FinTech & Web3 – Where CeFi Meets DeFi

Appmilla CEO James lectures UWE students on the convergence of traditional finance and Web3

James Guest UWE Lecture

In a recent lecture at the University of the West of England, Appmilla’s CEO James Guest, took the stage to address 150 final year business students.

The focus of the talk was a profound exploration of the convergence between traditional finance (TradFi)/Centralized finance (CeFi) and the disruptive force of Web3 in the decentralized finance (DeFi) landscape.

James began by emphasizing the transformative influence of Web3 technologies in reshaping the financial sector. The combination of decentralized blockchain networks, smart contracts, and cryptographic tokens has emerged as a formidable force challenging the conventional structures of traditional and centralised finance.

During this exploration, James cited several recent examples of this convergence, shedding light on the dynamic intersection of these financial realms. Examples included Chainlink’s Cross-Chain Interoperability Protocol (CCIP), a significant initiative emphasising the importance of interoperability between different blockchains. Chainlink’s role in connecting smart contracts with real-world data showcased the necessity for a seamless flow of information and value across the decentralised ecosystem.

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Another noteworthy example discussed was PayPal’s recent announcement of the launch of its stablecoin. This strategic move signaled a paradigm shift in the approach of traditional financial giants, reflecting an increasing acceptance of blockchain and cryptocurrency technologies in mainstream finance. With PayPal’s over 430 million active accounts, including around 35 million merchants this could present a huge leap in onboarding millions of new users and businesses into the crypto space.

James also discussed JP Morgan’s recent proof-of-concept on the Avalanche blockchain to tokenize assets, and how this initiative by such a major financial institution highlights TradFi’s growing acceptance and shift towards embracing Web3 rails, and the efficiency and security benefits that blockchain and tokenization technology can bring to the industry.

The discussion then shifted to Blackrock, the world’s largest asset manager, filing for a Bitcoin ETF (Exchange-Traded Fund). While there have been over 30 prior applications to the SEC seeking approval for a Bitcoin ETC in the US for years, firstly the Winklevoss twins, Cameron and Tyler, in July 2013, Blackrock’s entry to to space points towards likely success this time – afterall, prior to this application Blackrock has 575 ETF applications approved by the SEC and only one rejected. This move shows there is clearly rising institutional interest in cryptocurrencies as legitimate investment assets, marking a significant step towards the convergence of traditional finance with the decentralized world of digital assets.

To round off the examples, James referenced the Bank of International Settlements’ “Blueprint for the future monetary system” report. The report envisions a future where all assets are tokenized on a ‘centralized blockchain’. While this signals a broader acceptance of tokenization as a fundamental shift in the financial landscape, it also raises concerns about placing too much control in the hands of governments with Central Bank Digital Currencies (CDBCs).

In conclusion, James’ talk at UWE provided an insightful exploration of the convergence between TradFi/CeFi and Web3. The examples cited collectively painted a vivid picture of the transformative forces at play in the financial industry. The students at UWE undoubtedly gained valuable insights into the evolving landscape of finance and the potential implications for their future roles in shaping this dynamic environment.

“It’s going to be an exciting few years ahead to see where all this goes – especially if Blackrock get their ETF approved and we see a flood of capital and investment into the space” – James Guest

This lecture is another example of Appmilla’s commitment to staying ahead of the curve in the ever-changing landscape of Fintech. Web3 and Blockchain are core specialisms at Appmilla, and connecting with a new generation of talent will be key to remaining at the forefront of the as the industry evolves. It was great again to see so many students engaged and enthusiastic about the subject.

Get in touch if you want to find out more about how Web3 might affect your business, or the opportunities it might present.