The rise of Web3, especially blockchain technology, will be completely transformative for many service-based businesses. Any business that acts as an intermediary or middleman, including financial service providers and other service-based industries, can be threatened by blockchain and smart contracts. Because this technology allows two parties to conduct transactions and business securely without a third party overseeing the interaction.
However, there are opportunities as well as threats. It’s an opportunity to provide better customer service, streamline internal processes, and create exciting new services designed for the Internet of the future.
Let’s take a closer look at these changes and how they affect different industries.
Notable trends in financial services include DeFi (decentralized finance), investment in digital assets, ReFi (regenerative finance), blockchain-based lending, and blockchain-based remittance networks.
DeFi is the term used to describe a new internet-native, crypto-based financial system that replaces traditional intermediary services with a peer-to-peer system of smart contracts and blockchains, allowing people to transact directly with each other. centralized bank.
It has the potential to remove inefficiencies in traditional banking, increase access to banking services and democratize the lending process. However, regulation and consumer protection are also lacking, creating the risk of fraud and deception. The DeFi movement ultimately aims to build an internet-native financial system built for the Web3 era.
One of the major Web3 aspects that will impact financial services is, of course, cryptocurrency. While crypto is a major asset class in its own right, there are also NFTs (traded in crypto), creating a new wave of digital assets. Financial institutions should decide whether to engage with Web3 assets and include them in their portfolios alongside their traditional assets. In other words, Web3 has the potential to impact traditional approaches to wealth management and wealth management, offering new ways to invest and grow your client’s wealth.
Blockchain technology can also be used to ensure that investments are made more ethically in the global fight against climate change. While traditional financial institutions often fail to consider the climate impacts of the companies they invest in, many investors want to invest in ways that benefit the planet. Blockchain allows organizations to verify their green credentials and coordinate investments to ensure funds go where they are needed most. The idea is known as Regenerative Finance (ReFi) and focuses on the intersection of climate change action and his Web3, especially blockchain, to build a system that restores and conserves natural resources.
Blockchain is also being used to transform lending by eliminating intermediaries, allowing depositors to lend money directly to borrowers through smart contracts that manage the lending and repayment process. It is part of the decentralized finance (DeFi) movement, with over $200 billion in loans disbursed by the Web3 lending platform in 2021.
Blockchain-based money transfer network Ripple offers a glimpse into the future of money transfers. Ripple is a blockchain-based money transfer network that facilitates transfers between various government-backed currencies, cryptocurrencies, gold and other assets. It acts as a trusted intermediary for transactions between two parties, similar to traditional financial services providers, but built for the Web3 era. Transactions are processed quickly at low fees.
The IT industry has also been affected by decentralization, especially when it comes to decentralized data storage. Using this model, businesses and individuals can rent storage his space from other users in a peer-to-peer storage network, or rent their own spare storage to earn revenue.
It is hoped that this approach will solve some of the problems of current centralized approaches, such as increased security and long-term data retention capabilities.
Another interesting effect of decentralization is the emergence of blockchain-based networks. Helium calls itself a “network of people” and creates a fully decentralized network that users can effectively build themselves. This completely undermines the traditional business model of the telecom company and internet service provider, who has over 500,000 hotspots worldwide as of early 2022.
Virtually any service-based business can be expected to be impacted by Web3 and the Metaverse. For example, an architect will be designing in and for the Metaverse, an insurance company may benefit from Smarthis contracts, and a law firm may need to advise on legal issues in the Metaverse. I can’t.
I believe that every service-based business, and indeed every profession, will be affected to a greater or lesser degree by Web3 and the Metaverse. For example, accountants can employ smart contracts and cryptocurrency payments with clients. HR professionals can onboard new talent, especially remote workers, in an engaging metaverse-based environment. Realtors can create immersive property tours in the metaverse to market real-world properties, use AR to “dress up” empty properties for viewing, or market virtual properties in the metaverse. You can also move the pivot foot to
knowledge is power
It can be said that many industries and professionals are exposed to future Internet threats. But there are also great opportunities to adopt new technologies, streamline services, and offer immersive new services.
Awareness and alignment will be key traits of companies growing through these changes. Successful companies take actions to minimize threats and maximize opportunities.