Not Web3, but Web2.5: The Current State Of Fintech Industry

The fintech industry has had some significant problems in the past year. Crypto markets have experienced chaotic swings (Bitcoin recently fell to a two-year low); there are fears that FTX could collapse, and now the crypto contagion is estimated at $62 billion. Some have suggested that Web3 is now dead.

The problem is that large parts of the world are simply not ready to adopt Web3. And that there is a need for harmonization within that. There is still demand for Web3, 85% of retail managers are keen to adopt crypto payment. But continued use of Web3 is not the global answer. Instead, Web 2.5 offers the best solution now. It gives us the best way to solve the global problem of adoptions in the real and service sectors.

Web 3 does not make sense globally

Web3 was characterized by a number of factors. Greater decentralization, personal autonomy and transition to non-custodial platforms. And a shift from corporate management to DAO.

But As exciting as all these developments are, Web3 currently does not make sense globally for most people or businesses. There is a huge sense of novelty around it, with many businesses, sectors and customers moving onto these platforms simply to ‘try something new’. Without thinking about whether this is the most effective model for them.

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For example, a small retail business that sells snowboards worldwide already accepts various fiat currencies, cards, PayPal and other payments. Deciding to use Crypto will create a whole host of problems they may not be ready to deal with. The track of setting up new payment methods through DAOs, figuring out how to set up a wallet (potentially even figuring out what it is), setting up smart contracts, using unfamiliar terminology. All of this can quickly become time-consuming and confusing for new users.

And for many business owners, they don’t want to become experts on all these ideas, or spend time figuring out the risks associated with signing smart contracts from a simple wallet. They already have enough to do to maintain their businesses and lives in a time of great economic uncertainty. They don’t want to learn about packaged Ethereum or speculate on markets. No, what they want is a way to easily add a Crypto payment method to their website; a way to buy real products (entertainment tickets, appliances and so on) in a fast and efficient way, but without admin.

The crisis of confidence

Of course, there are reasons why the world moved on from Web2 to Web3. And they were good. 2008 was a watershed year. The financial crash started a crisis of confidence. It provided clear arguments for greater financial decentralisation, personal autonomy and development in global finance. Individuals relied too much on their identity to others, and that was enough. We belong to ourselves and must move towards it.

Web2 was unable to mitigate this crisis of confidence. So it is natural and justified to want to move away and embrace Web3. And of course, there are those who have worked with Web3 long enough to fully understand it, who are more advanced – so naturally they want to move their projects in that direction.

Web 2.5 is the best of both worlds

But to really move forward, we need to adopt Web2.5, which will take the best of Web2 and Web3. This means the openness and autonomy of Web3. Combined with customer service and the protection of ordinary individuals’ rights that we found in Web2. And there are many projects that already work with these principles. Platforms like Utopia Labs, which is a DAO management startup, raised $23 million in funding. While Deel – an external payroll company that uses Crypto – doubled its value to $12 billion. Similarly, Travala made it possible to buy flights, hotels > and other activities via Crypto has continued to grow in revenue. These platforms are actively growing because they are teaching their Web 2 users the benefits of Web 3.

The main concern for the Fintech industry to move forward is to solve the problems of ordinary people. To make buying and selling with Crypto accessible and easier for them to learn about. People are keen to pay their bills in Crypto or use it to buy everyday high street products. By building bridges to this, it will make it easier to move forward and solve the problems of adopting Web 3.

Make the most of Web 2.5

Going forward, there are many types of business or organization that are missing and must be created. Things like review sites or agencies will be of great use and will only become more necessary in the coming years. So bodies that compared services or evaluated and rated companies operating in the Web 2.5 world. More trusted sites where users and business owners can go to find “Top 10 Small Business Payments in Europe” and more.

Better consulting services, those specializing in legal and financial compliance that are growing in crypto-specific industries, will also be called for. 2022 has seen significant movement on this front with the introduction of legislation and guidelines in both the US and the EU. The market lacks “decision-making aids” and services like G2, Trustpilot, etc that will gather both professional and public opinion to help entrepreneurs decide what and how to work on.

Initiatives that streamline and integrate crypto payments into your cash flow as a business are set to grow in popularity. Customers and businesses that adopt crypto will look for ways to integrate this into their traditional financial models, such as debit cards that use crypto or interconnect payments. There still aren’t enough big merchants accepting crypto, in part because they haven’t yet figured out how to easily integrate it. Companies that can offer this easily and reliably will present a real opportunity for these brands. Similarly, there must be investment services for ordinary people. It is estimated that 46 million Americans believe they will invest in crypto in the next year, while 41% of first-time investors in the UK see crypto as the most important asset to own. Apps have made investing easier for first-time users, with a particular interest in crypto. Making this adoption available will be an important step.

Prioritizing ordinary people breeds evolution

If we move forward into the next few years with this goal at the center, improvements will be seen across the industry. There will be simplification of customer onboarding and harmonization of tariffs and coins. We must prioritize making adoption and the rules of the game clear for everyone.

At the moment, the barrier to entry to Web3 is too high, it requires too much technical knowledge and experience. Many potential users and users simply do not understand what they are dealing with. Even local central banks are still struggling to deal with DeFi. The market may make a more extensive transition to Web3 in the future, but the framework simply isn’t there yet.

Web 2 was an outdated concept that needed to be changed. And Web3 was a revolution. But there is still learning to do. Web 2.5 provides an opportunity for evolution. For the Fintech industry to move into the best possible future.

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