How to Invest in Web3

The Web3 concept, through the use of blockchain and decentralization, promises a more transparent, reliable and free Internet. The emergence of a new standard creates new opportunities for earning on cryptocurrency, NFTs, metaverses and other components of blockchain-based Internet.

In total, there are more than 15,000 companies in the world in the field of cryptocurrencies, blockchain and the “next level Internet”. They raised $87 billion, and in 2019 the total amount of funding was about $4.25 billion, in 2020 – $4.86 billion, and in 2021 – already $32.8 billion. What is so special about Web3 and its components that makes people invest in it in spite of all the risks? Let’s figure it out.

What is Web3?

Web3 is a recent emerging concept for a new, 3rd generation Internet that is decentralized and powered by blockchain and token economy. It is opposed to the World Wide Web2, which operates on the basis of centralized platforms for social interaction between users who do not have any share of ownership in them.

Simply put, Web3 is the Internet, where user data is stored not in large corporations such as Google, Amazon, Facebook and Apple, but in decentralized databases.

The 4 pillars on which the idea of a new Internet is built are privacy, security, transparency, and decentralization. Web3 will enable the building of platforms that no one controls but that everyone can trust because of the underlying algorithms and protocols. This is proposed to be achieved using advanced technologies such as blockchain, machine learning (ML), big data and artificial intelligence (AI). The fuel for the 3rd generation Internet economy should be tokens and cryptocurrencies independent of conventional financial systems.

The blockchain-based web ecosystem is multi-layered and diverse, including things like NFTs, DeFi, the metaverse, DAOs (Decentralized Autonomous Organizations) and more. This opens up a lot of opportunities for both investors and developers. However, as a rule, where there are great opportunities, there are also pitfalls, and Web3 is no exception. Web3 projects are accused of negative environmental effects and financial speculation, including opportunities for fraud. Well, medications often have side effects, but it’s important to be aware of them before you take a pill.

Now the concept of Web3 is still under development, so there is no well-established definition and understanding of all the principles of Web3 operation. Nevertheless, knowing a brief history of Web 3 and its previous versions will help you have at least a general idea of what it is and what its future is.

How Did Web3 Begin?

The first phase of the Internet, which became available to everyone in the 1990s, can be characterized by the way users initially interacted with data on the web. Most users during the first iteration of the Internet were passive content consumers. In other words, Web1 was all about reading the news, digital print, classifieds, etc., not writing. So, the Internet was originally static, not dynamic. This has changed with the advent of Web2.

The next stage in the development of the Internet was distinguished by interactivity and the activity of its users. Users created most of the content on platforms such as YouTube, Facebook, and Twitter. Web2 was faster, more social, and more collaborative, but it usually came at a cost. The downside of this greater online participation was that while creating content, users were also providing personal information and data to the platform owners. This, in turn, meant that they could dispose of their users’ data in a way that was beneficial to them, for example, by selling it.

Web3 is the next and so far the last phase of the Internet evolution. Its development is currently still in progress, so there is not yet a single, well-established definition of what Web3 is or will become. What can be accurately concluded is that Web3 users have more rights in comparison to users of previous Internet versions. They can not only consume and make content, but also fully own it, and their data, as well as digital assets, will be securely protected with blockchain technology. Using Web3, users can selectively share and monetize their content, build DApps, secure and simple smart contract transactions, and many more. It sounds really promising, and the fact that Web3 is still under development encourages investors to get in early.

Reasons to Invest in Web3

Investment in Web3 is booming. Not so long ago, only narrow-profile funds invested in the next-level Internet. But even now, among active investors, one can notice such global giants as Sequoia Capital and Tiger Global. What makes them invest in it? Some of the reasons are:

• The share of investment in Web3 is growing every year, and the global Web3 market is expected to reach $176 billion by 2025. That’s an increase of 700%.
• Web3 investors gain access to brand new, mind-blowing, innovative products and services.
• Web3 provides a more secure and efficient way to collect and manage data.
• The global web3 market is still in its early stages of growth, so investors have a chance to get in early and capitalize on its potential.
• An investment in Web3 is an investment in the future of the Internet.

How to Invest in Web3?

Investing in Web3 is a chance to be one of the first adopters of an emerging and swiftly evolving technology and to generate profit. It’s like investing in shares of highly successful companies like Google or Facebook, when few people knew about them and they were worth a penny. But the problem is that not every start-up grows into Google, and instead of becoming a billionaire, you may even lose what you invested.

However, if the risk doesn’t scare you and you’re determined to invest in Web3 and get your share of the evolving blockchain-based Internet, here are some of the popular investment areas:

Investing in Web3 Companies and Stocks

With growing interest in the possibilities that Web3 brings, many technology companies are beginning to refocus on the next, modern version of the Internet. This trend affects market performance. For example, some of the big companies like Microsoft are already listed on the stock exchange. To gain access to Web3 developments, you only need to invest in the company’s stock.

Some of the most popular companies leading web3 projects that investors might be interested in are Coinbase (COIN), Apple (APPL), Unity Software (U), Advanced Micro Devices (AMD), and Block (SQ, formerly known as Square). Companies are actively integrating new web 3.0 technologies into their products and services, and are also developing their solutions for the next generation web.

Investing in NFTs and Metaverse

NFTs, Metaverses, and Web3 are part of one vast ecosystem that can work together for the common good. Events and concerts, weddings and business meetings are held inside virtual worlds. You can buy land there, rent an office or advertising space. Over the past year, plots in the most developed metaverses have risen in price tenfold. Metaverses are still at the very early stage of their development, which is good for investors.

