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Web3 is Forging the Future of Finance

It’s critical to distinguish hype from reality in Web3 precipitated by sensationalist stories, large sums of money being invested, new projects, and sophisticated lingo. Even if the market corrects, the shift in opportunity for entrepreneurs and problem solvers will likely persist. One ignores  Web3 at one’s peril. Web3 can be examined through the prism of three things, viz: technologies, concepts, and use cases.

We could be witnessing an intergenerational transition in the internet on par with the introduction of social, mobile, and cloud in 2010. Undoubtedly, we need to understand the technologies, concepts, and use cases that will influence the next decade in order to truly comprehend Web3. We hope that this article will help you grasp the change that is upon us, how it came to be, what it’s made of, and where all of these things fit together to form the future of finance and the digital economy, whether you’re a banker, fintech nerd, a regulator, or a crypto-native.

It is critical to comprehend how Web3 will create the first totally digital, genuinely global economy that will underlie the metaverse. In the same way that Web2 delivered subscriptions and adverts, Web3 is about the introduction of new economic models. There is no universal understanding of what Web3 is, how it operates, or what it means for businesses. Far too much noise rents the air and not enough signal. 

The focus in the financial services industry on ‘crypto’ has been on danger rather than benefit. It’s past time for a more balanced perspective.  The focus is frequently on pricing rather than long-term worth. This article makes no mention of price. Web3 has evolved swiftly, which means the terminology and concepts have changed as well, making it difficult to stay up. Because all of our readers essentially have the same questions, we decided to write the answers down to save everyone time.

Web3 introduces innovative business models and economic opportunities for a society where institutions are losing trust at scale.

Tools for monetizing data and targeting ads were developed by social media and Web2 companies. As a result, emotional responses were emphasized in order to increase involvement, which further exacerbated distrust.

New technical possibilities have been unlocked thanks to advancements in trustless technology, cryptography, and decentralized computing.

After the financial crisis of 2008, many people began to mistrust institutions, which paved the way for financial alternatives. Nearly half of consumers now see the government and the media as polarizing entities.

Creators and independent artists are becoming heavily dependent on huge platforms for money (e.g., Apple, Meta, Youtube, Spotify), but they have little control over their audience, revenues, or intellectual property.

Builders and entrepreneurs have new toys to play with as infrastructure matured and received developer support. NFTs and metaverse land were adopted by major brands like Visa, NBA, Adidas, and Nike.

People were accustomed to working online, and increasingly in communal places, throughout the pandemic. As such, companies flocked to the metaverse, a $13 trillion opportunity.

Web3 is characterized by a16z as a user-owned internet that is administered through tokens. VCs are pouring billions of dollars into the metaverse and gaming industries.

Web3 is the Next Step in the Internet’s Evolution

Web3 is a new online business model and the subsequent step in the internet’s evolution.

The name web3 has sparked a lot of curiosity among people and organizations who were previously skeptical of cryptography. While these topics are similar, their emphasis is different.

The truth is that Web3 is based on cryptographic primitives. However, Web3 focuses on business models and economic potential. Web3 is more than just ‘crypto,’ however this paper article on how crypto technologies help Web3 achieve its full potential.


  • Tokens 
  • Wallets 
  • Price / Speculation
  • Technology 
  • Termed a ‘bad brand’


  • Ownership Data portability 
  • ‘Metaverse’ and experiences 
  • The use of tokens as a business model 
  • People who remember web2 describe it as a “strong brand.”


Protocols like HTTP (websites) and SMTP (email) defined Web1 (emails).


The themes of Web2 were mobile, social, and cloud. Subscriptions and advertising have been the most popular business models.


Web3 is redefining data and asset ownership and access to build totally new business models.

Consequently, the paradigm has shifted from protocol to centralized ownership to all of us becoming owners.

Web3 Talent Acquisition and Industry Disruption

Web3 is rapidly expanding, recruiting top personnel and upending conventional systems. In 2021, venture capitalists invested more than $33 billion in cryptocurrency. The same year saw the average daily revenue on Ethereum rising to $29 million ($10.7 billion overall). In addition, 2021 saw OpenSea’s NFT marketplace gross merchandise volume (GMV) sales totaling $14 billion.

