On July 11, the European Commission officially adopted its new strategy on Web4 and virtual worlds with the aim of ensuring an “open, safe, trusted, fair and inclusive digital environment” for EU citizens. This strategy is based on four main pillars, around empowering human resources, supporting businesses, further developing public services, and establishing a global standard for “Web 4.0” — a new term coined to preempt the next wave of technology.
While it is commendable that the European Commission is proactively strategizing for the EU to take the lead in Web 4.0, or Web4, and the virtual world, we must not ignore the fact that for all the Web3 hype and the trends that have accompanied it, leading credit and financial institutions have so far only unequivocally and primarily placed their faith in Bitcoin (BTC) and, to a lesser extent, Ethereum.
Indeed, it’s hard to argue that Web3 left any appreciable substance behind it – aside from a sharp but short-lived surge in the Lamborghini and Rolex markets. The sooner that term is forgotten, the sooner we can focus again on the areas that matter.
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The EU’s general attitude toward Bitcoin has arguably diminished its image as a forward-looking and technologically advanced region, and it would be best to either retract or change previously taken positions on things like proof-of-work mining. Reinventing money is far from a light matter, and if the EU wants to take control of what ultimately makes the world move, it is strongly advised to do so by advancing its digital euro project as well as supporting the other side of the coin, thereby protecting its position to a level where it minimizes risks and maximizes the opportunities that may exist.
To do so, he must shake off the head of the European Central Bank from the sands, limit any anti-Bitcoin publication of the notorious Fabio Panetta, and adopt a neutral monetary stance parallel to a technology neutral stance.
The European Union has introduced Web4 and cyber strategy
The strategy is in line with the 2030 goals of the Digital Decade policy program and the three main pillars of digitization: skills, business and public services.
EU economic outlook beyond… pic.twitter.com/lg1X5Yvccj
— FanBe_web3 (@FanBe_web3) July 12, 2023
Turning to the cornerstone of the strategy proposed on Web4 – digital twinning – it is evident that the EU faces tough competition from strongholds such as the United States and China in digitally dominant fields such as artificial intelligence. While one might argue that, on the physical side, the EU enjoys a prominent position in areas such as global goods manufacturing and exports, there is still a considerable degree of lag to be made in relation to digital areas such as cryptocurrencies and cloud computing.
For the EU to lead the intersection between the physical and digital worlds, it must increase its efforts to free up digitally exclusive domains such as crypto, which present an important opportunity given the current lull in the market. While most leave innovations like decentralized finance (DeFi) and decentralized autonomous organizations as trends that have recently stepped out of the limelight, it is clear that it is still very early days for such topics, and positioning itself optimally while the general concern is elsewhere is likely to pay handsome dividends within a few years time.
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When it comes to DeFi, in particular, Europe as a continent has quietly declared itself to be the leader, with countries like Italy and France being the birthplaces of some of the most high-profile projects in the space. It’s not good to ignore the advantageous position gained in the market in this regard, and with total value metrics locked still hovering comfortably above the $45 billion mark, it’s pretty clear that DeFi is steadfastly taking the hit of a bear market and is no where near being knocked out. It is also likely to come back in the next market reversal.
With innovations like ERC-4626 poised to open up many exciting new prospects in the space, it’s safe to say that we are yet to see the true power and potential of DeFi, and if the EU manages to take control and drive innovation forward, it will solidify its position in the inevitable financial revolution that has been bubbling in its pot over the last few years.
Over the last decade, cryptocurrencies have been reinvented and reformed to no avail. The promise of a new form of money is still its strongest premise, and digital assets thrive best in digital environments. The lessons learned from the repeated failures of security tokens should be fresh enough to emphasize the fact that we are not yet ready for the seamless intersection of what is digital and what is physical, and for the two subjects to succeed simultaneously there must be a comparable, if not identical, level of advantage.
That is something that is still sorely lacking in the EU in terms of digital and crypto assets, which is why it should remain in focus in the short term.
Jonathan Galea is the CEO and founder of BCAS, a European crypto regulatory consulting firm. He has consulted with many regulatory bodies in various jurisdictions on crypto-related issues, including the structuring of a new legal framework. He holds an LL.D. in law from the University of Malta.
Matteo Vena is chief strategy officer at BCAS, a European-based crypto-focused regulatory consulting firm. His area of focus is business strategy and marketing in the Bitcoin and digital asset industry. He previously worked as managing director for Cointelegraph Italy and as head of content for Blockchain Week Rome.
This article is for general informational purposes and is not intended to and should not be construed as legal or investment advice. The views, thoughts and opinions expressed here are those of the authors themselves and do not necessarily reflect or represent the views and opinions of Cointelegraph.