As the ASEAN region makes significant strides towards digitalisation, it is a prime prospect for the new version of the internet, Web3, to flourish. As new technology emerges, backed by the decentralised ledgers currently used in blockchain, the possibilities seem endless for Web3, and the Southeast Asia tech scene is preparing to capitalise on the benefits it brings.
Here is an overview of how this new way of using the internet, storing data, and conducting business online will impact the region and bring economic benefits.
What is Web3?
For many years, the internet has operated on the second iteration of the world wide web, known as Web2. This has allowed eCommerce to flourish, changing the way people connect, enjoy entertainment and conduct business. Web2 allowed the creation of user-generated content and transitioned from the original iteration’s more static, read-only structure to a more fluid, interactive form. Nonetheless, the platforms and applications used were owned by corporations or private entities, restricting some possibilities and requiring users to entrust their data to tech companies.
We do our take on analysing Web3 in Southeast Asia
Web3 changes this and expands ownership by allowing for more openness and data security through decentralised storage. The new rendition of the internet will allow users to securely store data on decentralised ledgers and have more control over their own user-generated assets by leveraging the technology that blockchain has brought to life for cryptocurrency and fintech operations.
Benefits of Web3
Although there is still some scepticism about the application of the technology in this manner, many experts believe it will have an immense impact on all aspects of the internet and industry.
Kenrick Drijkoningen, a venture capitalist (VC), sees parallels between the disruptive technology of cryptocurrencies and Web3. Crypto was initially dismissed as a passing fad. It has not only flourished, but the technology that underpins it, blockchain, has impacted financial technology and spurred a slew of problem-solving products.
Similarly, the new internet is primed for streamlining many online processes and upending traditional business methods. From simple procedures like enhancing gaming to selling digital assets such as artwork and music, the opportunities for startups and entrepreneurs to use the new technology are practically infinite.
Decentralisation’s impact will most likely be felt most profoundly in the fintech sector. The secure storage of private information in encrypted ledgers makes identity verification swift and less likely to be fraudulently compromised. Because decentralised finance (DeFi) applications will only have limited access to information, this data protection will reduce the risk of corruption.
The Impact of Web3 in Southeast Asia
With a young, tech-savvy population, the ASEAN region is eagerly embracing the rapid digitalisation of many aspects of life. Southeast Asia quickly adapted to ordering many products online, using virtual services such as doctors and pharmacies, and increased its consumption of digital entertainment during the pandemic. This readiness to adopt technology, as well as the region’s thriving startup ecosystem positions the region as one of the top markets for Web3.
Despite the pandemic’s constraints, many governments in the region have progressive digitalisation plans in place, and the rollout of 5G technology is proceeding apace. Southeast Asia has seen rapid adoption of blockchain-enabled technology and products such as cryptocurrencies, DeFi, the Metaverse, and NFTs, demonstrating the region’s eagerness to capitalise on emerging innovations.
Indonesia, one of the largest populations globally, has one of the highest crypto transaction rates and fintech companies have used blockchain technology to introduce solutions to the country’s high level of unbanked. In the first five months of 2021, over $25 billion USD in crypto transactions occurred in Indonesia, despite the fact that only 2.66% of the population owns cryptocurrencies.
Singapore, despite having a much smaller population, is one of the top 5 countries in the world for crypto engagement. In 2021, 9.4% of people in Singapore owned the new currencies. Other markets in the region, such as Vietnam, Thailand, and the Philippines, are also among the top 20 countries embracing cryptocurrency and are highly motivated to participate in nascent innovations like Web3.
With an influx of funding expected to support the development of new style web products and applications, the region’s startups would be wise to jump on board sooner rather than later. As the new ecosystem evolves, it will become clearer how businesses can use the technology to improve their operations.
If the region embraces the new Web3 possibilities and the Southeast Asia tech scene continues to innovate, there is a real opportunity for Southeast Asia to become a global technology hub. With enhanced internet capabilities, 5G accessibility, and a highly-engaged population, the region has the potential to develop economically and transition many countries from developing to advanced economies.