The rise of Web3, particularly blockchain technology, will be completely transformative for many service businesses. Any business that operates as a middleman or middleman could be threatened by blockchain and smart contracts – including financial service providers and other service industries – as the technology allows two parties to transact and make conduct business securely without a third party overseeing the interaction.
But there are opportunities, as well as threats: opportunities to provide better customer service, streamline internal processes, and create exciting new services designed for the Internet of the future.
Let’s take a look at these changes and their effects on various industries.
In financial services, particular trends to watch include DeFi (decentralized finance), digital asset investing, ReFi (regenerative finance), blockchain-based lending, and blockchain-based money transfer networks.
DeFi is the term used to describe a new internet-native, crypto-based financial system that replaces traditional intermediary services with smart contracts and blockchains in a peer-to-peer system, allowing people to trade directly between them without the help of a centralized bank.
It has the potential to eliminate inefficiencies in traditional banking, increase access to banking services and democratize the lending process. However, it also lacks regulation and consumer protection and creates risks of scams and fraud. The DeFi movement ultimately aims to create an internet-native financial system, designed for the Web3 era.
One of the biggest aspects of Web3 impacting financial services is, of course, cryptocurrency. Crypto is a major asset class in its own right, but we also have NFTs (which are bought and sold in crypto), creating a new wave of digital assets. Financial institutions need to decide whether they want to get involved in web3 assets and include them in portfolios alongside traditional assets. In other words, Web3 could impact traditional approaches to asset and wealth management, offering new ways to invest and grow clients’ wealth.
Blockchain technology can also be used to ensure investments are made more ethically in the global fight against climate change. Traditional financial organizations often don’t consider the climate impact of the companies they invest in, but many investors want to invest in ways that benefit the planet. Blockchain can be used to verify an organization’s green credentials and coordinate investments to ensure funding goes where it is most needed. This idea is known as regenerative finance (ReFi), which focuses on the intersection of climate action and Web3, particularly blockchain, to create systems that restore and preserve natural resources.
Blockchain is also used to transform loans by cutting out middlemen, allowing depositors to lend money directly to borrowers through smart contracts, which manage the lending and repayment process. This is part of the decentralized finance (DeFi) movement, with over $200 billion in loans disbursed by web3 lending platforms in 2021.
The Ripple blockchain-based money transfer network gives us a glimpse into the future of money transfer. Ripple is a blockchain-based money transfer network that facilitates money exchanges between various currencies, cryptocurrencies, and government-backed assets like gold. It serves as a trusted facilitator for transactions between two parties, like traditional financial service providers, but it is designed for the Web3 era. Transactions are processed quickly, with low fees.
Another sector affected by decentralization is IT, particularly with regard to decentralized data storage. With this model, businesses and individuals can rent storage space from other users in peer-to-peer storage networks – or make money by renting their own spare storage.
This approach promises to solve some of the problems of the current centralized approach, such as increased security and the ability to retain data for longer.
Another interesting effect of decentralization is the emergence of blockchain-based network. Helium, which describes itself as “the people’s network,” is creating a fully decentralized network that users build themselves. This completely challenges the traditional business models of telecommunications companies and Internet service providers, which had more than half a million hotspots worldwide at the start of 2022.
In reality, any service-based business can expect to be impacted by Web3 and the Metaverse. Architects, for example, will design in and for the Metaverse, insurance companies might benefit from smart contracts, and law firms might need to advise on Metaverse legal matters.
I think every service business – in fact, every profession – will be impacted to some extent by web3 and the metaverse. Accountants, for example, could adopt smart contracts and crypto payments with their clients. HR professionals could onboard new talent, especially remote workers, in an engaging metaverse-based environment. Real estate agents could create immersive property tours in the Metaverse to market their real-world properties, use AR to “dress up” empty properties for tours, or even turn to marketing virtual real estate in the Metaverse.
Knowledge is power
It could be said that many industries and professionals are threatened by the future Internet. But there are also exciting opportunities to adopt new technologies, streamline services, or deliver new immersive service offerings.
Awareness and adaptation will be key characteristics of businesses that thrive amid these changes; Successful businesses will take steps to minimize threats and maximize opportunities.
Learn more about these topics in my new book, The future Internet: how the metaverse, Web 3.0 and blockchain will transform business and society. And don’t forget to subscribe my newsletter and follow me Twitter, LinkedInAnd Youtube to learn more about future trends in business and technology.