Though the internet is hardly static, every generation or so, it undergoes a transformative change that completely upends how regular users wield it. If certain thought leaders are to be believed, we are now in the middle of such a transition—one that might very well change global finance forever. 

“Web3” is this latest iteration, and it’s being built with the collective experiences of blockchain technology fully in mind. Because it can leverage blockchains at a fundamental level, Web3 is poised to deepen the ongoing decentralization of finance, bringing power away from central authorities to the hands of ordinary currency holders.

Holders of privacy coins like Monero (XMR) are proving to be particularly supportive of the transition. Using a Monero wallet, XMR holders in a Web3 framework can conduct transactions with an even more heightened level of security, thanks to Web3’s central ethos of privacy and decentralization. 

Even outside of the crypto community, the transition to this new way of online living may potentially reconfigure finance and economics in still-unpredicted ways. Let’s do a deeper dive on Web3 and the types of applications you may see it being used in quite soon. 

What Are the Implications of Web3?

Despite introducing critical social and mobile elements to online life, the current Web 2.0 model of the World Wide Web is often criticized for centralizing and homogenizing the typical functions of the internet. For instance, online transactions tend to take place under the purview of just a few major institutions that could, at any time, make decisions that negatively impact billions of regular users. Building Web3 on blockchain technologies may serve to decentralize this control, in a way taking us back to the early, optimistic days of the web.

At its core, Web3 leverages decentralized networks and cryptographic protocols to enable “trustless” transactions that no longer require intermediaries, as well as self-executing smart contracts. This gives everyday online activities a similar level of security and decentralization already being experienced in mature cryptocurrency networks. Such a shift from centralized control to distributed networks has been seen as a way to democratize the internet, giving power back to individual users.

9 Ways Web3 Will Impact Finance Moving Forward

Though Web3 may very well redefine all everyday interactions on the internet, it’s set to have especially profound effects on finance. We might expect to see these happen once Web3 becomes mainstream:

1) An Expansion of Decentralized Finance (DeFi)

Web3 has always been conceptualized as a means to drive the growth of DeFi. When the framework takes off, regular web users may borrow, lend, trade, and earn interest on cryptocurrencies without intermediaries like banks. Smart contracts hosted on blockchains will automate these processes, reducing transaction costs while increasing the reliability of DeFi systems.

2) Individual Security and Privacy

Blockchain technology’s decentralized nature ensures that malicious actors will have to scale a much higher wall to access large data sets. Moreover, regular users will have more control over their data, potentially reducing the risk of hacks and data breaches at an individual level.

3) Tokenization of Assets

Web3 will enable the tokenization of real-world assets, such as real estate, art, and stocks. This will increase liquidity and allow credible fractional ownership, making a wider range of investments more accessible to the general public.

4) Transparency and Trust in Transactions

Blockchain’s immutable ledger provides complete transparency over transactions, doing away with the need for fallible third-party authorities. Once Web3 matures, the added transparency may even reduce fraud and corruption in day-to-day finance.

5) Reduced Transaction Costs

Eliminating intermediaries will allow Web3 to significantly lower transaction costs for users. With peer-to-peer (P2P) transactions set to be the standard, the fees associated with traditional banking and payment systems will no longer be necessary.

6) Seamless Cross-Border Transactions

With no intermediaries in transactions, Web3 will facilitate faster and cheaper cross-border transactions. The expanded use of cryptocurrencies may eliminate the need for currency conversion and other transaction hurdles, benefiting global trade.

7) Inclusive Financial Systems

Even with just a smartphone and internet access, anyone can participate in the incoming Web3 financial system. Unbanked and underbanked populations throughout the world are set to derive major benefits from the impending transition, as the cost of participating in the mainstream economy will be reduced to unprecedented levels.

8) Innovative Financial Products

Decentralized insurance, prediction markets, and automated investment strategies are just some of the business models already being validated for a Web3 world. Once Web3’s expanded financial freedoms are extended to the wider public, we are likely to see even more remarkable displays of financial ingenuity.

9) Decentralized Autonomous Organizations (DAOs)

Web3 will promote the rise of DAOs—organizations governed by smart contracts and operated by community consensus. Alongside emerging developments in artificial intelligence, DAOs can revolutionize corporate governance and create more democratic, yet still profitable business structures.

Fair Finance and Unlimited Possibilities for Everyday Web Users

Web3 will completely change our everyday assumptions of the internet, providing regular users unprecedented levels of privacy and safety. However, its biggest impact is going to be in finance. “Money trails,” as we understand them, may become a thing of the past, creating newfound freedoms that can drive both everyday commerce and personal liberty. 

As Web3 continues to gain ground, the effects on daily finance will be profound, creating new opportunities for innovation and inclusivity in the financial sector. Thanks to the ardent support of the growing cryptocurrency community, we should soon see a World Wide Web that offers a truly level financial playing field for all its users.