More than financial services are being disrupted by Web3:

  • Entertainment, gaming, fitness, sports, health, and telecommunications are all potential business models. 
  • Helium, for example, is a decentralized telecommunication network with clients such as Salesforce and Lime.

Several well-known brands have entered the crypto market:

  • Visa and Mastercard enable crypto-branded debit cards; 
  • Nike purchased RTFKT, an NFT design firm; and 
  • Robinhood, Cash App, Revolut, and PayPal, all support crypto in their apps.

Some of the world’s brightest minds are flocking to crypto:

  • Former regulators from the SEC, CFTC, Bank of England, FCA, and Monetary Authority of Singapore, as well as ex-Goldman, HSBC, Citi, BNY, and others, have landed jobs with big crypto companies. 
  • Web3 projects have attracted leadership expertise from Amazon, Google, Meta, and Airbnb.

Web3 Regulation

Web3 is becoming a more governed and well-understood industry. Internationally, there are efforts to legitimize this industry through regulation.

  • For instance, the European Union’s Markets in Crypto-assets Regulation (MiCA), 
  • The US President’s Executive Order on cryptocurrencies, 
  • Dubai’s Virtual Assets Law, and 
  • The Monetary Authority of Singapore’s Tokenization Guidelines. 
  • The United Kingdom’s intentions to become a crypto-assets hub, as well as the recognition of NFTs as legal property Guidance for Virtual Assets Service Providers from the Financial Action Task Force.

Top countries and authorities are coming to the realization that pursuing crypto will just drive talent, innovation, and prosperity away from their borders, causing them to miss out on the Web3 potential. Nevertheless, there are hazards that must be handled in order for mainstream acceptance to occur.

The Three Ways to Look at Web3

Web3 uses open, trustless, and modular technology to unleash concepts that allow for programmatic, global, and 24/7 economies and markets, as well as novel use cases in finance, shared ownership, and digital communities. Web3’s technologies and concepts combine to generate innovative business models and prospects.


Wallets are the center of gravity in Web3. They allow users to interact with smart contracts and tokens. Wallets work by storing a user’s data and private keys which prove that the user owns and controls their digital assets.


Web3 wallets allow users to manage and access their assets and data. In web3, wallets are the be-all and end-all. Users can engage with smart contracts and tokens using them. Wallets store a user’s data as well as private keys, proving that the user owns and manages their digital assets.

Users access the web3 through wallets. The term “wallet” is deceptive. It truly is a ubiquitous account, like the Ether that holds the heavens. This is seen in the design pattern.

  • Web1 – Make an account for each service you use. 
  • Web2 – To access services, create a centralized account. 

Because it’s yours, it can see more about you than any centralized service can, just like a physical wallet (which holds IDs, intimate objects, money, credit cards, loyalty cards, the grocery list, and other miscellaneous items).

  • Web1 You access your data on a server over the web. It is under the control of the server.
  • Web2 You access your data on a server through social media sites. It can be controlled by the server acting as an intermediary.
  • In Web3, the user has complete control over their data and assets. It’s possible that the data will live on other servers.

There are a variety of web3 wallets available for a variety of users and use cases.

Because several wallets fall into more than one category, the concentration is more on their core use case. Consumers can access these samples, but businesses may prefer to deal with a specialized custodian. Custodians can take care of your keys in one of two ways. Either you manage the keys, or they help you do so.

For individuals, Web3 wallets:

If you come across a paywall on a website, you’ll need to input your personal information and sign up prior to accessing the content you’re looking for. You simply connect your wallet and authorize the contract on Web3.

Web3 wallets accelerate digital ownership. Assets in Web3 wallets behave more like they do in the real world. Therefore, no one can lock access for you.

For businesses, Web3 wallets:

Businesses and entrepreneurs have more accurate data.The networks with the greatest data moats won in Web2. But no single platform – the government, Meta, Google, or anybody else – has more data about a user than they do. Web3 allows users to run algorithms on all of their data, allowing them new competitive advantages.

These wallets promote community engagement. The wallet that owns an NFT (for example, a Bored Ape) is public information. Fancy being able to communicate personally with every customer who has purchased a product from your company. Or, even better, a competitor’s name. Imagine being able to communicate with your NFT holders just by knowing which wallets have the assets you’re interested in, indeed.


