Hype over web3 and the Metaverse put selling the future ahead of building the infrastructure for digital transformation. But that infrastructure is the source of business opportunity.
By Trevor Butterworth
The current malaise over web3 and the metaverse feels very much like a case of flying car syndrome: let’s take a shortcut to the future — and watch as we crash. We’re still waiting for flying cars, 70 years after they first seemed like a consumer reality; but if crypto is a similar measure of whether web3 will fail, then we’re missing a crucial point.
The important thing about the 1950s and 60s in terms of business and technology was not flying cars or the belief that their time had come; it was the many, ways in which the infrastructure for doing business changed: processes for creating new and better materials, and generating greater yields, the development of computer chips and their productization, and statistical management techniques and quality control. Individually, few of these developments caught the public interest; yet in the case of Japan, which combined them all, we ended up with a manufacturing and economic “miracle.”
We are in the middle of a similar infrastructural revolution in the way we can do business. Whether digital or analogue, the problems with legacy infrastructure and processes, are that they are too costly (think fraud), too complex (they can’t be managed quickly and easily from a mobile phone or a digital twin), too insecure (logins, passwords, and VPNs are “Bronze-Age” tools for defeating phishing), too fragmented (System A can’t interact with System B), too labor intensive (think the great resignation), too disengaged (they don’t facilitate a relationship with the customer or continuous product feedback), or too burdensome (they struggle to comply with digital privacy rights).
All these interrelated problems need to be substantially solved before we can get to decentralized finance or meaningful interaction on the Metaverse’s Broad Street; and central to their solution is verifiable data, otherwise (and perhaps now confusingly) called decentralized identity. Verifiable data through the use of verifiable credentials based on the W3C’s open standard for decentralized identifiers are the new level up for the internet and digital interaction. They are the infrastructure that will power new processes, new products, and new services—and, perhaps most importantly, address sectoral needs for immediate digital transformation.
A digital shipping container
You might think of a W3C verifiable credential as the digital equivalent of the standardized shipping container. The way it is designed to hold data determines the data’s integrity and verifiability. It can transport any kind of data associated with any kind of entity, whether a person or a device or even a thing—and it has its own direct shipping channel, so you don’t have to route the data through a third party (solving the data privacy compliance issue).
Because the container is built on open standards, it’s interoperable, and it can be used, in a manner of speaking, for air, rail, road, and sea transport. Because it’s built on open-source code, it can be continuously upgraded to provide new functions. And because it’s both a flexible and light piece of technology, you can overlay and integrate your new containers into your existing infrastructure. A container can transport data from System A to System B even if the two systems can’t directly speak to each other—which saves on the cost of a direct integration.
What do you get with this new data shipping system? You get the missing verification layer for interaction online. You get the ability to authenticate data: you can know where it has come from without calling up the source or relying on a third party to manage the transport; you can immediately see if the container has been tampered with compromising the data inside; and based on those two facts, you have the power to make data immediately actionable.
The first practical consequence is a way to deal with fraud. The data is in the container and not stored in some centralized database that the container accesses. If you trust the organization that sent the container, then you’ll trust the information inside it. That’s instantaneous, which leads to the second practical benefit: seamless processes.
At the customer end, seamless processes are being driven by the expectation that everything should be controllable from a mobile device and minimally inconvenient. At the business end, they are being driven by the need to automate mundane processes dependent on manual labor, for which there is either a shortage of workers or little worker interest. This is an acute challenge facing all sectors. Similarly, changing workforce demographics mean that remote is not going to disappear—and a decentralized workforce needs a more secure way of interacting with business systems than VPNs.
Autonomous devices, Industrial IoT, and digital twins will all need verifiable identities so that verified users can interact with them and consume and share verifiable data in secure ways. Smart manufacturing, supply chain transparency, and product lifecycle management all require verifiable data and relationships that can be easily facilitated by verifiable credentials and its rich, direct communications protocol, DIDComm.
In fact, when you look at digital transformation in finance, manufacturing, travel, any sector, verifiable data and verifiable identities provide the critical infrastructure needed to move digital interaction forward and deliver the transformation that overcomes fraud and friction. This is what is needed right now—and when it is in place, then we’ll have a web3 that can take flight.
Image (edited) from Alexandre Debieve, via unsplash