Blockchain tech company Paxos published a blog post on Tuesday illustrating how Web3 can empower enterprises in the financial sector, and kickstart a “new era” of digital sovereignty.
“Web3” is a loose term for capturing the oncoming third generation of the internet, which combines the decentralization of the early internet with the utility and functionality of the modern age.
Blockchain is at the center of this transformation, creating a decentralized foundation for storing and exchanging both information and money.
By outsourcing such “essential infrastructure components” beyond a single entity, Paxos believes blockchain can help restore the rapidly “waning trust” in traditional institutions.
Security would also receive a boost, as decentralized business models would help defend against surging cybercrime and data misuse, again fostering digital trust.
Moreover, Web3 empowers consumers to take control of their personal data, rather than seeing it harvested and sold by centralized platforms. Consumers could therefore monetize their data individually, and create “more equitable digital ecosystem.” Paxos wrote:
“All of these benefits also happen to be the pillars of a sound financial system. These benefits will continue to become important as other industries utilize the technology to meet the demands of today’s—and tomorrow’s—consumers.”
The Crypto Component
Naturally, blockchain is widely known for its relationship with cryptocurrency, which can also play a critical role for enterprises in the Web3 era.
Not only can crypto help with “streamlining peer-to-peer payments” can lowering transaction costs, but “tokenization” can help “redefine” how people transact and interact digitally.
One of the most simple and popular uses for “tokenization” is stablecoins – crypto tokens value pegged to the US dollar or other national currencies. Such tokens act like currency on the blockchain, leveraging the peer-to-peer benefits of cryptos like Bitcoin (BTC) and Ethereum (ETH) without inheriting their price volatility.
Paxos once issued a stablecoin, BUSD, on behalf of the crypto exchange Binance – but the coin is now in its wind-down phase due to regulatory pressures. That said, online payment company PayPal is now also issuing a stablecoin, PYUSD.
Another use case is for tokenizing stocks, letting blockchain users personally own company shares in a crypto wallet rather than on a centralized exchange. According to Dune Analytics, tokenized stocks issued by firms like Backed Finance and Franklin Templeton have reached a market cap of over $327 million.