Web 3.0: The Convergence of the Virtual and Physical Worlds
The internet is evolving. Web 3.0 is expected to deliver a more connected and intelligent internet, where websites and applications are able to understand and interpret knowledge and data. This redesign of the web will change how we work and collaborate, as it gives birth to a spatial web with global connectedness (or IoT) rich in data. With the increase in digital information, the lines between the virtual and physical worlds will blur. Are you ready for Web 3.0?
What is Web 3.0, and what does it imply for the economy and financial services?
This new era of Web 3.0 brings with it great promise but also some uncertainty, as no one can be certain exactly how all this will play out. However, there are three key areas where Web 3.0 is likely to have an especially significant impact: the virtual world, the physical world, and the financial services industry.
In Web terms, we are currently in Web-version two-point something (Web²), which has been around for about 20 years. It is characterised by the centralisation of web activity around large platforms like Google, Facebook and Amazon. These companies have become incredibly powerful due to their ability to control what users see and do online. Web³ — or “the semantic web” — promises to change all that by decentralising the internet, giving users more power over their own data and interactions. This will result in a much more intelligent and interconnected internet, where information is easier to find and use.
This shift towards a smarter web will profoundly impact the virtual world. In particular, it will lead to the development of a “spatial web”. On this internet, digital information is no longer bound by screens and browsers but instead exists in physical space as well. This will blur the lines between the virtual and physical worlds, opening up new possibilities for businesses and consumers alike.
Web 3.0 will also have a significant impact on the financial services industry. Banks are currently reliant on centralised systems that can be easily hacked or manipulated. With Web 3.0, blockchain technology will enable banks to move away from these vulnerable systems and towards more secure decentralised models. This will create a more transparent and trustworthy banking system, which is much needed in today’s uncertain political climate.
1. Web 3.0 AI-driven services (such as machine learning algorithms) in financial services
2. The data architecture is decentralised.
3. The rise in popularity of cryptocurrencies and decentralised finance platforms
Web 3.0 AI-driven services (such as machine learning algorithms) in financial services
More than 8 out of 10 (83%) financial professionals responding to an NVIDIA poll agreed that AI is crucial to their company’s long-term success. The method for employing AI varies depending on the kind of financial institution. AI’s application is more concentrated in algorithmic trading, fraud detection, and portfolio optimisation for most FinTech and investment companies. Meanwhile, banks are using AI to detect frauds, create recommendation systems, and optimise sales and marketing efforts. Finally, AI is used in consumer banks not just for fraud detection and prevention, but also for customer acquisition and retention and cross-selling and up-selling of personalised goods and services.
The Royal Bank of Canada is employing millions of data points in a fraction of the time to train its private AI, which has resulted in fewer client calls and faster delivery of new applications for customers. BNY Mellon, the world’s biggest cross-border payments service provider, has trained its AI and ML models to detect fraud, boosting accuracy by 20%.AI is being coupled with high-performance computing to create better and faster trading intelligence by crunching real-time market data in nanoseconds, according to the MIT Technology Review. But perhaps the most disruptive AI innovation has been witnessed in the FinTech sector. NerdWallet employs machine learning to suggest its customers the best suited financial products, such as mortgages and insurance. Its recommendation engine is fed with scores of profile characteristics, including credit ratings, outstanding balances, and credit utilisation, to ensure that it is extremely familiar with the underwriting process and improve its ability to match NerdWallet members with appropriate offers.
The data architecture is decentralised.
The potential of the internet, which is currently dominated by the super-elite and their corporate partners, might be fully democratised. Making it open and decentralised is one of the most effective methods. Data will be stored on various connected devices in a decentralised system, with each playing a distinct role such as node, verifier, developer, or simply a participant. Every connected device in the structure will have access to the same data, which is time-stamped and secure, ensuring that it cannot be readily hacked or tampered with. These capabilities are powered by blockchain technology. The data ledger is preserved in all linked devices thanks to blockchain, which requires the agreement of all the nodes in the structure to make a change to the data. Hacking into all of the connected devices simultaneously is quite difficult and expensive.
The rise in popularity of cryptocurrencies and decentralised finance platforms
Decentralised finance (DeFi) refers to financial products and services that are accessible to anyone with an internet connection. No central authority has the power to block payments or deny access to anything, because these goods and services are always accessible and have no centralised authorities who can do so. DeFi is expected to play a larger part in Web 3.0 if it is based on decentralisation and uses blockchain technology, according to experts. But, eventually, the two realms of Centralised finance (CeFi) and decentralised finance (DeFi) will come together. The businesses that are taking steps to narrow the CeFi-DeFi gap will have a lot more opportunities for innovation in financial services. The key advantages of DeFi are that it provides a financial tool for people who do not have access to traditional finance or don’t want to use banks. It can also assist with issues such as inaccessibility to bank accounts and financial services, government fears of centralised institutions bringing down the sector, extra fees and hidden costs, and money transfer delays caused by internal human processes.
What is DeFi, and how does it work in practice? DeFi enables consumers to get services without the need for financial institutions to act as guarantors by utilising cryptocurrencies and smart contracts. A smart contract in DeFi eliminates the risk of depending on a financial institution, as soon as it is deployed. A smart contract is designed to move money from one account to another without the need for a financial institution to supervise or charge fees. DeFi is being used in a variety of ways, and these are only going to increase. It allows you to move money anywhere in the world, streams it anywhere in the globe, access constant currencies, borrow funds without or with collateral, start crypto savings accounts, trade tokens, acquire insurance, and manage your entire financial portfolio through one platform.
web 3.0 will be the convergence of the virtual and physical worlds, delivering a more connected and intelligent internet. Its basic idea is to create a semantic web that has the potential to understand and interpret knowledge and data. This will change how we work and collaborate, giving birth to a spatial web and global connectedness (or IoT) rich in data. The data architecture is decentralised, with blockchain technology powering the security and integrity of the data ledger. The rise in popularity of cryptocurrencies and decentralised finance platforms indicates that Web users are ready for Web applications that are based on decentralisation and use blockchain technology. Eventually, centralised finance (CeFi) and decentralised finance (DeFi) will come together, with businesses taking steps to narrow the CeFi-DeFi gap having a lot more opportunity for innovation in financial services. Web users are ready for Web applications that are based on decentralisation and use blockchain technology. DeFi is being used in a variety of ways, and these are only going to increase. It allows you to move money anywhere in the world, stream it anywhere in the globe, access constant currencies, borrows funds without or with collateral, starts crypto savings accounts, trade tokens, acquires insurance, and manage your entire financial portfolio through one platform. This is an exciting time for Web development! The future looks bright for Web applications that are based on decentralisation and use blockchain technology. We can’t wait to see what comes next!
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