What is the difference between Web3 and traditional finance?

Web3 represents a decentralized internet model using blockchain technology to enable peer-to-peer interactions without intermediaries, whereas traditional finance relies on centralized institutions like banks, governments, and regulatory bodies. In Web3, financial services such as lending, borrowing, and trading are powered by decentralized applications (dApps) and smart contracts, which enhance transparency, reduce fees, and offer global accessibility. Users have greater control over their assets and data, often holding their funds in personal wallets instead of relying on third-party custodians. Traditional finance, in contrast, is governed by strict regulations and requires intermediaries to validate transactions and manage risk. While Web3 promotes inclusivity and innovation, it also faces challenges like security risks, scalability, and regulatory uncertainty that traditional finance has largely addressed.