How Web3 is Shaping The Future of Finance?

By Web3 Solutions

June 09, 2023

Web3 is no longer a secret but has become a buzzword on the internet. The advent of blockchain and other distributed technologies gives it hype from the facts. It has changed the way we deal with and interact with the financial system by offering great transparency and security. Also, critical data handling becomes more efficient & effective as every time people communicate online, copies of data are transmitted to the server with complete control.

Best of all, users can leverage complete control of portions of the internet instead of being mediated by major tech players like Google, Apple, or Facebook. They can own the rights and earn in cryptos.

Do you want to know more about how web3 revolutionized the finance industry? Then, continue reading. The guide is designed to explore how Web 3.0 is shaking up finance. Read it till the end.

Current Financial Systems

Whether you search for financial services before web3, the financial services of web2, or the present financial system, the answer is the same.

Before web3, financial systems included a group of organizations such as banks, insurance firms, and stock exchanges to enable money exchange. These Financial institutes operate at business, regional, and international levels to finance various needs of the projects and get returns in exchange for financial assets. All the rules related to financial agreements, borrowers, and lenders are led by financial institutions that employ their web2 infrastructure.

In other words, Financial institutions have complete control over loan negotiations between borrowers, lenders, investors, and other banking assets. Users complying with certain conditions can only be able to operate the platform. As the platform is operated by a central authority, it is still facing many weaknesses, such as;

  • Security issues
  • Lack of personal relationship with customers
  • Technical issues affecting platform performance
  • Complying with growing customers' expectations
  • Auto codes generated platform
  • Cloud-based storage system
  • Changing banking landscape

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Now, Understand What Web3 Is?

Web3 is a game changer and is described by everyone in their own style. But in simple words, it's an open-source and interconnected decentralized application that functions with the ability of blockchain computing architecture.

Web3 allows users to read, write and own content through cryptocurrency tokens. All this information is backed by blockchain technologies such as Ethereum, Solana, Polkadot, Hyperledger, and similar technologies. As the network grows, the value of the platform or tokens rises.

In finance, the power of web3 enables the removal of the involvement of financial intermediaries such as banks and brokerages. The platform enables users to equip themselves with the following capabilities;

  • Lending and borrowing funds
  • Trading cryptocurrencies
  • Earning interest on savings
  • Buying insurance
  • Trading derivatives

And enjoy,

  • Complete control over their assets
  • Undertake peer-to-peer exchanges and transaction

With the ability of;

  • Permissionless operations
  • Transparency
  • Open-source software
  • Decentralized management and governance.

Role of Web3 In The Finance Industry

Web3 comes with amazing surprises to the present system. Here are some benefits of opting for web3 in finance.

Tokenized Securities And Assets

Web3 platform allows investment banks and other financial institutions to represent custom securities, bonds, and other assets in tokens form. These tokens can help the banks;

  • To offer customized experience as these bonds and securities can be created based on customers' experience for seamless trading.
  • Secondly, these assets are based on auto trading smart contracts that allow financial institutions to trade more and minimize risk.

Diamonds, high-value physical assets, and digital assets like NFTs are prominent examples of tokenizing that allow trading.

Digital Currency Backed By Central Banks

Many countries are adopting cryptocurrencies at the same level as their fiat currency. Therefore they are planning to develop digital currency central banks just as their fiat currency handles central banks. The bank will perform the same function as its current system follows but with advanced features. The digital transformation opens up opportunities for businesses to trade in countries with cryptocurrency.

Monetization Through Bank Payment Options

With the increasing popularity of digital currency-based web3 platforms, the demand for new banks is also flourishing. It enables users to exchange value from the virtual world to the real world. Therefore, whether users are operating in gaming, ecommerce, real estate, or on other platforms, they can exchange money and provide loans by holding certain platform tokens.

Virtual Banking

Web3 banks are going to be a crucial part of the metaverse, where customers can visit branches using customized digital avatars, interact with staff and make virtual transactions. Also, virtual banks are becoming post-pandemic as customers find it a more comfortable option to interact and get advice from experts. Services like financial reviews, mortgage advice delivery, financial planning, and more can be leveraged with virtual banks effectively. Once a customer finalizes a decision, banks generate tokens for their holdings or digital assets that undoubtedly revolutionize the banking experience.

Build Personalized Relationship

Financial institutions functioning through web3 not only enable users to make financial decisions and tokenize the same but also build robust relationships between customers, employees, and organizations. On the one hand, it enables a smooth hiring process where people with different skills from different corners of the world can be interviewed and hired for specific jobs. On the other hand, they can build a strong relationship with customers by offering customized services. The condition can be employed by anyone.

