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Singapore Fintech Festival 2021: Web 3.0 on the horizon

Singapore Fintech Festival 2021: Web 3.0 on the horizon

A key focus for Singapore Fintech Festival 2021 was Web 3.0. Loosely defined, Web 3.0 is the next stage in the evolution of the Internet that would ensure that information can be processed with human-like intelligence with technologies such as big data and machine learning.

Web 3.0 will allow data to be interconnected in a decentralised way, a step change from Web 2.0 where data has traditionally been centralised and siloed. As a result, many industry leaders see symbiosis between Web 3.0, blockchain and cryptocurrency. Further, sessions at Singapore Fintech Festival saw CEOs come together to discuss these elements and what the decentralised structure of Web 3.0 could mean for company hierarchies.

Digital currencies and gaining global acceptance

Sam Bankman-Fried, founder and CEO at FTX kicked off discussions around adoption of digital currencies. “I think one big thing is [digital currencies are] starting to get institutional adoption in a way that we hadn't seen before. I think we're seeing that on many fronts at once in terms of users, investors, partners, regulators.” Bankman-Fried added that the reason he believes we’re seeing this happen now is because of rapid digitalisation and fears of inflation and depreciation, both due to Covid-19.

While discussing what the future of cryptocurrency holds compared to the current system, Bankman-Fried said “the current system is not prepared to handle the volume that’s trying to be placed on it.” He went on to reference how banks had asked FTX to “slow-down” the number of wire transfers they handled a day, which most of the time was in the hundreds.

Jeremy Allaire, co-founder, chairman and CEO of Circle concurred that currency systems are not easy to use and cryptocurrency is a good option for the future. “Once you start using cryptographic money on a public network, whether it be Bitcoin or a stablecoin like USDC, it is transformative and you realise this is absolutely how the financial system should work.”

Bankman-Fried commented that while many people have “dabbled” in a small amount of cryptocurrency, they are not regular users. However, “at this time, relative to previous technical advancements, we are seeing more exploration.”

He also believes that it would take 10-20 years before a consumer’s financial needs could be fully hosted on digital currency.

The future of ecommerce in Web 3.0 world

After determining the institutional adoption of digital currency, panellists turned to defining Web 3.0 and exploring the failings of Web 2.0 platforms.

The discussion started with some of the failings of web 2.0 platforms. On this, Sangeet Paul Choudary, founder of Platformation Labs stated: “What we’ve seen with Web 2.0 is that the systems that we have built and the businesses that we have built, the design of those businesses are determined more by design than technology.” He references two businesses, one venture-funded and another driven by advertising and said that as these are built around capturing data, and as a result, are limited by power being centralised on a few platforms, and commoditisation occurring in the ecosystem. Openness on these platforms is always present for strategic reasons, and only where it is convenient.

This led to conversations around regulation and data privacy. Historically, mandatory open data initiatives have been beneficial. David Hardoon, managing director, Aboitiz Data Innovation believes that “we need to acknowledge the change and what the underlying risks are.” Part of the problem is how fast technology is moving compared to relatively slow evolution in regulation, which calls into question the need for a potential separation between infrastructure regulators and data regulators.

Choudary concluded with a warning: “We’re still at the stage of Web 3.0 where a lot of token value is still driven by speculation. We need to be really clear about when token value is driven by speculation, and when it is driven by actual market infrastructure components being built.”

The impact of AI on the environment

AI will likely form a large part of Web 3.0, but how green AI actually is or can be needs to be considered.

Google software engineer David Patterson explored the environmental impact of AI and called on Google research to dissect four contributing factors.

  • the machine learning model used;
  • the processors running models
  • show efficient the data centre running models are; and
  • the type of energy being used to supply the data centre.

Google research found that if organisations optimised their strategies across all four of these areas, carbon footprint could be reduced by a factor of 1000, according to Patterson.

He added that geography is a concern when considering carbon emissions. For example, data centres in Oklahoma had 96% carbon free energy, largely because of the windy climate, but Singapore only had 3% carbon free energy. He further commented that “it’s great that we’re worried about green AI, but it’s important to improve the quality of our energy sources.”

Dr Daniel Klier, president of Arabesque Holding, noted the importance for companies looking for green credentials, commenting that “when big companies issue their RFPs in their search for a new technology provider, green credentials are very high up there. Everybody knows that if they want to be carbon neutral, that use of computing power is something that can only go one way, it only increases and so you need to do it with something that is actually environmentally secure.”

The implications of Web 3.0 and the role of the CEO

Piyush Gupta, CEO at DBS, challenged the more idealistic expanses of Web 3.0, which he referred to as the “third level” or the “wild west”, where people do not need intermediaries or institutions and would pave the way for smart contracts.

"The problem with this argument is when you take it to the next phase you start questioning whether you need a central bank, you don’t need regulators. Even going as far as no longer needing nation states or government. This starts to become not a question of technology; this is now a question of social politics and philosophy.”

Mike Wells, GCE of Prudential added that:

“With Web 3.0, you’re going to see so much more data. Consumers will have more control, they will have more customisation, but they are going to need help with it. Our game has to improve every single year to protect the trust we have with our clients.”

When discussing whether Web 3.0 will make traditional banking institutions redundant, Wells said that “I think there's an element of disrupting traditional businesses that changes their role and their capability, but it doesn't really change the value.”

Helen Wong, group CEO of OCBC Bank explored some growing “We know crypto is a storage value, but we have risk to think about. We have seen scams, and to cite an example - crypto from the recent TV Show Squid Game called Squid Coin. At one point the value of this was $3000, and then the creators did a ‘rug pull’ and the value became zero. There are risks associated with the ‘new thing’, with transformation. And it also comes down to the players, so are you able to get everyone together? It also becomes a trust issue of who will do the due diligence, eventually it will rely on who is a trusted intermediary.”

Dr Calvin Choi, chairman of AMTD, noted that his vision for Web 3.0 brought the word ‘open’ to mind, breaking it down to this open world, open platforms, and open future. He added: “I think across the whole world we are investing in and embracing the fundamental change of Web 3.0 and beyond. From our end, this new age presents even more opportunities for investment bankers and for clients in terms of choices.”

When asked about volatility and issues around liquidity, Choi retorted: “I think it’s about the overall market. It’s how we can connect through the different unconnected dots. It’s about a coordinated effort, collaborating to make it through any uncertainties for the investors.”

What is the role of a CEO is in an increasingly decentralised world, where the top down structure is not necessarily considered the primary way to move forward?

Wells stated: “It’s becoming a more complex role with more information. Certain elements like capital allocation, risk management, and key stakeholder management are more important and harder than they've been in the past, but you have more resources to address them. I think the day-to-day operational element, if you're going to grow and scale business, you have to decentralise decisions, authority and empower organisations.”

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