COMPUTER scientist and Ethereum co-founder Gavin Wood coined the term “Web 3.0” back in 2014, putting forward his vision for the future of the internet.
But what is Web3 and how can you invest in it?
What is Web3?
Web3 is decentralized and a more democratic version of the current internet.
One that isn’t dominated by a handful of power organisations such as Google, Microsoft, Facebook and Amazon.
The internet that became available to consumers in the ’90s is known as Web1.
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Web1 gave users read-only content such as news, telephone directories, and classified ads.
Then came Web2 after the dot com boom in the early 2000s.
Web 2 allowed users to create their own content through websites and social media.
But Web2 users have found it difficult to monetize their content with the likes of Google, Facebook, and Apple finding ways to extract value from users by selling their personal data.
The next part of the internet is Web3 which will allow users to read and write content while fully owning their data and assets through blockchain technology.
This move to Web3 will allow users to monetize their own data and own tokens that give them voting power over their preferred platforms.
It will also mean businesses won’t be at the mercy of Web2 monopolies that can censor, ban and limit them.
Gavin Wood said: “The big problem with this is sort of the same thing as placing all your eggs in one basket, if something goes wrong with one of these services, the service is suddenly unavailable for an awful lot of people.
“Furthermore, the keyword here is trust. We’re having to trust the people behind the services. We’re having to trust the owners of the companies that run the service. We kind of managed to architect ourselves into this, somewhat like dystopian version of what the world could be.”
He added: “Web3 is an alternative vision of the web, where the services that we use are not hosted by a single service provider company, but rather they’re purely algorithmic things that are hosted by everybody. It’s very peer to peer, right? The idea being that all participants contribute a small slice of the ultimate service.
“And thus, no one really has any advantage over anyone else, not in the same sense. For example, if you go to Amazon or eBay or Facebook, where the company behind the service really has absolute power over what it is that they do in providing the service.”
Blockchain is the main technology behind Web3 and is most-often associated with Bitcoin.
The Bitcoin blockchain is a public ledger which is used as a record-keeping system that maintains users’ identities in secure and anonymous form.
But Bitcoin isn’t owned by a single company or person and isn’t issued by a central authority like a central bank.
Instead, it’s decentralized and the network is maintained by a group of people running specialized computers around the globe.
But despite many Web3 enthusiasts suggesting Bitcoin and cryptocurrencies will play a pivotal role in the future of the internet, Woods thinks otherwise.
He said: “I suspect currency will continue to play a role in services. But I think we’re going to start seeing services be delivered without the need to use tokens.”
“And I think that’s going to be a big jump and I think it’s one of the key factors that’s going to open the door to the mainstream,” he added.
Woods went on to suggest most people won’t want to buy different tokens to use a service.
One example of a current Web3 application is MetaMask, which gives millions of users complete control over their funds through a browser extension or mobile app.
Another example is the Helium network, which allows for decentralized wireless data to be shared through its network nodes.
How to invest in Web3
1. Buy and hold cryptocurrency
Buying and holding cryptocurrency – whether it be Bitcoin or alt coins – is one way to invest in Web3.
2. Mining cryptocurrency
If you have programming skills, you can mine cryptocurrency yourself.
Alternatively, you can join mining pools (contribute your hardware to crypto mining communities), or rent out cloud mining services.
These are better options if your hardware can’t support the energy needed for mining cryptocurrency.
3. Staking cryptocurrency
Staking allows you to earn money by holding onto your cryptocurency.
You just need to deposit your cryptocurrencies into a staking pool and you earn interest.
4. NFTs
Buying NFTs is another way to invest in Web3.
In 2014, Kevin McCoy minted the first ever NFT, called “Quantum”.
In 2021, the same NFT sold for over $1.4 million.
5. Virtual real estate
Virtual real estate is another investment people who want a slice of Web3 could explore.
Companies are buying into the metaverse – mainly Decentraland and The Sandbox – in the hope it will help them to reach new customers and see a return on their investment.
PwC and JPMorgan both own plots of land in The Sandbox.
PwC aims to set up “a Web 3.0 advisory hub to facilitate a new generation of professional services, including accounting and taxation.”
Adidas also bought land in The Sandbox, as “a way of expressing our excitement around the possibilities it holds.”
Someone even paid $450,000 to be Snoop Dogg’s virtual neighbour.
6. Invest in companies working with Web3
A number of companies are working with Web3.
In fashion Adidas, Nike and Gucci are all exploring the space.
In tech Nvidia, Meta and Samsung have all invested heavily into Web3.
As have Taco Bell, Mattel and Coca-Cola.
Decentraland, The Sandbox and Axie Infinite are the most popular metaverses and all have utility tokens you could invest in.
Two DAOs you could back are Uniswap1UNI, ApeCoin2APE while Venture Capitalist Firms
a16z/Andreessen Horowitz, Sequoia Capital and Tiger Global have also thrown their weight between Web3.
ETFs (NASDAQ) include LEGR, BLCN and BLOK.
