During its Creator Week 2022 event, Meta made an important announcement. The company declared its intention to allow Instagram users to create, display, and sell NFTs through their Instagram accounts.
The announcement was met with both wonder and uncertainty. People had so many questions to ask, and Meta’s announcement left some very important ones unanswered. However, the wider implication of Meta’s announcement signifies yet another Web 2.0 institution paying even more attention towards Web 3.0.
Aside from Instagram’s announcement, we’ve recently seen J.P Morgan, and even Google, make significant policy changes that signal a shift in attention to Web 3.0. Why are these institutions making that switch now?
From Web 2.0 to Web 3.0, with Love
In the last week or so, three main institutions have made massive moves toward Web 3.0 adoption. These are institutions that are usually slated to be mortal enemies of Web 3.0. Yet they are reaching across the aisle, as it were, to create amazing experiences and products with blockchain technology.
In the first week of November 2022, JP Morgan executed its first live trade on a public blockchain.
The trade was to issue tokenized S$100,000 as part of the Singapore Central Bank’s pilot programs exploring DeFi. After issuing it, the bank traded it for tokenized yen with Japan’s SBI Digital Asset Holdings.
The pilot program is called Project Guardian and is a protocol to understand the feasibility of conducting foreign exchange and government bond transactions against liquidity pools of tokenized Japanese government bonds, the Singapore Dollar (SGD), Japanese yen (JPY), and Singapore Government Securities Bonds.
For JP Morgan, this was essentially an experiment. The chief executive of JP Morgan’s blockchain unit, Umar Farooq, when speaking at a panel at the Singapore Fintech Festival 2022 on the second of November, had some things to say about the trade.
He believes that the experiment, as it were, was successful. It was the first time JP Morgan, or any bank in the world, had tokenized wallets on a blockchain. And it had gone well.
While there was no unforeseen incident with the transaction, Farooq argues that for banks like JP Morgan to get full-time into DeFi, there would have to be some identity solution. He argues that there needed to be some KYC solution that solved the identity problem for DeFi to be completely institutionally accepted. Without that, he says, money laundering is inevitable.
Finally, he said that JP Morgan’s way to solve this problem is to deploy verifiable credentials that live in the customer’s blockchain wallet. That means that a protocol would be able to verify the person’s identity anytime they wanted to trade.
But this isn’t JP Morgan’s first attempt at using the blockchain. The bank executed an Intraday Repo Transaction using Blockchain in 2020. While it admitted at the time that current operational limitations stopped it from continuously using the blockchain for day-to-day trading, the bank’s participation in this project just proves that it’s even more willing to test the waters of DeFi.
Meta has suffered huge stock losses due to Mark Zuckerberg’s insistence on trying new things. Today, a lot of Meta’s shareholders want Zuckerberg to stop trying to build the metaverse, as they are convinced it will be a failure.
However, it doesn’t seem like Meta wants to stop trying new things anytime soon. The company recently announced that it will soon allow users to create, display, and sell NFTs on its platform. Meta also plans to integrate video NFTs so that video creators will be able to easily sell their creations on the platform.
Asides from that, the company plans to import information about existing collections from OpenSea, the biggest NFT marketplace in the world. They also have no plans to charge gas fees for the new feature until at least 2024.
Meta is already in talks with Polygon and Arweave, with the two set to provide infrastructure to support the project. The NFTs will be minted on Polygon, and Arweave will provide the decentralized data storage protocol that will store the created NFTs.
Additionally, Meta will allow users to connect their Solana and Phantom wallets to showcase alternate forms of digital collectibles.
On the 5th of November 2022, Google cloud made an interesting announcement. It was now going to run a validator on the blockchain and will soon ship features aimed at welcoming Solana developers and Node runners.
Google Cloud also announced that it was looking to bring its Blockchain Node Engine to the Solana chain in 2023. The Node engine is a node hosting service run by Google, which already supports the Ethereum blockchain.
The goal of Google Cloud is to make running a Solana Node a one-click solution. The Cloud giant also said that it would start indexing Solana data and adding it to its BigQuery data warehouse. This should make it easier for the Solana developer ecosystem to access historical data.
And on top of that, Google Cloud said that it would provide select startups in the Solana Ecosystem with up to $100,000 in Cloud credits.
Traditional Institutions And Web 3.0
A lot has been said about Web 3.0 being Web 2.0’s killer. But it doesn’t look like Web 2.0 institutions are interested in fighting against Web 3.0.
From governments trying out CBDCs, to banks like JP Morgan trying to launch their cryptocurrency, it appears that traditional institutions are starting to see the promise of Web 3.0. But doesn’t that mean that the new web era has stopped trying to replace them. Would they rather prefer to coexist with these institutional players?
The answer is a little bit more complex than that. Institutions like Facebook, JP Morgan, and Google aren’t tethered to Web 2.0. These institutions have grown their wealth and influence under the present world order. However, there’s nothing stopping them from adopting aspects of the new order to create a balanced product for their customers.
Their loyalty is fundamentally to their business, not to the model it runs on. If a majority of their customers and clientele move to decentralized data solutions, so will they.
One might question the timing of these moves. If these institutions wanted to adopt Web 3.0 technology, wouldn’t they have done it during the massive bull run that crypto just had?
Two possible reasons may explain this. The first is that institutions like big banks and social media behemoths like Meta do not think in terms of bull runs and bear runs.
They take a longer-term view of trends. What this means is that whether an industry is in a bull run or a bear run is irrelevant to them. They see it as the industry taking ten steps forward and maybe three steps backwards. This means that they didn’t paid attention to Web 3.0 because of its bull run. Rather, they paid attention to it because of its actual potential.
Another reason why these institutions are paying attention to Web 3.0 now is that they are extremely proactive. A good example of this proactivity is Meta. According to insiders of the company, the goal of Meta is to kill Meta. The company constantly searches for new ways to disrupt its industry. It aims to produce products that renders its existing products useless.
This is the same for many traditional institutions. Their ideological loyalty isn’t with the business model they run, but with the business itself. Hence, it makes sense to pay attention to whatever technology that has the biggest chance to supplant them. They then try to adopt it to allow the business to thrive.
A Net Positive or a Net Negative?
Cynics argue that central banks and Web 2.0 hegemons would rather compete with Web 3.0 than adapt to the possible new normal. While that could be true—lots of central banks, for instance, are trying to kill crypto—it’s also true that many institutions would rather adopt Web 3.0 than compete with it.
In light of that, it would be difficult to construe institutional attention on Web 3.0 as a net negative. It’s easy for people to argue that Web 3.0 is Web 2.0’s killer, but the truth is that reality is still far away. Web 3.0 still has a lot of problems that need fixing, and Web 2.0 institutions could just be the ones to provide these solutions.
On the Flipside
- Zuckerberg is really into experimenting nowadays. His attempt to onboard NFTs onto Instagram might backfire or could just be another fun experiment with Meta for him.
- These institutions may be just testing out the weaknesses of their competitors by trying to adopt or provide support for their technology.
Why You Should Care
Things change quite rapidly in tech, and it’s important to know just where the trends are headed. The tempo of institutional support for Web 3.0 is rising, and this may be a sign of even more interesting things to come.