ウェブ3、メタバース、暗号技術、および従来の金融・保険企業の位置付け

In this blog, we build on 2021’s technology buzzwords that may hold potential for financial services’ innovation in the years to come. These technologies may provide an alternate or a refreshed way of interacting on the internet. We will briefly explore these buzzwords which will be worth watching as we move into 2022.

Web3

Web3, also known as Web 3.0, is a concept for a new iteration of the World Wide Web that promotes decentralized protocols and aims to reduce dependency and control by big tech companies like Alphabet, Amazon, Apple, and Meta. Unlike Web 2.0, where data and content are centralized in big tech companies, Web3 is the decentralized web. Web3 is marked by decentralized apps (dApps), decentralized finance (DeFi) like cryptocurrency (crypto), and distributed ledger technology using blockchain technology, and play to earn games (GameFi). Anonymity, privacy, freedom in transactions, and lack of centralization and controls are some of the key benefits proposed by a Web3 internet.

Metaverse and crypto potential for financial innovation

A concept of an immersive virtual world with ethos of Web3 is the metaverse and the usage of crypto. Most of the world's population participation in the metaverse virtual economy and transacting with crypto may still be in its nascent stages. It may be years before the vision of metaverse is fully realized, as portrayed in Spielberg’s 2018 adaption of Ernest Cline’s Ready Player One (2011). But it is a space to watch and could be the successor of the mobile internet, as described by Mark Zuckerberg. Today, it is closely associated with augmented reality (AR) and virtual reality (VR) and metaverse can be considered as a VR application of a digital twin world.

Crypto can be the foundation and standard self-sovereign financial system in the metaverse, whereby financial ownership is via NFTs (non-fungible tokens). The metaverse is described as an open environment for open creation and transaction with a universal digital anonymous representation in the form of avatars. NFTs offers unique digital representation and ownership of digital “thing” such as tweets, game assets, digital files, digital art, or digital real estate stored on a blockchain. Although not every digital item are NFTs, digital transactions are gaining steady ground for product purchase and to earn a living. Digital luxury product such as a Gucci handbag sold on the Roblox online gaming platform has fetched a higher price than the real version and play-to-earn blockchain games or GameFi allow players to earn crypto as a reward or to sell their NFTs in an open market. Play-to-earn apps requires users to have a crypto wallet like MetaMask or Coinbase (with cryptocurrency such as Ethereum or USDT) and have a game character like a pet avatar which can cost several hundred dollars. Players earn items or tokens through completion of tasks by their game characters. Earned items or tokens can then be traded on crypto or NFT exchanges to cash out. NFTs must be sold on the NFT marketplace for a stablecoin such as USDT before converting the stablecoin to fiat currency. For more information on vendors participating in the crypto economy, Celent’s blog Beacons of the Crypto Economy: Square to Block is a blog series tracking the players in this space.

As highlighted in Celent’s blog Insuring the Metaverse: A Thought Experiment, virtual assets can function as traditional general insurance items and be subjected to losses which require insurance in the metaverse. In 2021, Chainalysis reported that over US$7.7 billion worth of cryptocurrency have been stole by fraudsters worldwide, an 81 percent rise from 2020. This raises the potential need for cyber insurance, which typically provide coverage for data breaches and hacking attacks, and this insurance can also cover data theft when a user moves from one metaverse to the next. And as the metaverse is proposed to run like the current internet and in parallel time as the actual world, a network outage could even require connectivity insurance. We can even think about a vision where life insurance can be sold to the avatars in the metaverse, whereby an avatar’s death signifies an actual loss to the user. In a more radical thought and as portray in the television series, Black Mirror, life insurance can also cover the passing of an individual’s consciousness to the cloud or blockchain, where one can live out their life entirely in the metaverse. The question is, who owes the insurance policies in this case if the metaverse and crypto aim is to decentralize control and put control in the users.

Technology firms including Apple, Microsoft, and Facebook’s parent Meta are racing to build the metaverse which they envision would provide an immersive digital world that may eventually replace some in-person interaction. Traditional conglomerate such as South Korea’s SK Group investment arm SK Square are also betting on the metaverse and crypto trend, with a vision to have every portfolio company to have a metaverse presence and to have customers use cryptocurrencies for shopping, media streaming, and other transactions in the metaverse community.

The metaverse and crypto-based digital economy offers a neutral space which do not encourage censorship and centralized data control. But the acceptance and willingness of individuals to spend time and capital to virtual environments will require the establishment of trust, privacy, safety, and infrastructure stability in the digital space they choose. There is also the motivation of users to put on a device and participate in the metaverse. It is in hopes that a decentralized digital world will be the alternatives to the influential technology institutions in control today. The capability of the metaverse to be a safe space will very depend on how companies train their systems to moderate the virtual world and the desire of users. The role of crypto in the open metaverse in further discussed in this article, Into the Void: Where Crypto Meets the Metaverse.

Double edge challenges

The digital world is susceptible to harmful content if left unchecked and can sometimes amplify undesirable content and action by the avatar participants or AI. In a metaverse, more safeguards must be in place to protect against misinformation, privacy tracking and recording, and general bad behavior such as cyber-bullying using offensive or dangerous contents towards unpopular avatars.

Sensorium’s vision of the metaverse is a fun environment for avatars to take virtual tour of an exotic location or to watch a live-stream concert. But during a demonstration in Lisbon earlier this year, their bot David spewed health misinformation when asked about vaccines. In response, Sensorium plans to add filter to limit what their bot can say about sensitive topics.

Social media firms like Meta, Twitter and Google’s YouTube have policies to prohibit users from spreading offensive or dangerous content, through AI systems scanning for hate speech or the removal of offensive posts. The metaverse is an expansive social network with the same challenges as any social network, that of account privacy and users’ well-being. Companies providing such services will need to address such issues alongside the technology development.

Regulatory control

The recognition of crypto as an asset class is still being examined by countries such as Singapore. The country’s central bank, Monetary Authority of Singapore (MAS), views crypto tokens as volatile risks with speculative swings and is not anchored to economic fundamentals. Despite these reservations, MAS granted four licenses (FOMO Pay, TripleA, Independent Reserve, and DBS Vickers) for firms to provide digital payment token (DPT) services in Singapore out of 170 applications. The DPT is the regulator approach to facilitate financial innovation but having controls to address risks such as money laundering and terrorism financing. With regulators’ input, crypto can have proper development and control. Crypto is generally a trading tool and it will still take time to be a main payment method in countries such as Singapore. However, the usage of blockchain have been adopted for cross-border payments and companies such as PayPal have allowed account holders to buy and hold cryptocurrencies in the United States. Countries like El Salvador has adopted Bitcoin as legal tender.

As with most innovation, global recognition and mass adoption of crypto and the metaverse will require universal regulations and international standards for concerns such as money laundering, terrorism financing, data control, and safety and trust for users. However, some current established systems are misaligned with the crypto and metaverse’s proposition of anonymity, privacy, decentralization, and freedom of transactions. But we should not write it off completely, the pace of change will differ between different societies and time is the only way to judge if these trends will rollover to the mainstream.

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To learn more, Celent tracks this market and has research addressing it (list of recent reports here).If you would like to find out more, please feel free to get in touch with me.

Below are related reports/blogs contributed by my colleagues and I:

Securing Insurance Data: Confidential Computing and Data Lineage Use Case

Insuring the Metaverse: A Thought Experiment

Beacons of the Crypto Economy: Square to Block

Internet of Things, Augmented and Virtual Reality: Remote Sensing Tools for Insurance Value Chain