As Web3.0 applications are vouched to take the decentralised ‘centre stage,’ experts seem to explore its possibilities for shaping the financial world. It is believed that the current financial system can benefit from enhancement in Web3.0 penetration.
According to Grand View Research, a market intelligence firm, global Web3.0 blockchain market is expected to grow at a 44.9% compound annual growth rate (CAGR) between 2022-30. Furthermore, the demand for cryptocurrencies, along with implementation of 5G and 6G services, are expected to improve this growth prospect. “I believe digital financial services, including payments, money transfers, loan sanctioning, lending, and investing, will be completed quickly and securely with the introduction of Web3.0. This technology can improve the availability of data/nodes, thereby, optimising the cost of data storage and data-fetching operations,” Kishore Ganji, founder, Astir Ventures, a venture capital (VC)-based firm, told FE Blockchain.
From what it’s projected, Web3.0’s utilisation of smart contracts can create a transparent peer-to-peer (P2P) financial system, with less involvement of authorities. Insights from PricewaterhouseCoopers (PwC), a professional services-oriented platform, highlighted that Web3.0 could establish a cross-border connection between global banks. The technology also has the potential to facilitate global payments through a hashed timelock contract (HTC), which enables cryptocurrency-based conditional transactions.
Reportedly, companies such as OpenSea, ConsenSys, Autograph, Crypto.com, Ripple, Alchemy, among others, have started to inculcate Web3.0-based financial services. In the upcoming years, central banks are expected to take up an active role in disruption of traditional business models.
While Web3.0 can reduce middlemen and costs in transactions, researchers believe that it makes users vulnerable to data infringement. However, nascency around the technology has been upheld as the core factor behind its drawbacks, which experts expect can be tackled through further exploration of the concept of decentralisation. “I think Web3.0 has the potential to disrupt the financial services industry globally with the use of AI, AL, DeFi, among others. Yet, it has some challenges to overcome and needs surveillance for safe transactions and smooth functioning,” Pushpendra Singh, founding partner, Centricity WealthTech, a financial company, said.
Moreover, future predictions indicate that Web3.0 can help tap into the potential of new markets and business structures. As stated by McKinsey & Company, a management consulting firm, Web3.0 players, funded by VC ventures, are aware of the challenges around regulatory oversight and user experience, and aim to address them. Reports suggest that Web3.0-based VC investments went past $18 million in the first half of 2022. “I think few companies have already resorted to a hybrid model between traditional finance and Web3.0 to improve security and usability. While the implementation of blockchain in our financial systems may not be possible right away, we at least are at a place where we can see these industries become mutually beneficial,” Punit Agarwal, founder, KoinX, a cryptocurrency taxation platform, mentioned.