Industries That Cannot Be Separated From Needs of Web3 Finance

Apart from banking and other financial institutions, web3 platforms are offering an immersive experience in other fields that deal with cryptocurrency. Web3 wallets and crypto wallets revolutionized the way these deals are secured compared to fiat currencies. Some of the businesses involved;

  • Web3 Real Estate
  • Web3 NFT Marketplace
  • Web3 play-to-earn Games
  • Web3 Healthcare platforms
  • Web3 Tourism platforms
  • Web3 Ecommerce platforms
  • Web3 Education platforms
  • Web3 Crypto Trading platforms
  • Web3 Automobile platforms
  • Web3 Insurance platforms
  • Web3 Retail platforms

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Key Considerations of Web3 World

Web3 platforms function around blockchain technology, wallets, tokens, smart contract, non-fungible tokens (NFTs), AI, and ML. Let’s dig deeper to know these.

Blockchain Technology

Each piece of information is backed by blockchain technology. It enables banks, financial institutions, and other organizations to offer streamlined services, empower banking and lending services, and settle disputes quickly. Automated KYC/AML data helps in reducing operational risks and enabling real-time verification of financial documents.

Web3 Wallets

Web3 wallets store cryptocurrencies and NFTs and allow decentralized applications (dApps) on various blockchains to interact with the platform. Web3 wallet offers a gateway to bankless financial services, on-chain identity creation, community collaboration, and more.


Tokens are representative of digital assets. The value of the token defines the right over digital assets, and it can be calculated in cryptocurrency. In finance, tokens are used for lending and borrowing of digital assets.

Smart Contract

Automated codes generated smart contact enables banks and other financial institutions to interact with the platform with predefined codes. This predefined contact removes the need for both parties to trust each other.

Non-Fungible Tokens (NFTs)

It's a kind of cryptocurrency that represents a one-of-a-kind digital asset or unique piece of artwork or property. The fungible defines each piece of the platform that can be interchanged for cryptocurrency.

Machine Learning & Artificial Intelligence

Web3 platforms are known for their robust nature. The ability of machine learning and artificial intelligence enables humans to make speedy and accurate decisions. It enables businesses to analyze, manage, invest, and protect money.

How Web 3.0 is Shaping the Future of Finance?

We have gone over the current financial system, web3 environment, the role of web3 in the finance world, and industries that are functioning on web3. It's time to understand how web3 is shaping the future of finance.

The most obvious thing about web3 is that it interacts with blockchain technology that allows safe, secure, and transparent peer-to-peer transactions. It has the ability to disrupt the entire financial sector by making traditional banking institutions obsolete.

Blockchain technology eliminates the need for intermediaries or central banks, as every transaction is verified through smart contracts before proceeding.

Peer-to-peer transaction processing impacts the financial system. It enables faster and more successful completion of the transaction as there are only two parties involved. It not only reduces costs but makes payment more effective.

Web3 also impacts investment risk. It has robust AI-based analytical tools that reduce investment risk, and parties can enjoy a flawless experience.

Web 3.0-based investments are backed by smart contracts that proceed only if the user fulfills certain conditions. It leaves no scope for fraudulent activities on the platform, and parties need to adhere to certain conditions.

Skyscraper Demand for Crypto, CBDC, and Next-Gen Payments

With the growth of digital technologies, physical cash is becoming an obsolete choice for next-gen users. With emerging technologies, crypto, CBDC, and Next-Gen Payments are becoming an alternative to making transactions effectively. A study revealed that “The total volume in DeFi is currently $3.42B, 7.45%. The volume of all stablecoins is now $43.35B, which is 94.38% of the total crypto market. By the year's end, the market cap is expected to cross $2.2 trillion.

The total value of cryptocurrencies is still a fraction of global assets. These include the stock market, gaming, real estate, NFT marketplace, ecommerce stores, and more. Therefore, it could be safe to say people’s perception of money is changing, and they are showing more interest in cryptocurrencies.

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Be An Early Adopters To Claim The Advantage

As we know, web3 is reshaping the finance sector. Still, there are many businesses that are latecomers to establish their business on the web3 platform. Keeping your business away from the new-aged business strategies means you are losing a chunk of profits behind. So, it's time to be an early adopter and shift to an incredibly changing web environment.

The platform is easier to adopt by users, as they need to enter the space using digital avatars and can interact with the digital environment. It enables organizations to keep up with the changing demands.

Being a leading web3 development company, we are working on many finance projects with robust strategies. Now the next could be yours. Take a step and discuss your business needs, shortcomings, and customers' expectations. We have a foolproof strategy for every business. We also offer web2 to web3 migrations services to build next-gen solutions.

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