Over the past few years, the rapid growth of blockchain technology has ignited a significant frenzy among tech enthusiasts and investors alike. Blockchain promises to revolutionize the way we live, interact, and work.
While most people are familiar with cryptocurrencies like Bitcoin, only a handful get to appreciate the more disruptive blockchain products like web3. The web3 train is just leaving the station, and the prospects are incredibly appealing.
As with every new technology, early investors always enjoy the first mover advantage. The growing excitement around web3 makes it a promising investment option for anyone looking to enjoy huge returns.
In this blog post, we’ll dive into the intricacies of the technology and show you how to invest in web3.
What Is Web3?
Nowadays, you can barely scroll through the internet without coming across the term “web3.” But is web3 worth the hype? Or is it another one of those buzzwords Silicon Valley folks throw around to sound smart?
Web3 is a concept rather than an entity with a specific definition. At the basic level, web3 is a blockchain-based decentralized online ecosystem. Proponents of the technology have dubbed web3 “the internet of the future.”
Web3 – or “web 3.0” – was coined by Ethereum co-Founder Gavin Woods back in 2014. Web3 is set to replace the first and second generations of the internet (web 1.0 and web 2.0).
Web 1.0 allowed users to access information and communicate via e-mails. But that was it. Webpages in this era were static, read-only versions, and users couldn’t participate in creating content.
Web 2.0, the current version of the internet, allows users to create, share, communicate, and collaborate without needing technical skills. This was previously impossible with web 1.0.
Web3, in contrast, will enable users to not only contribute but also own the internet. How so?
Well, decentralization is deeply ingrained within the fundamental ethos of web3. What does decentralization look like?
Let’s take an example of the traditional internet. Large tech companies, such as Google and Meta, built the whole ecosystem. These corporations then take the lead in defining how the internet operates and in the distribution of returns.
In web3, algorithms built on a blockchain network govern the ecosystem entirely. Perhaps, the most significant advantage of web3 is that it takes power from large corporations and gives it back to the individual.
While it might not sound like much, the impact of decentralization is enormous. Web3 promises to reward individual creators and users, who are the drivers of any ecosystem.
Web3 also promotes data security. Users can choose whether or not they want their data shared and earn rewards for sharing it.
Brave browser is a real-world example of a successful web3 project. Brave rewards users in their native token, BAT, for the ads they choose to watch.
Web3 continues to gain traction as more and more people realize its potential. Before we explore how to invest in web3, let’s examine whether you should invest in web3 in the first place.
Should You Invest in Web3?
In the early days of the internet, many investors were skeptical about getting involved with this new technology. Today, internet companies are some of the most valuable entities on the planet, controlling trillions of dollars worth of assets.
With this massive growth, investors who understood the internet’s potential and got their feet wet at the right time continue to reap huge benefits. The inception of web3 marks the dawn of a new revolution that presents a similar opportunity.
Web3 already commands a valuation of $23.3 billion and is set to continue growing at a CAGR of 44.6% from 2023 to 2030.
Furthermore, web3 platforms have registered a widespread mainstream adoption in the last few years. Without a doubt, we are headed towards the era of web3, making it an attractive investment venture.
Also, since web3 is built on decentralized, permissionless blockchain networks, traditional bureaucracies and bottlenecks don’t apply. This means you can invest in web3 from any part of the world without worrying about cross-border laws and regulations.
If you’re already psyched up to join the budding web3 community as an investor, you first need to understand which investment options are available. Let’s take a look at a few of the most popular ways to invest in web3.
How to Invest in Web3: 6 Different Investment Options
In general, you can invest in web3 projects or other tools that support the complete realization of web3 ecosystems, such as NFTs and the metaverse.
Also, investment opportunities in web3 aren’t tied to the crypto world. The stock market provides alternatives in case you don't want to get involved with the highly volatile crypto tokens.
Here are six ways how to invest in web3:
1. Web3 Native Tokens
Web3 native tokens are the cryptocurrencies that support transactions on web3 networks. An example of a web3 token is LINK, the cryptocurrency for the Chainlink network.
Web3 tokens are a good investment option because their value tends to grow significantly as more projects are built or launched on a web3 platform. However, knowing the right web3 tokens to invest in is the most challenging part.
Here’s a tip: Consider the unique use cases of each platform and pick ones that are likely to contribute to the era of web3 significantly. Diversifying your portfolio to cushion against landslide losses is also essential in case one project doesn’t work out.
Otherwise, the best starting point is learning how the web3 ecosystem works, its unique pain points, and the projects that will most likely stand the test of time in addressing these pain points.
