Web 3.0, the idea that the next iteration of the Internet which will be built on concepts of decentralisation, openness, and greater user utility, can help India contribute an additional $1.1 trillion of economic growth to its GDP over the next 11 years, new research from the US India Strategic Partnership Forum (USISPF) and digital currency exchange CrossTower has said.
Digital assets like Bitcoin, Ether, Solana, Algorand, stablecoins and other blockchains are the fuel of the future financial ecosystem and Web 3.0, the report said.
In the first phase of its evolution, the Internet was driven by users consuming information. In the second phase, which is ongoing, users also became contributors with the advent of social media.
In Web 2.0, people’s data is owned by large organisations such as Facebook, Google, and Amazon. In Web 3.0, the data is envisaged to be owned by consumers and resides on blockchain networks, as opposed to centralised organizations.
“Web 3.0 is turning the world on another way, where instead of that data residing in these centralised databases, it is going to reside on the blockchain technology which is not controlled by one organisation. And with that, my data becomes my choice, (and) which advertiser I want to give it to, and if advertiser is paying Facebook, I should get a piece of that,” said Kapil Rathi, CEO and co-founder of CrossTower.
To provide some perspective, in 2013, the market capitalization of the digital asset market was approximately $1.5 billion, and today, the market capitalization is at nearly $3.0 trillion.
Comparing the success of the US in the Internet industry, evident in the fact that 17 US firms are among the top 25 major public tech companies by market capitalisation worldwide, the report said India can take a leap in Web 3.0 if it adopts the right kind of policies.
“The US became a hotbed for tech firms in the early days of the internet largely due to the numerous frameworks that policymakers implemented early on, creating a structure for massive innovative projects. India should consider substantively similar structures, such as private/public partnerships, grants and frameworks for education at every level, sandboxes for regulatory clarity, venture capital programs and incentives for foreign investment, and other strong and clear policies. This will thrust India into a world leadership role in digital assets and Web 3.0,” the report noted.
The Ministry of Electronics and Information Technology on Friday released a “National strategy on blockchain”, which identifies 44 potential areas of using the technology and lays out the broad contours of how it can be leveraged across different sectors.
However, India’s stand on cryptocurrencies, the most well known application of blockchain, remains less than favourable.
“I think it goes back to the fundamental understanding of how blockchain technology works, to get to harness the full potential of this technology (blockchain), which is a distributed ledger. The word distributed means that there are multiple computers. We have this database(s) which are participating in the validation of transactional database. This validation process makes this database fully secure and immutable. You can only add to the data. To promote or incentivize the participants on a blockchain, you need some sort of economic benefit. And that economic benefit is provided by the use of digital assets or cryptocurrencies,” said Rathi.
Talking about concerns of money laundering through cryptocurrencies, Rathi said research has shown that the total number of money normally laundering cases in a traditional banking system were about 3 per cent, whereas a study of all blockchain money laundering scenarios showed that those cases are somewhere between 0.25-0.5 per cent.
“The digital asset industry could see growth that is far more explosive, given how revolutionary it is. Just like the internet, digital assets stand to impact most, if not all, industries. In fact, we believe the potential impact of digital assets is much larger than that of the internet. To seize the prosperity that digital assets can bring, India must take appropriate actions now,” the report concluded.