Finance 1.0 v/s Finance 2.0 v/s Finance 3.0 With Algorand

Over time financial requirements, service, and products have changed. in the short-term, we don't feel the change but if we look back approx. 30 years then we can see the differences.  Creating and sending transactions and managing our finances was not as easy as today. The current financial system will get more convenient in the future because we are at the beginning of the finance 3.0 era.

In this article, I will outline how we slowly moved from finance 1.0 to finance 3.0 and how we can make finance 3.0 system more secure, stronger, and faster with the Algorand blockchain.

What Is Finance 1.0?

This is the traditional financial system that started after the birth of banks and fiat currency. We step into the era of finance 1.0 when people started storing their money in banks because they believed banks were more secure than a home. People also started earning as ROI (Return of investment) by saving their money in the bank and thought this is the ultimate finance system that we could have.

Over time, some problems with finance 1.0 became visible including; slow transactions, lengthy queuing, high transaction fees, time-consuming, the possibility of error (as all the things controlled by humans), problems in borderless transactions, robbery, scams, etc {Reference}.

In finance 1.0 there was no technology with all paperwork managed by humans. Records were kept in register books which had inherent risk:   loss or damage. Bank employees' physically verified signatures. This was open to being targeted by scammers and because of slow processing, many scams occurred. You can read about Harshad Mehta scam to understand how scammers were exploiting the slow processing system.

As more and more people joined this system, it failed to scale, and this was the end of the finance 1.0 era and we are heading toward the finance 2.0 era.

What Is Finance 2.0?

After technology, meet with finance 1.0 it becomes finance 2.0 now everybody has mobile phones and internet connection in it gives them access to manage all their financial activity like money transactions, balance inquiry, complaint registration, money request, account opening, etc {Reference-1} {Reference-2}.  

In the era of finance 2.0, there are many types of third-party payment network processors or payment gateway like PayPal, Visa, MasterCard, etc. which are introduced making sending or receiving a payment easier, convenient, and can be done from home.

The financial system is still not open or under the control of its users. It still has lots of negative points including; a centralized system so all the user's data are get stored in a centralized server which leads to the leak of user's data in the dark web {Reference}. Users have to pay money in the name of the various transaction/processing fees/charges and the money in the bank is not controlled by users. The bank can any time freeze or invest anywhere to make a profit from users money {Reference} {Reference-2}. 

Why are you allowing the bank to make a profit from your money just for a tiny return?

Now, it's time to take control of your money and time to cut off all kinds of fees/charges/penalty so we have to move towards finance 3.0

What Is Finance 3.0?

Finance 3.0 is the open financial system, which gives more controls to its users and reduces or eliminates the middleman, fees, charges, penalty, etc. Finance 3.0 is a permissionless system independent of borders and communities.

To power finance 3.0 we should use blockchain technology which can give limitless scalability, transparency, security, etc to a finance 3.0 system.

There are various types of blockchains so the selection of a blockchain platform for finance 3.0 may be a little difficult to you but I’m suggesting you adopt Algorand blockchain for your finance 3.0 project It has all the tools needed for your finance 3.0 project.

So let's discuss how Algorand is the best blockchain for your finance 3.0 project?

Finance 3.0  with Algorand blockchain:

Algorand blockchain is a next-generation permissionless blockchain platform that runs on PPoS (Pure proof of stake) consensus. The Algorand blockchain solves the blockchain trilemma and after the launch of Algorand 2.0 the protocol now more facilities like ASA (Algorand Standard Assets), atomic transfer, ASC1 (Algorand Smart Contracts in Layer-1) added to the Algorand blockchain.

You can develop your financial service and application on the top of the Algorand blockchain using all these facilities and tools. Algorand gives you the option to run a co-chain in the name of your financial institute with Algorand main chain which will be independent of the main chain and the co-chain can be on a public or private blockchain.

Do you know?

There so many existing financial service providers like Tether, Meld, Assetblock, Realio, etc. who are already using Algorand blockchain to sharpen their product and services. The Algorand Foundation and Borderless Capital recently launched the Algorand Asia Accelerator program, powered by LongHash Ventures.The program helps finance 3.0 products and service providers, so please check my previous article to know about the Algorand Asia Accelerator program in detail.


With my research about Algorand blockchain, I got to know some important tools and function which I described above in this article and because of these tools and features Algorand blockchain will provide decentralization, scalability, cost-cutting, speed, stability, and maximum security to your financial 3.0 service and product. Available funding through the Algorand Asia Accelerator program could provide funding for your finance project along with amazing mentor-ship.