News

Web3 Predictions at the World Economic Forum

"There will be more tokenization of assets, and increasingly mainstream use of blockchain technology."

• By David Ramel
• 01/06/2023

A member of the World Economic Forum (WEF) published four predictions about Web3 developments in 2023.

The Jan. 4 post comes in advance of the WEF's big annual meeting, typically referred to as Davos 2023 for its location in Switzerland. That's where the WEF convenes leaders from government, business and other "civil society" institutions to address the state of the world and discuss priorities for the year ahead. The group says the meeting provides a platform to engage in constructive, forward-looking dialogues and help find solutions through public-private cooperation. Others have said it's the place where global elites gather to work out the future direction of that "civil society."

WEF members have been busy ahead of the Jan. 16-20 meeting publishing posts on a variety of topics, with blockchain-related technology being the subject of multiple examinations (see the Virtualization & Cloud Review article, "Davos 2023: Cryptocurrency Rebound Seen, Calls for Global Cybercrime Rules," which reports on an article written by Dante Disparte, an employee of a crypto company).

One recent treatise is titled, "Going mainstream: four Web3 developments to watch in 2023," authored by Samantha Weinberg, a WEF project specialist, crypto impact and sustainability accelerator. Web3 is described by some as the third generation of the worldwide network, with Wikipedia saying it "incorporates concepts such as decentralization, blockchain technologies and token-based economics."

Despite recent cryptocurrency troubles, Weinberg agrees with Disparte that blockchain-related tech is only going forward, with one of the key takeaways from the article being, "There will be more tokenization of assets, and increasingly mainstream use of blockchain technology."

Token-based economics can refer to processes where digital representations of assets are created on blockchains, which authenticate the transaction and ownership history of things like securities, stocks, bonds and real estate -- or possibly even other assets such as land, wine, art or other physical valuables.

"Tokenization can allow for almost any real-world asset to have a digital representation on a blockchain," Weinberg said. "The increased use of tokenization has the potential to revolutionize financial markets and most industries. 2023 will see continued increases in the use of tokenization, especially as more mainstream players like BlackRock and Goldman Sachs explore its possibilities. This could impact financial markets, but also other sectors with viable assets to digitize like real estate and entertainment as well."

Summaries of the other three key predictions include:

• Changing policy landscape: "There has been much discussion of regulation and policy approaches for the Web3 industry throughout 2022. Heading into 2023, it is likely this will continue with more concrete policy taking shape globally."
• Rise of decentralized social media: "One of the critical pillars of Web3 is the concept of decentralization -- the idea that there won't be middlemen managing things on the internet as we have now with big tech. This will probably mean a rise in the popularity of decentralized social media in 2023."
• Expansion of mainstream use cases: "The first three trends highlighted all point to 2023 being a year in which Web3 breaks further into the mainstream. As the technology matures there will be an increasing number of concrete use cases for it beyond those that currently excite early adopters."

Blockchain-related tech is obviously an important focus of the WEF, which has even created a Platform for Shaping the Future of Blockchain and Digital Assets, which it says was created to ensure equity, interoperability, transparency and trust in the governance of the tech for everyone in society to benefit from its transformative potential.

Specifically, the WEF said:

• The Forum helped central banks build, pilot and scale innovative policy frameworks to guide the implementation of blockchain, with a focus on central bank digital currencies.
• The Redesigning Trust with Blockchain in the Supply Chain initiative is helping supply chain decision-makers implement blockchain, while ensuring that this technology is utilized in a secure, responsible and inclusive way.
• The Centre for the Fourth Industrial Revolution UAE is testing the application of digital assets and tokenization to improve financial systems.

"The World Economic Forum is committed to helping ensure that blockchain securely decentralizes the transfer of information in ways that reduce corruption, increase trust and empower users," says the group in a mission statement.

However, the blockchain-based cryptocurrency market suffered some serious upheaval (called by some a "crypto winter") in late 2022, prompting a recent (Jan. 3) "Joint Statement on Crypto-Asset Risks to Banking Organizations" from three federal agencies that in part says:

"The events of the past year have been marked by significant volatility and the exposure of vulnerabilities in the crypto-asset sector," said the statement from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. "These events highlight a number of key risks associated with crypto-assets and crypto-asset sector participants that banking organizations should be aware."

The joint statement lists many such risks and states, "It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system."