Why without Web 2.5, there’ll be no Web 3.0

Fiat-related pain points for crypto platforms

The world today is priced and valued in fiat currencies. As a result, people, when interacting with crypto, always subconsciously convert it to fiat and wonder how much it’s worth. Paying for groceries and utilities in crypto is at least a decade away. In the meantime, crypto needs fiat to become mainstream. Why? Well, because fiat is the only access point to crypto right now. That means crypto platforms, in order to thrive, need reliable access to fiat banking rails, which is where the present-day pain points start.

Firstly, there are the infrastructural problems of legacy core banking systems. They’re slow, clunky, and unreliable. But it’s not just about tech – the operational processes built on top of those systems often haven’t changed for decades. To make matters worse, when you pop-up the hood you suddenly realize that each bank uses their own messaging standards and protocols. There’s literally no standardization or consistency when it comes to interfaces into core banking systems. Bank APIs, such as they exist, may at best, result in manual processes behind the scenes, at worst in your integration getting bottlenecked thanks to a monolythic platform hidden behind a few shiny RESTful endpoints. All this means high cost,complexity and unpredictability when you’re forced to build on top of it or integrate to it. Not to mention how drastically the cost of it all increases when managing multiple integrations of such kind.All the while the party ultimately suffering is your (crypto) customer.

Secondly, there are serious data mismatches. Fiat payments may be significantly delayed due to the so-called bank RFIs (requests for information). It’s when the bank on the receiving end of a customer’s bank transfer (i.e. towards a future crypto transaction) asks a question about the customer and his or her source of funds. Everything stops, the transaction is halted, the crypto on-ramp interrupted and the quest for more information starts. The funny thing is, data to satisfy these requirements may have already been captured somewhere, but it’s unstructured, not in the right format or is not exposed to anyone properly. Or a compliance officer at a traditional bank may not know how to read and interpret the data. Extra due diligence requirements based on arbitrary transaction limits or rigid AML (Anti-money laundering) rules only add to delays and ultimately to customer disgruntlement.

Thirdly, there are multiple relationships to manage and the obvious overheads associated with that. Your fiat providers may be different to your FX providers. You maintain multiple relationships as insurance against the risk of being suddenly offboarded or de-banked. But more integrations mean there’s more to maintain and more to go wrong. This means more time, effort and cost spent on non-core, non-value-adding activities for your business.

Benefits of better bridges

When it comes to updating core systems, large banks simply don’t have the luxury of ‘rip and replace’. It’s hard for them to get better quickly. It’s hard for crypto platforms to get started with banking. And it’s hard for both to partner effectively, even if their goals are aligned.

A reliable bridge is very much needed between the old fiat world of Web 1.0 and the new crypto world of Web 3.0.

Say hello to Web 2.5.

In Web 2.5, on-ramp/off-ramp flows are quicker and more reliable, delivering better user experiences and faster routes to revenue. Web 2.5 means building trust with banks to prevent de-banking and interruptions to day-to-day retail customer money flows. It also means driving efficiencies to minimise the impact of manual processes, returns and delays.

Web 2.5: a bridge to the future (and back)

At Fiat Republic, we believe that Web 2.5 comprises: a robust and scalable banking and payments platform, a compliance-first mindset and a systemic consortium approach.

– Banking and payments platform – Our aggregated banking-as-a-service solution links crypto platforms and crypto-friendly banks. We like to think that our low-code API is the only fiat API crypto platforms will need. It incorporates local fiat services (e.g. individual and pooled virtual IBANs, real-time FX, local and international bank payment methods), plus features to simplify fiat flows for users and reconciliation for you.

– Compliance-first – we act as your first line of defense for bank inquiries. That means earlier visibility of transactions stuck in compliance review and faster response times to bank RFIs. Our on-platform tools and workflows help secure data exchange between compliance teams, streamlining payment and compliance operations. We’re also trad-fi regulated in reputable jurisdictions – that means our banks listen to us and trust us, and in turn trust you.

– Crypto consortium – We’re creating the Fiat Republic Consortium to change the industry-wide perception towards crypto and to work together with regulators and banks; representing you, fighting in your corner, enabling you with access to mainstream banking rails and through that advancing crypto adoption as a whole.

Crypto exchanges don’t really trust the current bridge to fiat and banks don’t really trust the current bridge to crypto. Web 2.5 involves building trusted, reliable bridges. But also offering passports to allow crypto platforms and their users to pass freely across the bridge from Web 3.0 to Web 2.0, and back again.

Only 300 million people worldwide had a crypto token as at the end of 2021. We need a systemic solution to leverage the $1 trillion crypto opportunity. Crypto is only 4% solved.

Learn more about how Fiat Republic is building Web 2.5 bridges.