Non-fungible tokens are one of the fresh assets that are attracting the attention of investors. This is one of the fastest growing segments of the crypto market. According to analysts, NFTs have generated an expenditure of approximately $41 billion in cryptocurrency for the year 2021. It is also noted that not only the total volume of transactions is growing, but also their average value. The advantage of investing in the NFT sector is the great development potential. It’s not just collecting pictures anymore. Technology is evolving in areas where digital proof of ownership is important: from music and fan tokens, to clothing and real estate in a metaverse.

How to Invest in Web3 Crypto Projects

As already mentioned, digital currency is the engine of the 3rd generation Internet economy. For crypto, users buy non-fungible tokens and virtual possessions in the metaverse, it also gives them the right to vote and allows them to influence the development of crypto projects.

Among other things, Web3 crypto is the easiest way to invest. To do this, you need to have a special crypto wallet to store your digital investments and an account in a reliable crypto exchange where you will be able to transact and swap. Some crypto can be mined if you have certain technical knowledge and skills. You can also stake it, that is, hold it for a while and receive interest for it.

Polkadot (DOT), Chainlink (LINK), Filecoin (FIL), Internet Computer (ICP) and Theta Network (THETA) by market cap are currently the top Web3 tokens that can be invested in with minimal risk compared to others. However, especially in view of the fact that the crypto market is now particularly unstable, before giving away your money, it is recommended to conduct your own investigation of the crypto project of interest. Experienced crypto investors and experts often give advice and recommendations on how to invest in web 3.0 crypto. Also, since society is concerned about the environment, sustainability, and conservation, it is recommended to look towards eco-friendly crypto projects.

Investing in DAOs

DAO is a broad term that includes many different types of communities and businesses, but they all rely on smart contracts, code that runs on the blockchain.

DAO, unlike traditional companies, does not have a CEO or a group of leaders. Any decisions that affect the development of the project are made by voting, in which all members of the DAO take part. The power of a DAO member’s vote is usually based on their contribution to the project, but different DAOs may assess it differently.

To get the right to vote, you usually need to buy governance tokens – crypto linked to a specific project. In some DAOs, such tokens can only be obtained through structured ICO funding rounds. Demand for them can sometimes exceed supply. By owning DAO governance tokens, owners gain rights similar to those of LLC shareholders and can influence the future of the organization.

If the DAO does not use governance tokens, it may adopt other forms of investment. The most popular is Ethereum, because most of the DAOs operate on the Ethereum blockchain. But each organization has its own rules and initiatives, so when choosing a company for investment, you need to not only evaluate its prospects, but also choose the community whose ideas are congenial to you.

It is also worth remembering that there is always a chance that the price of a governance token will fall to zero. Investors, as always when it comes to the crypto industry, should prepare carefully and only invest funds they can afford to lose. But along with significant risk, there is significant reward. Some experts compare governance tokens with shares of a startup at its early stages – if the organization is successful, their value increases significantly.

Where can I Invest in Web3?

Where to invest depends on the choice of asset.

To invest in crypto, you need to have a crypto wallet and an account on a reliable exchange, where you can conduct transactions and swaps, as well as analyze coin rates and their ratio. Many have found the Godex.io exchange to be convenient and privacy-oriented, with a wide range of different tokens, including DAO tokens. You can try it and share your experience.

To buy real estate in the metaverse, all you need to do is set up a crypto wallet, replenish it, go to one of the platforms, such as Decentraland, Sandbox or OpenSea, find a suitable piece of land and make a purchase. On the same platforms, there is a huge selection of different NFTs. 

In order to buy shares on Web3, you first need to register with a legitimate and licensed broker. Many use the eToro platform, which is known for its large selection of worthy and popular investments. Using this service, you can invest not only in stocks, but also in fractional stocks that correspond to the amount of money that you are willing to spend.

Conclusion

Investing in Web3 can be a great way to make money, but it’s important to understand the risks involved. The Web3 concept is still in its infancy, so there is a lot of uncertainty about the future. However, if you do your research and invest in the right projects, over time you can make some good money from it.

FAQ

Is Web3 a Good Investment?

There is no 100% guarantee that over time assets like NFTs, Web3 stocks, or real estate in the Metaverse will be worth more than they are now. But, such is the nature of investing: the greater the potential for growth, the greater the risks. Skeptics believe that Web3 is nothing more than a hype story and the bubble will burst soon. Many enthusiasts and blockchain developers, on the other hand, will disagree, predicting the development and growth of the Web3 market in the coming years. Time will tell whether investing in this global high-profile project was a good idea.

Where can I Buy Web3 Coins?

Web3 tokens are in high demand and the most popular ones such as Polkadot (DOT), Chainlink (LINK), Filecoin (FIL), Internet Computer (ICP) and Theta Network (THETA) can be found on most crypto exchanges including Godex.io.

Is Web 3.0 the Future?

It is almost impossible to predict the future, especially in a world as changeable as ours. So far, the Web3 network does not exist. Nevertheless, Web3 startups exist and are actively developing, some projects are used by many people, and they collect millions of dollars of investments. You can use these services right now. Therefore, for now, we can conclude that Web3 is confidently moving towards becoming the future Internet.

Disclaimer: Please keep in mind that the content of this article is not financial or investing advice. The information provided is the author’s opinion only and should not be considered as direct recommendations for trading or investment. Any article reader or website visitor should consider multiple viewpoints and become familiar with all local regulations before cryptocurrency investment. We do not make any warranties about reliability and accuracy of this information.