Tokens are the digital equivalents of value In Web3, tokens are digital representations of assets. They exist in the blockchain network and reflect value, whether it is monetary or rights-based, natively digital or derived from the real world.’ They’re saved on blockchain networks, which keep track of the token’s owner’s wallet address. A smart contract can describe the token’s behavior, which boosts its utility.

Tokens in Web3 are individually identified and recorded on blockchain networks, and they are divided into two categories: native-network tokens and contract-defined tokens. Native-network tokens can only be used to make transactions on their network.ETH, BTC, and SOL are just a few examples. These tokens are used to pay the network processing charge, which allows the network to conduct transactions safely.

Contract-defined tokens involve smart contracts defining tokens, giving them a distinct utility.

WETH, UNI, COMP, and USDC, for example.

Basically, anything that falls within the purview of a developer can fall into this category. Money and assets can be programmed.

Web3 tokens can also be divided into two categories- fungible and non-fungible. For native-defined tokens, 

  • They can be traded one for one, as an example of a use case. 
  • When one BTC is exchanged for another, both parties receive one BTC (fewer fees). 

For contract-defined tokens, fungible tokens function as follows:
Using a platform (such as a DeFi exchange)

  • Discounts and rewards for loyalty
  • Access to the general public
  • Currency in video games
  • Voting and governance
  • Access to sports clubs

Non-fungibility in contract-defined tokens functions as follows:

  • They have singular values and, in most situations, cannot be traded one for one.
  • Digital collectibles 
    • Content In-game assets 
    • Wrapping specific 
    • DeFi strategies for monetisation 
    • Access credentials to digital environments (metaverses)

Smart Contracts

Smart contracts are the fulfillment centers of Web3. Smart contracts are computer programs that determine the behavior of tokens on blockchain networks. They assist in the development of complicated, decentralized software such as token swaps, NFT projects, and other similar projects.

Each blockchain network has its own programming language and environment. Something to bear in mind is that some blockchain networks do not utilize the phrase “smart contracts” as a technical word, but we find it useful as a larger category.

Smart contracts allow for the automatic payment of royalties on Web3 token sales.

For individuals, smart contracts mean:

  • Co-ownership- While tokens do not indicate legal ownership of a firm, platform, or entity, they are intended to enable users to participate in the governance of an app or service.
  • Rewards- Early adopters can benefit from a token’s price increase as more users join the network, thanks to new engagement mechanisms like Airdrops or token distributions.
  • New ways to make money- Users may be rewarded with tokens in new models of contributing or engaging with products (e.g., ‘learn-to-earn’ or ‘contribute-to-earn’, ‘mine-to-mint‘). A user’s contribution to a network, community, or marketplace can be monetized.

For businesses and entrepreneurs, smart contracts represent:

  • New marketing strategies- Consumers aren’t the only ones who use the service. They can have an impact on the product by voting and using it.
  • Marketing enclaves- Because they have more to gain than those who consume the same services without ownership, an engaged community will perform the marketing through word of mouth.
  • Imitation is the best form of flattery- SushiSwap was able to get off the ground by nearly totally replicating the open-source code of its competitor, Uniswap. When it first began, it gave more user control over the platform, which helped it acquire traction quickly.

Blockchain Networks

Web3’s transactional data infrastructure layer is comprised of blockchain networks.

A blockchain network is a distributed network of computers that run the blockchain software and store transactional data. They’re the Web3’s foundational infrastructure layer.

The usage of digital assets that are specific to each blockchain incentivizes these computers to validate transactions. For scaling, several ‘blockchain networks’ have different technical solutions. Admittedly, not all blockchains adhere to the data format of a ‘chain of blocks.’

Keep in mind that the blockchain network is part of the larger web3 stack.

Blockchain networks are just one part of Web3’s design. This is referred to as the ‘Web3 stack.’

However, blockchain networks are frequently seen as the cornerstone for transferring and holding wealth.

What we term as the Web3 Stack is made possible by a variety of blockchain networks and accompanying platforms. For scalability, security, and decentralization, blockchain networks use a variety of design approaches.

Web3 Concepts


Web3’s capacity to indisputably verify that users own digital goods is known as ownership.