2. Web3 Stocks and ETFs
Web3 stocks are publicly-traded shares of companies with a stake in web3 development. These include companies like Coinbase, Binance, and Crypto.com, which provide centralized exchanges where web3 users exchange fiat currencies for web3 tokens.
Other companies worth considering are chip manufacturers such as NVIDIA and artificial intelligence service providers like IBM. Web3 will need products from these companies to realize its full potential.
Exchange-traded funds (ETFs), on the other hand, are funds that hold a variety of shares from different companies. By investing in an ETF, you benefit from the good performance of all the companies in the fund and minimize your losses in case some companies don’t do well.
Web3 ETFs are currently available on many platforms. If you decide to go the ETF way, ensure you select ETFs with the best long-term growth potential.
3. Decentralized Autonomous Organizations
Decentralized autonomous organizations (DAOs) are a futuristic conceptualization of modern-day companies. DAOs have no centralized authorities, and members make critical decisions about the DAO through voting. Typically, members’ votes are considered based on the number of tokens they hold.
At the core of DAOs are smart contracts, self-executing pieces of code that carry out the proposals voted for by members. DAOs bring back transparency and trust in organizational management.
DAOs are the venture capital firms of the web3 era. Through DAOs, startups can easily raise funds from investors all over the world to fund their mission. DAOs don’t need to be registered companies, eliminating unnecessary paperwork and red tape.
DAOs are usually formed to serve particular purposes, and anyone with similar interests can join. For example, PleasrDAO was formed to collectively raise funds to purchase exclusive NFTs. PleasrDAO purchased NFTs such as the famous CryptoPunk #2890, whose value has since risen significantly.
Members receive rewards from the sale of these NFTs based on the number of tokens they hold.
Creating a DAO is easy. Check out the wide array of web3 tools from our Wonderverse to help you create and manage your DAO without much hustle.
4. Decentralized Finance
Decentralized Finance (DeFi) provides financial instruments based on distributed ledger technology built on the blockchain.
DeFi is one of the pillars that will support the development of web3, and its role in the future of the internet can’t be underestimated.
By eliminating centralized control from banks and governments, DeFi eases financial transactions from any corner of the world and massively reduces transaction costs.
Today, many DeFi products are akin to those provided by traditional banks. For example, DeFi staking allows you to earn interest on your financial assets. It’s similar to putting money in a fixed deposit account, but interest rates are higher with staking.
DeFi also supports borrowing funds against your financial assets. The best thing about DeFi loans is that the process is quick, and you won’t need to wait around for your loan requests to be approved.
DeFi protocols advocate for something close to a financial system nirvana. Web3 won’t be complete without the financial instruments provided by DeFi.
5. Non-Fungible Tokens (NFTs)
Non-fungible tokens are unique digital assets held on a blockchain network. They’re “non-fungible” in that every NFT is one of a kind and can’t be replicated. For example, Bitcoin is fungible because if you sell one BTC today, you can always purchase another one at a later date.
In contrast, every NFT is one-of-one, meaning there’s no other similar item. Art, music, games, and many other things can be sold as NFTs. NFT marketplaces have grown fast, with some like OpenSea handling billions of dollars in sales volume.
NFTs are crucial to web3 as they’re one of the instruments of ownership. To make money from NFTs, you need a lot of research to understand what you are investing in. Social media hype alone is enough to direct the trajectory of an NFT, but long-term value is dependent on certain dynamics of every project.
6. Metaverse Property Ownership
The metaverse is one of the most mind-blowing concepts of future internet technology. It’s a digital recreation of our physical world.
The metaverse redefines our interaction with technology and strengthens one of the basic elements of what makes us human: community. Imagine a virtual world where we can all work, play, learn, shop, own property, attend concerts, etc.
The most popular way how to invest in web3 via the metaverse is through buying virtual land. Virtual real estate is a hot commodity right now, with metaverse platforms registering a considerable increase in land prices.
Just like in the physical world, you can hire metaverse engineers to develop your land, say, to build an arena and rent it out to artists for concerts. Or, you can hold on to your land in anticipation of future price increments.
The two biggest metaverse platforms are Decentraland and Sandbox. You’ll need to acquire their tokens in exchanges like Binance to purchase land on these platforms.
Apart from land, the metaverse supports NFT integration, especially for games.
Web3: Investing in the Future of the co-founder
Throughout human history, technology has played a major role in advancing human civilization and culture. With every new generation of tech, new opportunities arise.
Web3 is the new tech revolution set to challenge the status quo. Many investment options are available in the web3 space, ranging from web3 tokens to disruptive entities like DAOs.
If you’re looking for a simple way to create and launch a DAO, Wonderverse provides you with the complete web3 tools to get your DAO up and running in a matter of minutes. Join Wonderverse today to access the best web3 project management tools.