Investing in Web3: Everything you need to know
Over the years, the internet evolved from a read-only infrastructure to a read-write web. In recent years, the development of the internet is driving it into decentralization; where the web is being built, operated, and owned by its users. This version of the internet is referred to as ‘Web3’.
The premise of ‘Web 3.0’ was coined by Ethereum co-founder Gavin Wood shortly after Ethereum launched in 2014. Gavin put into words a solution for a problem that many early crypto adopters felt: the Web required too much trust. That is, most of the Web that people know and use today relies on trusting a handful of private companies to act in the public’s best interests.
Web3 has become a catch-all term for the vision of a new, better internet. At its core, Web3 uses blockchains, cryptocurrencies, and NFTs to give power back to the users in the form of ownership.
History of the internet
In the 80’ and ’90s, the World Wide Web was created. It was known as ‘Web 1.0’, a composition of mainly static websites owned by companies, and there was close to zero interaction between users - individuals seldom produced content - leading to it being known as the read-only web. The Owners of the website monopolized content on the web.
Around 2004, Web 1.0 evolved and the emergence of Web 2.0 started growing with the development of social media platforms. Social media allowed for a read-write internet. Instead of companies providing content to users, they also began to provide platforms to share user-generated content and engage in user-to-user interactions.
However, as more people started interacting with the web, a handful of top companies including Facebook (now Meta) and google began to control a disproportionate amount of the traffic and value generated on the web. Web 2.0 also birthed the advertising-driven revenue model. While users could create content, they didn’t own it or benefit from its monetization.
Why the need for Web 3.0
The growth and development of blockchain technology and cryptocurrencies with the core principle of decentralization birthed Web3. Web3 looks to get rid of the monopolization of the internet by distributing ownership among its builders and users. Web3, therefore, works within these key principles;
- Decentralization: Ownership gets distributed amongst its builders and users instead of large swathes of the internet controlled and owned by centralized entities,
- Permissionless in Nature: everyone has equal access to participate in Web3, and no one gets excluded.
- Crypto payments: Web3 uses cryptocurrency for spending and sending money online instead of relying on traditional centralized banking setups.
- Trustless: it operates using incentives and economic mechanisms instead of relying on trusted third parties.
- Ownership: Web3 gives you ownership and full control of your digital assets in an unprecedented way.
Investing in Web3
Investing in cryptocurrencies
As discussed before in this article, Web3 will use cryptocurrencies for payments. Investing in cryptocurrencies, therefore, becomes the most obvious way of investing in Web3. Investing in cryptocurrencies such as Bitcoin, Ethereum, Solana, Litecoin, and others is an excellent way to earn some passive income and a great way to hedge against inflation. That being said, cryptocurrencies are extremely volatile so you should only invest after carefully analyzing the project or consulting with an investment professional.
Non-Fungible Tokens (NFTs)
NFTs are digital assets that represent items such as music, art, or even virtual real estate. There are several NFT platforms with popular NFTs such as the Bored Ape Yacht Club, which is being sold for over a million at the time of writing this article.
Investing in NFTs is also a great way to earn some passive income. You can create your own digital art and turn it into an NFT using artificial intelligence offered by various decentralized applications. By selling your NFT, you can earn some passive income. Also, you can invest in NFT stocks. This strategy includes traditional stock investing with hot and fresh NFT popularity.
Investing in companies working on the metaverse
A metaverse is a network of 3D virtual worlds focused on social connection. In futurism and science fiction, it is often described as a hypothetical iteration of the Internet as a single, universal virtual world that is facilitated by the use of virtual and augmented reality headsets. In a metaverse, users work, learn, play, entertain, and play games with other people in Virtual Reality (VR) and Augmented Reality (AR).
A company invested in the metaverse makes use of fungible tokens that are used to buy digital assets of the virtual world like virtual land or outfits for avatars. Metaverse is still at an infant stage and hasn’t been fully developed. Internet users and technologists see great potential in this technology even at its current level.
Companies in the Metaverse you should consider include:
- Meta: Meta, formerly known as Facebook, is arguably the company that’s betting the most on a future intertwined with the metaverse. Meta has invested heavily in the metaverse, with the company spending some $10 billion in growing its Reality Labs technology recently, with VR glasses, smart glasses, and a collection of other advanced products that could bolster the company’s profile.
- Nvidia: The reason why Nvidia is an essential stock in relation to the metaverse is that it’s currently the company that’s most likely to power Web3 through its suite of computer chips. As the most valuable semiconductor company in the world, Nvidia stands as the company best positioned to turn the metaverse visions of tomorrow into a reality.
- Cloudflare: Cloudflare (NET) is a content delivery network (CDN) that’s well-positioned to bring the required speeds to the metaverse as the landscape continues to emerge. According to the company itself, its network can deliver content in 50 milliseconds–a speed that Cloudflare believes can make a reality for around 95% of the world’s population.