When a token or asset is produced on a blockchain network, it can only be moved by the owner(s) of the Web3 wallet. Every token held by every wallet at any given time is recorded on the blockchain network (and historically). It serves as a comprehensive ownership record and history.


Web3’s programming ability refers to its ability to move tokens, data, or values across wallets predicated on axiomatic of rules. Sometimes referred to as ‘programmable money,’ it also refers to programmable assets such as NFTs (for illustration, paying royalties to an artist on a secondary sale).

Any Developer can create extra capabilities that use a token or asset if it is programmable. Developers can make payments or move money based on conditions such as ‘do y if x happens.’

Fintech firms have begun to make legacy infrastructure more programmable, but this does not imply that it is permissionless or composable. In Web3, every programmable token or smart contract may be interacted with by any developer.


In the domain of Web3, composability relates to the capacity to integrate digital assets and their accompanying behaviors. Developers can build on top of existing software and leverage functionality built by other developers (without a contractual or commercial relationship).

New use cases and interactions between ‘competing’ services on a blockchain network are now possible.

Web3 software is modular, allowing developers to pick and choose the building components to use to create their service. Composable (or configurable) refers to the ability for a developer’s application to be consumed (used) by another developer or application. Chris Dixon from a16z compares composability to compounding in finance. Otherwise, this is a profound concept that takes a long time to grasp, but once people get it, it completely transforms finance. 

Case in point- what if loans repaid themselves? Say whaaat?

Traders can borrow against their deposits, knowing that their deposit yield will return their loan on time, thanks to DeFi’s ability to create high rates. Alchemix combines (composes) simple principles (a Stablecoin with a dividend and lending) so that the Stablecoin’s yield repays the loan automatically.


Web3’s capacity to operate without a central authority while maintaining immutable transaction records is known as decentralization. Decentralization isn’t necessarily absolute, and it’s not limited to technology. Economic and legal decentralization are used by projects to openly share decision-making and information.

Use Cases

Web3 features a few big ideals that are frequently utilized as the foundation for additional applications. Such cases are noted as follows:

  • Non-fungible tokens, or NFTs, are tokens that, like real-world collectibles, are not interchangeable. They offer a wide array of use cases where distinctiveness and digital scarcity are necessary.
  • Stablecoins are a type of blockchain-based token. Their value is nearly always equal to one unit of the fiduciary currency in question.
  • Decentralized finance, or DeFi, refers to smart contract-based solutions. They have the same characteristics as financial products and services like investing, lending, and derivatives.
  • DAOs, or decentralized autonomous organizations, provide a new type of labor connection between entities and donors. They’re controlled by governance tokens and provide a new type of communal instrument for businesses and organizations.
  • Optimizing value transfers by reducing the cost and hassle of programming to pay or be paid.
  • Visibility in near real-time analysis allows for meaningful information at both the individual and market levels.
  • When users genuinely own their digital commodities and develop their digital economy, monetization of virtual assets takes on a whole new meaning.
  • Rethinking the competition by rewarding community members to help enhance the product and discuss business models.


Due to the fact that Web3 is the latest craze, many organizations feel compelled to act quickly. However, there is one thing that the Web3 area favors above all else: genuineness. The pursuant interpretation to the aforementioned statement would be that learning in public is not only acceptable but recommended! As such, just because it looks cool to launch an NFT, do not do so unless you have a convincing reason to do it. 

There’s a lot of terminology, so we’re hoping that this article will assist to simplify it and make it more tangible. The space is changing at a breakneck pace, and the best way to learn is to jump in, indeed. I suggest you get yourself a wallet as soon as possible.

For traditional  firms such as a bank or fintech firm, exploring Web3 by merging what they know from Web2 and building their own web2.5 journey is the smarter play. Reputable institutions have tremendous potential. One in every five adults in the United States and the United Kingdom owns cryptocurrency. According to a survey conducted by NYDIG, 81 percent of respondents would move their cryptocurrency to a bank if the bank provided the service. If you’re trying to use the TradFi rails, for instance, in Web3 and having trouble with compliance, keep in mind that these things take time and patience. The journey to Web3 has safety in numbers.

At the end of the day, while Web3 is a great evolution in earth’s technology, it is not without its risks, which is beyond the scope of this article and can be discussed at a later scribbling.

Stefan Muriuki
Stefan Muriuki