When it comes to traditional finance, crypto and blockchain leaders face something of a disconnect. TradFi firms are in a sense competitors, but if TradFi does not adopt Web3, Web3 cannot reach its full potential. Complicating the effort to reach out to TradFi are mutual insecurities: Crypto and blockchain pioneers worry that TradFi’s influence could dilute the consumer and transparent commitment that industry enthusiasts value, while TradFi firms are wary of a new industry whose technology and guidelines they don’t use. I do not understand.
Due to its long history, traditional finance is familiar to consumers and has gained widespread trust. By partnering with TradFi companies, Web3 organizations could get some of that positive feeling. In addition, by looking at TradFi as a potential customer base, Web3 businesses could begin to grow organically. From “ending hostilities” to spreading the wider net, there are many things crypto and blockchain leaders can do to bridge the gap between Web3 and TradFi. Below 16 members Cointelegraph Innovation Circle share your ideas.
Agree that there is room for building together
I often encounter those in the traditional financial industry who are against Web3 infrastructure and innovation and vice versa. I believe we need to adopt a mindset that we are all building together. There is no perfect Web3 or traditional financial product that will serve every use case. As we build this emerging ecosystem together, the industry is being disrupted. – Megan Nyvold, BingX
Collaborate on products that will serve younger, tech-savvy investors
There is too much of an “us versus them” narrative when it comes to Web3 and traditional finance. In fact, they will need to work together to meet the demands of 21st century customers. Crypto leaders can address this by partnering with fintech and TradFi companies to mutually develop products and services aimed at younger, more tech-savvy investors. – Molly Glennon, The same
Look at TradiFi companies as potential clients
The first step is to understand that TradFi companies are not our enemy; they are an opportunity. TradFi users are almost all in the company, and TradFi already has relationships of trust with these people. We at DeFi should focus on building tools that TradFi companies will need and consider them as potentially our biggest clients. – Budd White, Daddy
Look for Web3 solutions that enhance current TradFi products
Web3 emulates TradFi products with the global reach and transparency of a public blockchain. If you’re in TradFi, start with what you know and look for things that mimic or improve on those products. Then see what is different from what you know. Identify the problem that this differentiation solves. See who’s in the value chain (and their economic incentives). This will bridge the gap. – Shawn Douglas, Amber data
Contact TradFi institutions and collaborate on specific solutions
Industry leaders could work to create partnerships and collaborations with traditional financial institutions to help them understand how blockchain and cryptocurrency can be integrated into their existing systems and processes. This could include developing custom solutions for specific use cases or working to create interoperability between Web3 and traditional financial systems. – Theo Sastre-Garau, NFT evening
Bring the two industries together and introduce regulations for blockchain technology and cryptocurrencies
Work with traditional financial institutions and regulators to establish clear guidelines and regulations for the use of blockchain technology and cryptocurrency. The development of standards for security, compliance and reporting would make it easier for traditional investors and financial institutions to participate in the Web3 ecosystem, which in turn would increase trust and confidence in the technology. – Vinita Rathi, Systango
Be aware that common Web3 practices are unfamiliar to most TradFi users
In order to include the majority of non-native Web3 users, the user interface of all applications in our space needs to be improved. We’re early enough adopters that switching chains and asset packaging may seem normal to us, but it’s a foreign language to most. Web3 needs to feel more like “Web2.5” to really turn the tide. I see some projects like Firepot finance put a lot of emphasis on UX to support TradFi users. – Ben Knaus, RillaFi
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Design better user interfaces and easier integration
Crypto and blockchain organizations need to provide better interfaces and user onboarding. Decentralized applications and other decentralized platforms must be extremely intuitive and user-friendly in order not to discourage retail investors. If more retail investors turn to DeFi, traditional financial institutions will be more inclined to venture into the space themselves. – Anthony Georgiades, Pastel mesh
Focus on the technology’s ease of use and real benefits
Too many people are trying to force Web3 adoption on a technical level. We need more “Web2.5” innovations to help bridge the gap and move people to Web3 without forcing the issue. Pioneers may seem too aggressive for traditional worlds; we need to entice in these traditional worlds with ease of use and the real benefits of technology, not pushy sales tactics. – Brian D. Evans, BDE Ventures
Start tokenizing real-world assets
Tokenization of assets such as real estate is one way to bridge the gap between Web3 and TradFi. This goes against the argument that crypto-assets are just “pet rocks” because these tokens can represent ownership of real-world tangible assets such as real estate, cars, watches, and more. – Zain Jaffer, Zain Ventures
Be honest about what blockchain can and can’t do
Be honest with users about what they really need for their business. The question of how and if blockchain is the right way to go and what tangible benefits it would offer. TradFi may not be perfect, but the crypto space is not fully mature either. Hybrid solutions that alleviate users’ risk concerns could also help bridge the gap. – Yaoqi Jia, AltLayer
Create clear definitions of space
Unfortunately for the people in charge of the regulatory side of Web3, there are a lot of unknowns. We need to work harder to create clear definitions for this rapidly evolving space. Then we can start speaking and understanding the same language, which will hopefully lead to better alignment. From there, we can unlock a productive path forward and finally bridge this gap. – Matthew LaCrosse, MetaEngine
Make sure you follow regulatory guidelines and policies
It comes down to one word: compliance. Regulated TradFi will not interact with Web3 technology and the distributed ledger unless it conforms or operates within accepted guidelines issued by regulators or policies created by legislators. Another important thing is to act like a company that would support a financial institution. Document your processes and procedures and be prepared to show that you are mature. – John Wingate, BankSocial
Openly discuss Web3 issues and what the industry can learn from Web2
We can bridge the gap by openly discussing the problems that Web3 and blockchain solve, the problems that hinder their growth, and what we can learn from Web2 to shorten the industry’s growth curve. In this way, both those in the traditional financial space and those in the Web3 space will engage in a progressive dialogue that benefits both industries. – Mohk Agarwal, ClayStack
Think globally
While cryptocurrencies and DeFi in the US are mired in regulatory uncertainty, blockchain leaders can continue to penetrate other markets around the world. Institutional investors in Asia, for example, are currently more enthusiastic about Web3 than their counterparts on Wall Street. – Wolfgang Rückerl, ENT Technologies AG
Ensure seamless integration of Web3 systems with Web2
Web3 and Web2 must work together to achieve exponential value. Web2 identities—email, Okta, etc.—must map to Web3 identities like wallets. Web3 needs to integrate with Web2 systems, and Web3 businesses also need to make sure Web2 users have the ability to pay for gas and so on using cryptocurrency or fiat. Many traditional companies are not comfortable holding cryptocurrencies on their balance sheets. – Nitin Kumar, from the blocks
This article was published via the Cointelegraph Innovation Circle, a trusted organization of blockchain technology industry leaders and experts who are building the future through the power of connection, collaboration and thought leadership. The views expressed do not necessarily reflect those of Cointelegraph.
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