Stripe

Credit cards can bridge Web2 to Web3, says music industry exec

As DeFi continues to become more mainstream, traditional financial tools can serve as a bridge from Web2 to Web3 for those who still remain skeptical.

Last year proved that the Web3 space is not just a phenomenon but rather the future of digital interactions. However, as pervasive as the space has become, many are still skeptical as to how it can and will be a part of their lives.

Many developers are seeking ways to bridge the gap between these two iterations of the web. Cointelegraph spoke with Bruno Guez, CEO of Revelator, to understand why he believes already existing Web2 financial tools such as credit cards can actually be bridges to usher new users into Web3.

Revelator, which works in the music industry to provide labels and distributors the infrastructure to run their businesses, recently announced that it integrated Stripe to help fans seamlessly purchase digital collectibles with their credit cards.

Guez said that making these new digital tools accessible via Web2 tools users are already familiar with, such as credit cards, creates a bridge between these two versions of the digital reality.

“The majority of the developed world uses credit cards for everyday purchases. If we want to usher new users onto Web3, we must provide these Web2 users with a familiar and ‘safe’ payment method.”

However, he touched on how using familiar Web2 financial tools helps lessen the hurdles plaguing the industry, such as a lack of education on decentralized money management.

“If we make the on-ramp easier and make accessing Web3 assets easier, we can slowly educate them about the power of decentralization and all that entails.”

He continued to say that this further education includes informing users about self-custody practices so that they can “fully embrace Web3, operate their digital wallets and never lose access to their digital assets.”

The lack of knowledge has created barriers to self-custody, which have often made centralized exchanges popular due to ease of access and user experience. Though, as Guez pointed out, and as has recently been seen in cases like FTX, when centralized exchanges go out of business, customer trust and confidence in the industry as a whole is damaged.

Revelator isn’t an anomaly in the Web3 space for utilizing credit cards to help onboard new users. Many other businesses are seeing how to continue pushing mass adoption by working with tools. At the beginning of 2022, Stripe announced partnerships with FTX, FTX US, Blockchain.com, Nifty Gateway and Just Mining to launch a crypto business suite.

In 2022, it also partnered with Twitter to offer USD Coin (USDC) payments to content creators on the platform, along with integration on a Solana-based market maker to offer a fiat-to-crypto on-ramp.

Guez said that credit cards efficiently on-ramp users onto Web3, while smart wallets are already operating in the background. This enables a “clean way” to perform blockchain transactions without the users needing prior blockchain knowledge.

“In this way, Web2 and Web3 tools work together by abstracting the complexity away from the user experience.”

According to reports surfacing on Jan 26., Stripe is working with JPMorgan professionals to advise toward a potential public offering after its fruitful reemergence onto the crypto scene.

Solana-based market maker integrates Stripe for fiat-to-crypto transactions

The Solana-based automated market maker Orca has opened up fiat purchases and fiat-to-crypto transactions through a new integration with Stripe.

As the Solana ecosystem comes back from the aftershocks of the FTX liquidity earthquake, one of its leading automated market makers (AMM), Orca, has announced a new integration.

The AMM revealed an integration with Stripe that will power its new fiat-to-crypto on-ramp, making decentralized finance (DeFi) more accessible to users both in and out of the existing ecosystem. This new integration now enables fiat purchases along with fiat-to-crypto transactions.

Users can now purchase the blockchain’s standard native SPL tokens, including USD Coin (USDC) and SOL (SOL), with fiat currencies.

According to Ori Kawn, the co-founder of Orca, the new integration helps create wider access to economic tools:

“With this new integration, we hope to make participating in the DeFi ecosystem even more accessible to the entire Solana community.”

The Orca integration marks one of the first blockchain-based integration from Stripe as it continues to venture into the crypto space.

Back in March of this year, it announced fiat payment support for cryptocurrencies and NFTs, in addition to partnerships with FTX, FTX US, Blockchain.com, Nifty Gateway and Just Mining to launch a crypto business suite.

A month later, it worked in collaboration with Twitter to create a USDC-based payout program for creators via the Polygon network.

This comes as the entire crypto industry picks itself up after the collapse of the former powerhouse crypto exchange FTX.

Solana was one of the many in the space that felt the effects of the market chaos. Its native token, SOL, was heavily hit, plummeting 32.4% on Nov. 10.

Nonetheless, the ecosystem received encouragement from major players in the space, such as Polygon co-founder Sandeep Nailwa, to continue building on the value of the Solana network.

Prior to this Solana unveiled its roadmap, which includes a major partnership with Google Cloud, new decentralized application stores and smartphone plans.

