16 ways crypto leaders can help bridge the gap between Web3 and TradFi
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When it comes to traditional finance, crypto and blockchain leaders face something of a disconnect. TradFi firms are competitors in a way, but unless TradFi embraces Web3, Web3 cannot realize its full potential. Efforts to reach TradFi are complicated by mutual feelings of insecurity: crypto and blockchain pioneers fear TradFi’s influence could weaken the value of industry enthusiasts who care about consumers and transparency, while TradFi firms are wary of a new industry , whose technology and policies they adopt ‘I don’t understand.
With its long history, traditional finance is familiar to consumers and enjoys widespread trust. By partnering with TradFi firms, Web3 organizations could gain some of that positive sentiment. Additionally, by considering TradFi as a potential customer base, Web3 firms could start to grow organically. From “cessation of hostilities” to spreading a wider web, there are many things crypto and blockchain leaders can do to bridge the gap between Web3 and TradFi. Below, 16 members of the Cointelegraph Innovation Circle share their ideas.
Agree that there is room for everyone to build together
I often see those in the traditional finance industry opposing Web3 infrastructure and innovation and vice versa. I think we need to adopt the mindset that there is space for all of us to build something together. There is no perfect Web3 or traditional financial product that covers every use case. Industry-wide disruption is occurring as we collectively build this burgeoning ecosystem. – Megan Nyvold, BingX
Work together on products for younger, more tech-savvy investors
When it comes to Web3 and traditional finance, there are too many us versus them narratives. In reality, they must work together to meet the needs of customers in the 21st century. Crypto executives can solve this by collaborating with fintechs and trad-fi firms, playing to each other’s strengths to create products and services aimed at younger, more tech-savvy investors. – Molly Glennon, ditto
Consider TradiFi companies as potential customers
The first step is to understand that TradFi companies are not our enemy; You are an opportunity. TradFi users are pretty much everyone in society, and TradFi companies already have trusted relationships with these people. At DeFi, we should focus on building the tools that TradFi companies need and see them as potentially our biggest customers. – Budd White, Tacen
Look for Web3 solutions that enhance current TradFi products
Web3 emulates TradFi products with global reach and the transparency of the public blockchain. If you’re at TradFi, start with what you know and look for things that emulate or improve on those products. Then check out what’s different than what you know. Identify the problem that this differentiation solves. Look at who is in the value chain (and their economic incentives). This bridges the gap. – Shawn Douglass, Amberdata
Contact TradFi institutions to work together on specific solutions
Industry leaders could work to form 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 on creating interoperability between Web3 and traditional financial systems. – Theo Sastre-Garau, NFT evening
Bring the two industries together to create regulations for blockchain technology and cryptocurrency
Work with traditional financial institutions and regulators to create clear policies and regulations for the use of blockchain technology and cryptocurrency. The development of standards for security, compliance and reporting would make it easier for mainstream investors and financial institutions to participate in the Web3 ecosystem, which in turn would increase trust in the technology. – Vinita Rathi, Systango
Be aware that most TradFi users are unfamiliar with normal Web3 practices
In order to onboard most non-native Web3 users, the UX of all applications in our space needs to be improved. We learn soon enough that changing chains and wrapping assets feels 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, putting a big emphasis on UX to further onboard TradFi users. – Ben Knaus, RillaFi
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Design better user interfaces and easier onboarding
Crypto and blockchain organizations need to provide better interfaces and user onboarding. Decentralized applications and other decentralized platforms need to be extremely intuitive and user-friendly in order not to scare off retail investors. As more retail investors turn to DeFi, traditional financial institutions will be more inclined to venture into the space themselves. – Anthony Georgiades, Pastel Network
Focus on the ease of use of the technology and the real benefits
Too many people are trying to force Web3 adoption on a technical level. What we need is more “Web2.5” innovation that will help bridge the gap and move people to Web3 without forcing the problem. Pioneers can seem too aggressive for traditional worlds; We need to lure into these traditional worlds with the ease of use and real benefits of technology, not through hard sell tactics. – Brian D Evans, BDE Ventures
Start tokenizing real-world assets
Tokenizing assets like real estate is one way to bridge the gap between Web3 and TradFi. This contradicts the argument that crypto assets are just “pet rocks” as these tokens can represent ownership of tangible, real-world assets such as homes, cars, watches and more. – Zain Jaffer, Zain Ventures
Be honest about what blockchain can and cannot do
Be honest with users and tell them what they really need for their business. Question how and if blockchain is the right way and what concrete advantages it would offer. TradFi may not be perfect, but the crypto space isn’t fully mature either. Hybrid solutions that address user concerns about the risks could also help bridge the gap. – Yaoqi Jia, AltLayer
Create clear definitions for the space
Unfortunately, there are many unknowns for those in charge of the regulatory side of Web3. We need to work harder to create clear definitions for this rapidly evolving area. Then we can start speaking and understanding the same language, which will hopefully lead to better alignment. From there we can chart a productive path forward and finally close this gap. – Matthew LaCrosse, MetaEngine
Make sure you comply with government regulations and guidelines
It boils down to one word: compliance. Regulated TradFi will not interact with Web3 and distributed ledger technology if it is non-compliant or if it does not operate within the accepted limits of guidelines issued by regulators or guidelines created by legislators. The other important thing is to behave like a company that would support a financial institution. Document your processes and procedures and show you are an adult. – John Wingate, BankSocial
Openly discuss the problems of Web3 and what the industry can learn from Web2
We can bridge the gap by openly discussing the problems that Web3 and blockchain technology are solving, the problems that are impeding their growth, and what we can learn from Web2 to shorten the industry’s growth trajectory. In this way, both those in traditional finance and those in the Web3 space can participate in a progressive dialogue that benefits both industries. – Mohak Agarwal, ClayStack
Think globally
As crypto and DeFi sink into regulatory uncertainty in the US, blockchain leaders may continue to make inroads into other markets around the world. Institutional investors in Asia, for example, are currently more enthusiastic about Web3 than their Wall Street counterparts. – Wolfgang Rückerl, ENT Technologies AG
Ensure that Web3 systems integrate seamlessly with Web2
Web3 and Web2 must work together to achieve exponential value. The identities in Web2 – email, Okta, etc. – need to be mapped to Web3 identities like wallets. Web3 needs to be integrated with Web2 systems and Web3 companies also need to ensure that Web2 users have the ability to pay for gas fees etc using crypto or fiat. Many traditional companies are not comfortable holding crypto on their balance sheets. – Nitin Kumar, zblocks
This article was published by the Cointelegraph Innovation Circle, a vetted organization of blockchain technology industry executives and experts who are shaping the future through the power of connection, collaboration, and thought leadership. The opinions expressed do not necessarily reflect those of Cointelegraph.
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