In today’s rapidly evolving digital landscape, a new wave of technology is promising to reshape the internet as we know it. Web3, with its core components of blockchain, decentralized finance (DeFi), and increased user control, holds immense potential for fostering financial and social inclusion. As Hong Kong embraces this emerging trend, it paves the way for a more equitable and empowered society.

Web3 offers individuals the opportunity to take ownership of their digital assets and data, marking a significant departure from the traditional internet. With the advent of cryptocurrencies and tokens, people can participate in new financial systems, transcending the need for traditional banks. Financial inclusion becomes a reality, enabling more people, particularly those underserved by traditional institutions, to access essential financial services. The Hong Kong Special Administrative Region government recognizes the potential of Web3 and has taken steps to adapt to this technological shift. By introducing new licensing rules for crypto exchanges and allowing retail investors to trade cryptocurrencies, the government acknowledges Web3 as a promising trend. These measures not only support innovation but also ensure that Hong Kong remains at the forefront of the global digital economy.

One of the key aspects of Web3 is its ability to empower marginalized communities and bridge the digital divide. In Hong Kong, local communities can leverage Web3 technologies to build their own affordable internet networks, opening doors for everyone to access information and opportunities. These community-driven initiatives foster digital inclusion and empower individuals who have historically been excluded from traditional power structures.

Moreover, Web3’s tokenization and DeFi platforms present new avenues for financial inclusion and access to capital. Through blockchain and smart contracts, transparency and trust can be enhanced in charitable donations and sustainable practices. This ensures that funds reach their intended recipients, while also enabling individuals to track products’ environmental impact. Web3’s decentralized nature facilitates more equitable and sustainable socioeconomic development.

By embracing Web3, Hong Kong has the opportunity to position itself as a global leader in the digital economy, driving innovation and fostering a more inclusive and empowered society

While the potential of Web3 is vast, several challenges need to be overcome to ensure its widespread adoption. Scalability remains an issue, as current blockchain technology struggles to handle high volumes of transactions concurrently. However, advancements such as Layer 2 networks offer solutions to improve scalability and efficiency. Additionally, concerns around energy usage and environmental sustainability need to be addressed to make Web3 more appealing to a broader audience.

The complexity of Web3 interfaces poses another hurdle to mass adoption. Blockchain and decentralized applications often present a steep learning curve for the average user. Regulatory clarity, interoperability and data privacy are essential considerations as well. Hong Kong’s government can play a crucial role in addressing these challenges by fostering a supportive regulatory environment, promoting education and awareness, and collaborating with industry stakeholders to create user-friendly solutions.

Web3’s potential to drive digital inclusion and strengthen cybersecurity in Hong Kong is undeniable. By decentralizing access to digital assets and services, Web3 empowers individuals to take control of their digital identities and data, reducing the risk of massive data breaches. Strong encryption and transparent scrutiny of Web3 technologies contribute to a more secure online environment.

As Hong Kong embraces Web3, businesses have an opportunity to leverage this transformative technology to mitigate risks and boost safety and trust. Trustlessness, transparency, and immutability, inherent to blockchain, can be harnessed in situations where traditional trust mechanisms are lacking. For instance, supporting internet access across multiple countries and jurisdictions can be facilitated by a transparent system built on decentralized principles.

The journey toward embracing Web3 in Hong Kong is ongoing, and there is still work to be done to make it more accessible and user-friendly. However, the potential benefits, such as financial inclusion, community empowerment and enhanced cybersecurity, make it a worthwhile endeavor. By embracing Web3, Hong Kong has the opportunity to position itself as a global leader in the digital economy, driving innovation and fostering a more inclusive and empowered society.

Web3 presents a paradigm shift in how we engage with the internet, offering the potential for financial and social inclusion in Hong Kong. The government’s proactive steps in embracing Web3, coupled with community-driven initiatives and business innovation, pave the way for a more equitable and empowered future. As we navigate this technological revolution, collaboration, education and regulatory support will be key to unlocking the full potential of Web3 and creating a thriving digital ecosystem in Hong Kong.

The author is chairman of the Asia MarTech Society and an assistant professor at Saint Francis University in Tseung Kwan O.

The views do not necessarily reflect those of China Daily.