. Selfridges’ mission, for example, is to reinvent retail while enabling its customers to live brighter.
It is no coincidence that it has invested time and energy at an executive level to define a clear Web 3.0 strategy, together with pursuing thoughtful and rewarding builds.
Also Read: Why RWA Is The Future Of Finance?
Back-Office Efficiency
We are also seeing a resurgence of interest in back-office implementations of blockchain across the retail sector, including in supply chains.
This makes sense: supply chains are complex and often involve huge numbers of counterparties, while changes of state across the supply chain often need to be tracked and shared between retailers and their suppliers.
Each party has information that only it can know at the time, so it must share that information with all the other parties that need to know.
Non-blockchain technology can and is being used, but if every party wants reliable access to a real-time record of what everyone else in the chain is doing and the ability to automate payment triggers, amongst other things, then blockchain provides a credible alternative.
There is relative academic interest in this area: a 2023 review identified more than 50 papers published between 2016 and 2021 on blockchain adoption in the food supply chain alone, but the number of newspapers has dropped significantly since reaching a peak in 2019.
Live implementations, however, are more difficult to come by, with the IBM/Maersk TradeLens failure having a chilling effect on would-be adopters.
There are three fundamental issues to overcome in any supply chain implementation: first, blockchain is a team sport and relies on coordinating a large number of counterparties with divergent interests; second, by automating things like payment triggers, we prevent certain actors (typically the big ones) from perpetually paying late and benefiting from strong cash flows; and third, the challenge of executing any digital transformation, especially without readily available off-the-shelf products that integrate with existing systems, is often too great for smaller players.
Those who have worked in the industry long enough will remember supply chains being touted as exceptional blockchain use cases twice before: once in 2015 and again in 2019–2020.
The difference this time, encouragingly, is that in 2023, most of the activity will take place on public chains like Ethereum rather than closed so-called enterprise blockchains like Hyperledger Fabric or Corda Enterprise.
This is in part a reflection of the industry’s automating things like payment triggers, which prevent certain actors (typically the big ones) from perpetually paying late and benefiting from strong cash flows; and third, the challenge of executing any digital transformation, especially without readily available off-the-shelf products that integrate with existing systems, is often too great for smaller players.
Those who have worked in the industry long enough will remember supply chains being touted as exceptional blockchain use cases twice before: once in 2015 and again in 2019–2020.
The difference this time, encouragingly, is that in 2023, the majority of activity will take place on public chains like Ethereum rather than closed so-called enterprise blockchains like Hyperledger Fabric or Corda Enterprise.
This is, in part, a reflection of the industry’s recognition that totally private and permissioned implementations undermine the core value proposition of distributed systems.
It is also a reflection of the growing trust in the integrity and security of some of the leading public chains and the benefits of a public ledger, even where the subject matter remains private.
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