Our Solutions

Unique and integrated solutions to manage payments in all shapes and forms in all online channels.
What are Web 3.0 and decentralised finance?

What are Web 3.0 and decentralised finance?

Published: 27 July 2022 • Reading time: 7 minutes

The web is constantly changing, and its evolution to the latest 3.0 version is complex to describe, even though the development of its features is part of relatively recent technologies and concepts.

So, what exactly is meant by Web 3.0? Although the concept dates back 16 years¹, it is very difficult to give one simple answer to this question. The interpretations are different depending on the context in which Web3 is spoken of. However, there are some recurring references in all the in-depth studies on the subject.

Decentralised data architecture

The architecture of Web 3.0 applications (dApp or Decentralized Application) is characterized by its decentralisation, as can be understood from the name. Web 2.0, on the other hand, is a space in which contents (e.g. posts, user comments, interactions, etc.) require constant updating of databases hosted on central servers that send information through an interface (e.g. browsers, apps, etc.).

In its 3.0 version, the web no longer has centralised databases but thanks to blockchain technology and its distributed networks, on which cryptocurrencies such as Bitcoin and Ethereum, for instance, are based, it is possible to develop web apps that do not require traditional systems, like the App Stores. Moreover, when a supplier’s server is down (e.g. a social network), with traditional apps it is not possible to access the service, but in a decentralised context based on blockchain tech, it is enough to have one active user for the network to function.

Semantic web

The Web today is a collection of texts interconnected with links, which content only human users are able to read and understand, due to their browsing experience and interpretation skills.

The Web3 is based on a standardised system of metadata in the pages content, and the correlations between them enable the use of bots that can understand the meaning of the text and perform tasks autonomously. The combination of logical rules and information that allow machines (automata) to generate knowledge from insights, which is the basis of artificial intelligence that, as aforementioned, plays a fundamental role in the internet evolution. In essence, Web 3.0 exploits a series of technological evolutions that facilitate access to information and its processing.

Geospatial Web and Metaverse

The idea of the geospatial web, i.e. the combination of location-based information with information accessible on the Internet, is part of the Web 3.0 features. This information can be implemented in augmented reality technologies, in which it can enrich the user experience with digital elements that emphasise the experience of the virtual environment they come in touch with. This way, the web becomes a hybrid tool, whose use is contextualised by the environment where it presents itself.

Another form of geospatial web finds its field of action in virtual reality and 3D technology, merging in the metaverse, a virtual space where users interact with each other via avatars. In the metaverse, you can wander through digital environments just like you do in real life, and geospatial information helps enhance your experience.

Internet of Things and artificial intelligence

Thanks to the semantic web and artificial intelligence, the connection between web and objects, from smart speakers to the latest generation of household appliances, plays a central role in Internet's evolution.

The increasing ability of IoT technologies, such as bots and automata, to interpret data and information can improve the access to the web and, more generally, the digital experiences of users who will have even more sophisticated interactions with everyday objects. 

In this scenario, which developments in the finance and payments world can we expect?

Decentralised finance, payments and Web 3.0

The web transformation has long involved areas that are indirectly related to it. Nowadays, many people spend a large part of their time on the web, and the line between the online and offline life is getting finer, making them converge into a fusion of real and virtual. Thant’s why it’s not hard to imagine that the financial environment too will progressively evolve aiming to adapt to this new ecosystem.

One of the financial elements of the Internet 3.0 is the Decentralised Finance (DeFi). By DeFi we mean a financial system no longer based on the centrality of its traditional intermediaries, such as banks, but organised and built on new technologies capable of disintermediating information and financial exchanges between multiple actors.

The technology underlying the Decentralised Finance is blockchain, on which new technological paradigms are being studied and developed with the purpose of revolutionising traditional finance. Let’s look at some examples:

Cryptocurrencies and Stable Coin

Not to be confused with digital currencies, which are essentially the ‘intangible’ version of traditional currencies (e.g. euro, dollar, etc.), cryptocurrencies, also called virtual currencies or simply cryptos, are proving to be very effective tools in reducing transaction costs while maintaining high security levels.

Even if they are based on the blockchain, cryptos are however not without risks, such as lack of regulation and, especially, high volatility. To date, the contexts where cryptos can be regularly used to finalise a payment are still few.

On the other hand, stable coins are cryptocurrency tokens pegged to the value of traditional currencies (FIAT) or a commodity, typically gold. This feature makes them more stable, as the word itself implies, and less prone to the high volatility of cryptos, so their financial application is suitable for money transfers and asset payments.

It is reasonable to assume that stable coins could be part of the future of Web 3.0 online payments, as their characteristics perfectly fit in a digital space that disintermediates services by putting the focus on users and the ownership of their data.

Smart Contract

Today's concept of smart contracts is closely related to blockchain technology. Thanks to the properties of blockchains, these tools can trigger an action, e.g. a payment, upon the occurrence of a specific event. Programmes capable of handling if-this-then-that situations actually existed even before the advent of smart contracts, the difference being the security guaranteed by the blockchain.

Examples of applications in the financial field, in addition to those still being studied, include reimbursements linked to parametric insurance policies in which a reimbursement is automatically processed when a claim occurs. For example, there are insurance policies based on Ethereum blockchain that automatically reimburse passengers when a flight is delayed.

Non-Fungible Tokens (NFT)

NFTs are tokens that represent ownership of an asset, either physical or digital. Although they are blockchain-based, they are not interchangeable like cryptocurrencies, but there are marketplaces on which it is possible to buy, sell and in some cases even create unique digital NFTs.

In a Web 3.0 context, NFTs are the ideal tool to certify a user's ownership of any piece of content. A piece of music, a digital work of art or a tweet, all can be reproduced and copied, while the availability of the NFT, generated through smart contracts and associated with that specific asset, certifies the ownership of the original.

The wealth of elements that characterise the web 3.0 and the relationships between them, as described in this article, only offer a glimpse of what we can expect in the near future in terms of web innovation in this fast-changing paradigm and how it will change our daily lives.

As an international player in the payments industry, Axerve continuously invests in innovation, participating, with all the stakeholders in the financial sector, in developments that contribute to the improvement of services and the achievement of customers' objectives, in all the physical and virtual entities in which consumers and companies interact.

Among the most recent initiatives in which Axerve has joined as a corporate partner is Sella group's 'Metaverse 4 Finance Accelerator'. With the dpixel accelerator, Sella group aims to enable finance in the metaverse by engaging with high-potential start-ups capable of designing new financial services and products that increasingly meet the needs of customers and society.

The acceleration programme, made up of 4 phases to select the best start-ups, runs for 16 weeks from the launch date of July 16, 2022 and offers EUR 500,000 in funding, with investment tickets of up to EUR 100,000 for each of the 5 selected start-ups. The project targets international teams and start-ups that bring disruptive innovations to the market through innovative technologies applied to the metaverse finance sector. You can learn more about the details of the initiative and join on the dedicated page of the 'Metaverse 4 Finance Accelerator' programme.

This content is published by Axerve without any claim of completeness or topicality of the information provided. This article has the sole purpose of providing useful information on the subject and is not to be considered an exhaustive guide but rather a vademecum. If you want to report a correction, please contact us via our social network pages.

Next, a 'more revolutionary' Web | Victoria Shannon, International Herald Tribune (23 May, 2006)

TagDigital paymentsEcommerce

Join our newsletter