For a business to benefit from Web3 means having to change your entire business model, argues digital transformation guru David Galea
David Galea, director at Centigo Ireland, is a digital transformation professional with over 20 years of experience advising technology start-ups and developing new business models, leading strategic and digital projects in Europe, the UK and the Middle East.
Galea has implemented digital transformation programmes in organisations ranging from micro enterprises launching new emerging technologies through to enterprises such as BP.
He has helped entrepreneurs shape their business models based on distributed ledger technology (DLT), Internet of Things (IoT), artificial intelligence, machine learning and cloud technologies, amongst others.
‘The irony is that the whole purpose of this technology is to do away with the concept of the transaction, which is what capitalism is based on’
His new book Digital Made Simple is all about how to successfully implement digital strategy in any workplace.
His main message, he says, is to humanise technology for successful implementation.
How would you define Web3?
Its evolutionary in nature. We’ve seen the evolution of the internet from basic information in the Nineties, which was Web1, moving towards transactional process around the 2000s, which was a centralised authority approving transactions, such as Google, Amazon and Facebook, through to Web3, which turns that concept on its head by creating a system where transactions are processed democratically using a decentralised democratic system, and where everybody has a say in how their data is owned and how transactions are carried out.
Web3 may seem conceptual, but it has several important implications for business.
Since the purpose of Web3 is to decentralise the ownership of transactions and data, clearly there is a move away from Big Tech and instead having that power distributed across people. This creates an opportunity for small business to really compete in a world where it is not dominated by giants, and they can compete on a level playing field because of transaction costs being reduced to almost zero.
Web3 seems to break down into specific areas though such as DLT, NFTs, blockchain and the metaverse. Can you explain how it’s used in each vertical?
The birth of DLT came from cryptocurrency such as Bitcoin, a decentralised currency which does not need the intervention of banks. Basically, it’s traded directly between people subject on a consensual basis using blockchain.
Whereas an NFT is more secure, but it is limited in its use for highly valuable assets, such as artwork or land transfers, where you have more scrutiny or need added security. An NFT has a narrower scope than cryptocurrency, even though they both use blockchain.
What’s the biggest challenge for companies that want to use Web3?
Changing their business models. I have worked with various startups in the distributed ledger technology space and what they were doing may have been revolutionising industries but all they were doing was replacing one technology with a new one without replacing the business model. The biggest challenge is how to use this new democratic power with its lower transaction costs and improved security to create new business models.
The question is how to come up with such a commercial model? How can you monetise the system? In every other system, you monetise the system by creating a middleman. But the ultimate benefit of DLT is to do away with all middlemen.
My fear is that all businesses will do if find a new way of creating new intermediaries using this technology. By definition, a business makes profits by adding value and that value is created through economies of scale and adding some form of brokerage in the process.
The irony is that the whole purpose of this technology is to do away with the concept of the transaction, which is what capitalism is based on!
How does Web3 affect the metaverse?
Obviously the metaverse is all about data and it is very important to have an environment where the data is secure, where no one company owns the data and I have trust of the system to use it.
Now it could be that in the metaverse, a character or a brand – think, Mickey Mouse – is created who lives forever and is then bought and sold as a piece of intellectual property, so data protection – and using blockchain to protect that valuable data – becomes even more important.
If Web3 helps undermine the model of capitalism, won’t there be pushback against it?
The objective of decentralisation is pure democracy, which implies equal access and opportunity. But this runs counter to what businesses do, which is to have an advantage over rivals, which in turn creates a profit. So, I think there will be opposing forces to the spread of decentralisation and instead take back that democratic power from the people.
Have any of your clients already started working with Web3 technology?
I have seen very few examples in practice working with DLT. Ironically, one of the few applications I have seen was in the public sector, managing the child adoption process, where the digital paper trail was key.
One lucrative opportunity that I can see is the use of blockchain in the supply chain. One is the pharmaceutical industry and the other is the food and beverage industry. Since the DLT has the immutable chain of transactions, you have the auditability and traceability of anything which has happened from the start of the transaction to when the final product reaches the customer. This is imperative in both industries.
You see the same thing in the food industry, where you have the concept of from farm to fork.
One application that I have seen was in the pharmaceutical sector, whereby a company launched an application could trace an active pharmaceutical ingredient across different players.
What is the one message you would like to get across about Web3?
The biggest takeaway is that organisations that want to get into the Web3 space will need to look closely at how their business model will work and how to monetize their operations in a different way. I believe that the first step will be the permission-based blockchain systems, as opposed to permissionless. Permission-based blockchains offer much more scope for commercialisation.
My message to clients is that you need to change your business model if you want to leverage how best to use Web3.
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