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The main use case of cryptocurrency has been to replace traditional fiat currency. A message was printed on the Bitcoin Genesis block about how the banks were rescued after the market crash, a clear indication of the intent of this new technology. A similar message was repeated in 2020, although fewer people are aware of this later reference to money printing.
Although the use cases have expanded significantly, this still remains a key goal of cryptocurrencies and NFTs. It offers wealth generation mechanisms that are unparalleled in the traditional investment industry and offers all classes of investors the opportunity to create long-lasting wealth. It also offers opportunities for microfinance, banking for the unbanked and helping people in emerging markets to gain a foothold financially.
All of this is happening outside of the controlled, centralized, legacy banking sector that has often prevented many from making fortunes and allowed few to hold onto them.
The problems of centralized banking
The problems of the traditional banking model are far too many to list in a single article. But it is evident that it encourages the centralization of wealth and allows a few key individuals to wield not only financial power but significant political power as well. All this centralization of power can culminate in a disastrous solution like war. The banking system and the political governance system are inextricably intertwined.
Of similar concern, banks are responsible for determining whether you can get a mortgage and at what rate. Despite this, they are known to switch customers to higher tariffs in order to get more profit while misleading their customers. They determine credits of all kinds. Accounts can be frozen for activities that violate their terms and conditions. Redlining is a policy whereby lenders identify minority groups that are more likely to default on loans and mortgages. Those of a certain ethnic background get worse odds, almost a form of institutional racism.
Fiat interest rates are now effectively negative when all fees are taken into account. If you pay $10 a month to store your money and earn $0.50 in interest, you’re still paying for the privilege of having an account (although this may not be marketed as a negative interest rate) . Earlier, those who deposited funds into a fiat bank account were rewarded, as is the case with all organic systems of economic investment like cryptocurrency.
It is difficult to set up an account and there is a ton of paperwork involved in all sorts of financial activities that are closely related to the legacy banking sector. The fees and charges are extremely high compared to what is on offer. Even if you get rich, it will be very slow, and you will pay dearly for every dollar you make.
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Build sustainable wealth with Web3 solutions
A number of innovative Web3 projects provide mechanisms that allow people to safely invest in cryptocurrencies in less time and build sustainable wealth for the future. Although the crypto markets are rising year after year, most investments are currently made by guesswork. There are no reliable metrics to assess what constitutes a coin or project with strong long-term viability.
New projects like Defy Trends offer a solution by assigning each coin a score based on a range of reliable metrics including social sentiment, on-chain data, off-chain data and deep web analytics. This is exactly what individuals and companies need to build diverse portfolios of strong Web3 companies and projects. It provides a framework for advanced traders and beginners to objectively analyze token value.
This contributes to long-term wealth accumulation and can also help to preserve the currency. Tools like this perform due diligence so investors are not scammed, which is all too common in the crypto markets. The first lesson in wealth preservation is to learn to hold onto it, and then grow it safely. Traders and investors need help with the right interpretation of the crypto markets in order to preserve and grow their wealth over the long term.
Other companies like Circle and CoinsPaid help existing businesses make a seamless transition to cryptocurrency in a cost-effective way. They offer companies a quick way to get into cryptocurrency while maintaining existing processes so there is no disruption to business. All customers will receive their own branded crypto payment processor out of the box within a month. It allows instant payment in 30+ cryptocurrencies and offers built-in exchange for 20 fiat currencies. This is the power of blockchain at work.
Read more: Become a Web3 programmer in your own time
Expansive wealth opportunities
Web3 companies like this are instrumental in the transition from legacy banking to modern cryptocurrency. Red tape is avoided, efficiencies are increased, remittances are fast and immutable, and cross-border payments are effortless when using distributed ledger technology.
But the benefits extend beyond that into entirely new investment paradigms. The real estate market, currently saturated by a small number of wealthy elites, will reopen in other ways. There are VR enhanced metaverses where you can buy your own “room” and sell NFTs about it. The music industry is also being redefined with concerts that can be attended virtually, with recording artists being paid in crypto.
The NFT market has already exploded, with a collection selling for $69 million despite being digital artworks only. There are also multiple opportunities in decentralized finance such as yield farming and cross-chain liquid staking invented by Ankr. These can be compared to financial derivatives in the crypto market. Any financial instrument in the legacy banking industry can be easily included on a blockchain and optimized for optimal results.
Read more: 3 reasons why Web3 requires protocols and not service providers
Retain ownership of acquired assets
The new Web3 investment model not only opens up access to existing markets. It creates completely new paradigms and new forms of wealth creation and preservation.
Perhaps the greatest benefit is that Web3 allows you to preserve the wealth you have already made. No one else has access to your crypto wallet, unlike a bank account, you only have a “right” to access.
In the old banking sector, your currency is eroded or effectively stolen by fees, charges, inflation, taxes and the many other creative ways in which centralized finance takes what is yours and confiscates it. I call that the poor tax. The money we have to pay when we don’t have money. It makes no sense. It doesn’t seem like society should be able to function this way. But there is hope.
Read more: Web3 is the future of the creator economy
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