Business owners should get off PayPal and move to the blockchain

Cryptocurrency platforms offer lower fees and more convenience than their corporate competitors. That’s a boon for entrepreneurs.

Do you believe that in five years every second transaction in e-commerce will be settled on blockchain? No? Well, that’s what people thought of plastic credit cards versus cash a few decades ago when it came to traditional stores.

There is no doubt that Web3 will drastically transform the way e-commerce operates. Using cryptocurrency payments in e-commerce stores will become just as common as accepting PayPal, Klarna, Visa or Mastercard. Stores that don’t adapt their e-commerce platforms to accept cryptocurrencies will soon find themselves out of business.

How Web3 has changed the e-commerce landscape

Thanks to the converging forces of Web3 — blockchain, decentralized finance (DeFi), AI and machine learning — new, smart algorithms can analyze and adapt to provide user-centric experiences. In addition, Web3 will be much more inclusive than previous versions of the Web. The decentralized nature of Web3 creates the perfect platform for the fast and transparent flow of information that’s not subject to censorship by a central authority.

In addition, Web3 eliminates intermediaries like Facebook that take a cut of users’ cash (and personal data) when they buy something online. At the same time, all the details of our transactions are public — for better or worse. Enhancing the security and convenience of online transactions will increase the volume of e-commerce transactions and encourage businesses to adopt crypto payments.

As more businesses move from Web2 to Web3, many merchants and consumers have begun using crypto payment solutions.

In Web2, most online payment platforms such as PayPal and Stripe charge transaction fees of around 4%. This, of course, makes it difficult for businesses to stay competitive without raising prices. Not only are crypto payments frictionless, but they’re also gaining traction as a payment method. With stablecoins today, people no longer have to worry about converting to fiat and the hassle of withdrawing funds to their bank accounts.

The power of blockchain in old and new business models

Similar to the Web2 e-commerce adoption, there’s a long road ahead before Web3 can provide the full range of benefits mentioned earlier. However, the introduction of smart contracts and Web3 platforms like Hyperledger has drastically changed the landscape of value exchange. Hyperledger Fabric was developed by enterprises like IBM for specific business cases that optimize supply chain operations. Access to the ledger using Fabric allows businesses to view the same unchangeable data, which guarantees accountability and minimizes the chance of counterfeiting.

Consumers can keep up with the progress of their orders and trace each item back to its origin. At the same time, supply chain operators can monitor inventory levels and shipments, take appropriate action to resolve issues and detect fraud. This allows the consumer and the company to expect delivery at a certain time. All of the packages can be easily monitored via the blockchain explorer while protecting the customer’s privacy.

Additionally, with blockchain, a global whitelist of genuine or reliable customers and vendors can be created and owned, something that Unstoppable Domains is doing with its identity verification for Web3. Such a whitelist reduces false positives and helps detect actual fraud. Unlike traditional e-commerce payments, Web3 allows people to place their orders easily by eliminating intermediaries and chargebacks.

A new regulatory environment

The advent of Web3 in e-commerce will change compliance requirements related to personal data, including the European Union’s General Data Protection Regulation, raising important questions such as identity authentication without revealing personal, sensitive information.

However, Web3 developers already experiment with the use of zero-knowledge proofs as the solution to prove to the other party that they are in possession of certain information (such as nationality or age above the limit) without actually revealing the details.

It is not necessarily going to be up to clients to decide how much personal data they’re going to give. That is only going to happen if companies adopt the applicable technology and regulators allow it. However, that may not happen unless someone is willing to make an argument in favor of it.

With such vast possibilities, more businesses should be considering jumping on the Web3 bandwagon. After all, they can elevate their transparency, reputation, and cost management in the e-commerce game to stay ahead of the curve while moving digital data safely and freely across borders. For that to happen, clear regulations must be devised to support the broader adoption of blockchain technology in this space.

Companies would also have an instrumental role to play in the world of Web3: ensuring that they are equipped with the latest security solutions to prevent themselves from becoming the target of cybercriminals. Recent occurrences of cyber crimes have seen hackers making away with funds, as well as the personal private information of customers, which inevitably leads to reputational damage to the organization.

Having the latest tools and systems would mean little without having a sufficiently staffed team of information security professionals to ensure that key systems vulnerabilities are addressed on a timely basis, and key controls are subject to testing on a regular basis. Adequate resources and attention would definitely have to be devoted by Web3 companies in order to address these areas of risk in the course of their business.

Raymond Hsu is a co-founder and the CEO of Cabital, a cryptocurrency wealth management platform. Prior to co-founding Cabital in 2020, Raymond worked for fintech and traditional banking institutions, including Citibank, Standard Chartered, eBay and Airwallex.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.