When it comes to traditional finance, crypto and blockchain leaders are faced with something of a disconnect. TradFi firms are in one sense competition, but unless TradFi comes to embrace Web3, Web3 can’t reach its full potential. Complicating efforts to reach out to TradFi are mutual feelings of uncertainty: Crypto and blockchain pioneers fear that TradFi’s influence may weaken the consumer- and transparency-first commitment industry enthusiasts value, while TradFi firms are wary of a new industry whose technology and guidelines they don’t understand.
With its long history, traditional finance is familiar to consumers and has earned widespread trust. By partnering with TradFi firms, Web3 organizations could accrue some of that positive feeling. Further, by viewing TradFi as a potential customer base, Web3 firms could begin to grow organically. From “ceasing hostilities” to spreading a wider net, there are many things crypto and blockchain leaders can do to bridge the gap between Web3 and TradFi. Below, 16 members of Cointelegraph Innovation Circle share their ideas.
Agree that there is room for everyone to build together
I frequently see those in the traditional finance industry opposing Web3 infrastructure and innovation, and vice versa. I believe that we need to adopt the mindset that there is room for all of us to build together. There is no perfect Web3 or traditional financial product that will serve every use case. Industrywide disruption happens as we build out this emerging ecosystem together. – Megan Nyvold, BingX
Work together on products to serve younger, tech-savvy investors
There’s too much of an “us versus them” narrative when it comes to Web3 and traditional finance. In reality, they’ll have to work together to meet the demands of customers in the 21st century. Crypto leaders can solve this by working together with fintechs and TradFi companies, playing to each others’ strengths to develop products and services geared toward younger, more tech-savvy investors. – Molly Glennon, Ditto
View TradiFi companies as potential clients
The first step is understanding that TradFi companies are not our enemy; they are an opportunity. TradFi users are pretty much everyone in society, and TradFi companies already have relationships of trust with these people. We in DeFi should be focused on building the tools that TradFi companies will need, seeing them as potentially our biggest clients. – Budd White, Tacen
Look for Web3 solutions that improve on current TradFi products
Web3 emulates TradFi products with global reach and the transparency of the public blockchain. If you are in TradFi, start with what you know and look for things that emulate or improve on those products. Then look at what’s different from 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
Reach out to TradFi institutions to collaborate on specific solutions
Leaders in the industry could work to create partnerships and collaborations with traditional financial institutions, helping them to understand how blockchain and cryptocurrency can be integrated into their existing systems and processes. This could involve developing custom solutions for specific use cases or working to create interoperability between Web3 and traditional financial systems. – Theo Sastre-Garau, NFTevening
Bring the two industries together to establish regulations for blockchain tech and cryptocurrency
Collaborate 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 mainstream investors and financial institutions to participate in the Web3 ecosystem, in turn increasing trust and confidence in the technology. – Vinita Rathi, Systango
Recognize that normal Web3 practices feel unfamiliar to most TradFi users
To onboard most nonnative Web3 users, the UX of all applications in our space needs to improve. We’re early enough adopters that switching chains and wrapping assets may feel normal to us, but it’s a foreign language to most. Web3 needs to feel more like “Web2.5” to truly turn the tide. I see some projects, like Firepot finance, putting a major emphasis on UX to further onboard TradFi users. – Ben Knaus, RillaFi
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Design better UIs and easier onboarding
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 to avoid deterring retail investors. If more retail investors…
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