Skip to main content

What Is Web 3.0? (And Why Should Banks & Credit Unions Care?)

 


A new version of the web-based on blockchain technology — is being predicted and promoted. Even though the trend has vocal naysayers, elements of Web 3.0 are already in use, including by a new crop of disruptive nonbank competitors.

By Steve Cocheo, Executive Editor at The Financial Brand

If the term “Web 3.0” has crossed your radar, and you are wondering what it is and whether it’s worth starting another ulcer over, we have four words for you: Eco, Valora, Compound and TrueFi.

Eco, which promotes the fact that it is not a bank and not FDIC insured, offers accounts held in stablecoins that function as both spending and savings accounts, but with higher returns.

Valora is an app available through the App Store and Google Play that uses the blockchain to deliver a version of P2P services out of a mobile crypto wallet.

Compound describes itself as “an algorithmic, autonomous interest rate protocol built for developers, to unlock a universe of open financial applications.” Among the services using it is Compound Treasury, which promises a 4% annualized return with dollar deposits turned into stablecoins as well.

TrueFi is a marketplace lender offering unsecured loans for borrowers and an opportunity for people with funds to invest in loans to earn a higher return. TrueFi is a form of decentralized finance — “DeFi” — using stablecoins.

Numerous tech and crypto investors back these fledgling companies, all of which are doing business through some aspect of “Web 3.0,” also called “Web3.” One investor in common is Andreessen Horowitz.

The venture capital firm is investing heavily in crypto through a hedge fund. In late 2021 it launched a lobbying campaign in support of its idea of how the World Wide Web should evolve, and, along with it, many of the businesses and activities that tie into it — including financial services. This push so far includes issuing ten Web 3.0 principles for world leaders shaping the future of the web and publishing a major Web 3.0 white paper, “How to Win the Future: An Agenda for the Third Generation of the Internet.”

Regarding financial services, that paper states: “Our financial system needs to be revamped for fast payments. It also needs to be more inclusive; for instance, by improving access to credit through better credit scoring that incorporates more data sources. Web3 has demonstrated the potential of alternatives to the current system. Decentralized finance, or DeFi, is also supplying a wave of new infrastructure to support more sophisticated financial products…”

There’s more in the paper, but it’s far from the only voice in Washington promoting Web 3.0. Anti-bank rhetoric is part of it.

In congressional testimony on Web 3.0, Brian Brooks, former Acting Comptroller of the Currency, who liberalized treatment of crypto activities by national banks, said in part: “Do we believe a user-controlled decentralized internet is better than an internet largely controlled by five big companies? … Do we trust big banks more, or open-source software more, as a tool for maintaining ledgers of account and allocating credit and capital?” Brooks is now CEO of Bitfury Group, a supplier to the cryptocurrency business.



Clearly, both traditional financial institutions as well as neobanks and fintechs have to understand what Web 3.0 is and how it could develop. The following Q&A presents the basics of what is already becoming a very complicated new field.

Comments

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

NCOFCU Newsletter

The Bucket Coach is a financial advice book designed by Fire Services Credit Union, Tronto, Canada. and written exclusively for Fire Fighters It's a practical guide for household financial management, including investments, credit and mortgages, and retirement. Developed with contributions from Fire Fighters," NCOFCU Newsletter : " Kevin Connolly Chief Executive Officer    Fire Services Credit Union Phone: 416-440-1294 ext 301  Toll Free: 1-866-833-3285 E-mail:  kevin@firecreditunion.ca 1997 Avenue Rd Toronto, ON M5M 4A3 
Post a Comment
Read Complete Article HERE>»

CUNorthwest Todd A. Powell Award is SFCU CEO Gayle Furness.

Spokane Firefighters Credit Union Big Enough to Serve. Small Enough to Care. This year’s recipient of the CUNorthwest Todd A. Powell Award is SFCU CEO Gayle Furness. Like Todd, Gayle has been instrumental in the growth, as well as the safety and soundness, of the credit union. Congrats to Gayle for living up to the standard that Todd created for our organization and the greater credit union community. __ ________________________________ Check out NCOFCU's additional features: First Responder Credit Union Academy Podcasts YouTube Mini's Blog Job Board
Post a Comment
Read Complete Article HERE>»

The Shrinking Pool of Small Credit Unions: Why It Matters & What We Can Do About It. - Henry Meier, Esq.

  Henry Meier, Esq. Henry Meier is the former General Counsel of the New York Credit Union Association, where he authored the popular New York State of Mind blog. He now provides legal advice to credit unions on a broad range of legal, regulatory and legislative issues. He can be reached at (518) 223-5126 or via email at  henrymeieresq@outlook.com . For as long as I’ve been around the industry, I’ve heard concerns about the demise of the small credit union. But I’ve come to realize it’s a lot like the weather: Everyone talks about it, but no one does anything about it. This is unfortunate. We need credit unions of all shapes and sizes to survive, and if we don’t take action soon, it will be too late.  Fortunately, there are steps the industry can take to potentially decrease the rate at which small credit unions are disappearing by making it viable for credit unions to survive by getting larger credit unions interested in making the necessary investments to keep the sma...
Post a Comment
Read Complete Article HERE>»

What Are Your Plans -As Government Shutdown Continues, Credit Unions Expand Offers of Assistance

BILOXI, Miss.— With the federal government shutdown now entering its second week, an increasing number of credit unions across the country are offering relief and financial assistance. All indications are the shutdown is no closer to ending than it has been since it began on Oct. 1. While the House has passsed a continuing resolution (CR) to fund government operations in the short term, the Senate remains at an impasse, even as it has scheduled a vote for today. In addition to the earlier assistance reported by the CU Daily  here , the latest pledges to support members include: • In Biloxi, Miss., Keesler FCU said it is offering paycheck relief for all eligible federal employees affected by the shutdown and will advance the amount of direct deposit paychecks for eligible members during the shutdown for up to 90 days. There is no cost or fee to enroll in the program. • In Nebraska, Cobalt Credit Union is offering furloughed members loans of up to $5,000 with no fees or interest...
Post a Comment
Read Complete Article HERE>»

Sunday Reading - FIRE, 101 - “financial independence, retire early,”

  Retiring at 30     FIRE, 101 Most US workers aim to retire around age 65—but for many followers of the FIRE movement, which stands for “ financial independence, retire early ,” that’s not the case. FIRE followers, who range from low- to high-income workers, typically prioritize high savings rates, relatively frugal living, and aggressive investing strategies in an effort to work less and enjoy life more in the long-term ( see five distinct approaches ). While many proponents argue that the movement is more of a mindset about achieving financial freedom than any ...
Post a Comment
Read Complete Article HERE>»