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Fintech Fridays: Web 3.0

Updated: May 31, 2022

What is Web 3.0?​ Web 2.0 is the contemporary version of the internet that we interact with on a daily basis, which has spurred the innovation of smartphones, mobile internet access and social networks. While Web 1.0 as the rudimentary stage of the world wide web evolution is characterized by a read-only web experience. Web pages are driven by a web browsers such as HTML, HTTP and URL technology. The experience is highly decentralized without search engines. In stark contrast, Web 2.0 users can read and write content on websites and applications and distribute them, which induced the dominance of apps such as Facebook, Instagram, TikTok, Twitter and Youtube. What would be a paradigm shift from this is Web 3.0, driven by machine learning and artificial intelligence, it allows for real-world human communication. Hence, users retain control over data and content and sell or trade data without losing ownership, risking privacy and reliance on centralized platforms Core Features of Web 3.0 Some of the defining features of Web 3.0 are high decentralization, trustless and permissionless, AI and machine learning and connection ubiquity. Decentralization implies that data networks store data in multiple locations within a peer-to-peer interconnection. This way, web control is given back to users in that they have access to data, digital assets and a secure login to the internet without being tracked by third-parties. Web 3.0 is trustless and permissionless in the sense that the network will allow users to interact directly without going through a trusted intermediary and anyone can participate without authorization from a governing body. In Web 3.0, computers understand information similarly to humans, through technologies based on Semantic Web concepts and natural language processing. In addition, machine learning uses data and algorithms to imitate how humans learn and improves its accuracy thereof. The fourth feature means that information and content are more connected and ubiquitous and accessed by multiple applications with an increasing number of devices connected to the web- Internet of Things.

Application in Fintech Web 3.0 made possible technologies such as blockchain, distributed ledger, and decentralized finance to the realm of Fintech. Blockchain advocates say that Web 3.0 is not only a way to resolve centralized internet’s problems but also reframe them. Web 3.0 has corrected the standard economic theory about decentralization’ s inefficiency had paved the way for centralizing monopolies such as Facebook and Google in Web 2.0: that the distrust towards decentralized communities in Web 1.0 leads people to entrust centralized entities to coordinate their exchanges of money and valuable information with each other. Blockchains such as Ethereum in supplanting trust in centralized entities like Google, offered the alternative of a verifiable, “truthful” means of tracking exchanges via open protocols and decentralized validator networks. The result is that monopolistic platforms would be replaced with decentralized communities of data sharing. In tandem with “self sovereign identity”, users can have control over valuable personal data which reside solely with them. This ties in with the emergence of dencentralized autonomous organizations (DAO), something which we will cover next week.

The views expressed within this article are those of the authors and do not represent the views of the Finance Student's Association. All images and references in this article are for fair and educational purposes only. The content in this article is not intended as legal, financial or investment advice and should not be construed or relied on as such.

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