How To Invest in Web3?

Web3 Investments: Why Are They Needed?

Blockchain technology has given the world a new type of assets. Blockchain allows you to create assets that are endowed with certain properties. The token can be embedded in any workflow. However, the capabilities of the decentralized ledger are not limited to this. The crypto community has survived a surge of forks, an ICO boom, and the advent of NFTs. 

The main disadvantage of most blockchain startups is user reach. Outside the crypto community, the new project is practically not in demand. The bulk of the coins are traded on exchanges, and are not used for their intended purpose. Web3 can help digital assets infiltrate the lives of users, as they will be needed for everything on the web, from buying a VPN to paying for ads.

What Is Web3 Background? 

Web 1.0

Web1 was the first form of the Internet to exist and was a static file system that was stored on websites. Web1 content was mostly text or graphics and was created by site developers. Consumers did not take part in the creation of the content. Users could read news on the Internet, download music, movies or books. This is how the Internet looked from about 1990 until 2003-2004.

Web 2.0

In 2004, the first platforms began to appear, and not just web pages. Such platforms included social networks, blogs, Wikipedia, video hosting, etc. Following Web1 comes Web2, which we use to this day. The era of Web2 primarily implies the emergence of social networks. That is, content on the World Wide Web could be posted not only by site owners and developers, but also by ordinary users, it became dynamic. However, this system, although it is good enough, has its drawbacks.

What's wrong with Web 2.0?  The information technology industry is dominated by a few companies. They get most of the traffic and, accordingly, super profits. Trade in personal data is not the worst thing. Information giants can even influence political elections. If necessary, Google may remove a site or page from the list. Representatives of the search engine emphasize that such an option is necessary to comply with the law. However, there is no guarantee that Google will not deliberately lower the rating of objectionable sites, such as potential business competitors to its other products.

At any time, the centralized platform can change the rules. The average consumer will have two options – to put up with the innovations or no longer use the service. This is a particularly acute problem in the absence of competitors.

Let's take the Instagram app as an example. It uses the data of its users for advertising and monetization. Moreover, users host their data on servers that have owners. User safety is at risk. Owners of websites and applications can be controlled by the government laws. Customer data is often stored and used without their permission. Users have no control over what happens to their data, how it is tracked and stored.

It follows from this that the Web2 Internet is centralized, and the owners of various sites and applications can dispose of user data, access to them can be obtained by the state.

In 2014, Ethereum co-founder Gavin Wood came up with a new concept for the Internet, based on decentralization. In an ideal Internet, the user will be able to do without centralized services. You no longer need to trust personal data to third-party companies. If the user needs to pay for some service or product, he can use tokens and remain anonymous.

In 2021, the concept of Web3 began to gain popularity largely due to initiatives from the cryptocurrency community. Bitcoin is a public ledger. It displays transaction data, but hides information about the users themselves. The registry itself is decentralized and simultaneously stored on multiple computers. If necessary, everyone can download the program and study the recordings. To do this, you can use the services of blockchain monitoring.

A decentralized ledger can do much more. Smart contracts, DeFi, NFT, etc. are already working on the basis of the blockchain. Developers got a tool to implement any ideas – websites, payment systems, games, etc.

The token itself inside the system can be used not only to pay for a specific process. In some blockchains, this asset plays the role of a stock. While the user owns the token, he gets additional features:

Participation in staking (coin mining using PoS).

The right to vote on the future development of the network.

Any asset can be tokenized. For example, you can transfer a shopping center to the blockchain. For this, 1 sq. m. is attached to the token. The owner of the cryptocurrency will be able to receive income from the area when renting. Since the mall is divided among several participants, they can tackle important issues by voting. Accordingly, the more tokens a user has, the more weighty his opinion will be.

A similar management principle is called Decentralized Autonomous Organization (DAO) – a decentralized autonomous organization. Many cryptocurrency projects are self-regulatory. 

Developers cannot make changes without community approval.

Several fairly successful cryptocurrency projects are already moving towards Web3. The number of developers in Web3 is gradually growing. Social networks have become a convenient tool for doing business and communicating with other people. It is difficult to imagine a company or a celebrity without a page on social networks. Now most sites do not require full registration. The user just needs to specify Gmail and give permission to process data. Such opportunities make staying on the Internet more comfortable. But for convenience, the user has to sacrifice personal data.

In Web3, the role of Gmail will be taken over by cryptocurrency wallets. When using the services, you do not need to provide personal information, it is enough to make a transaction in a certain cryptocurrency. With this level of trust, you can do without security certificates and fear that the funds will be in the hands of scammers.

The number of projects is already in the thousands, and the rate of emergence of new ones is constantly growing. Their main difference from the technology giants is that the profits are shared by several thousand active community members, and not by a small group of individuals.

Thus, decentralization is at the heart of the third version of the Internet. This means that developers will no longer create applications that run on a specific server or store data in a specific database. Applications on the Web3 Internet will run on the blockchain using decentralized networks, which will consist of a large number of nodes. That is, all applications will become decentralized (dapps).

In dapps, data is not located on a centralized server, but on nodes. There can be as many as you like, and devices of users from all over the world can act as nodes. When added, client data will be copied on all nodes and entered into the blockchain, and no one will be able to control and use it for their own purposes.

What Are Web3 Investment Opportunities? 

Participation in the creation and management of Web3 applications is taken by the users themselves, who can receive rewards in cryptocurrencies for this. The role of dapps for Web3 is not only to store data, they can also perform identification, hosting and other services currently provided by providers.

Among other advantages of Web3 investment opportunities is the ability to monetize not only node services, but also the content created. At the same time, content authors can remain anonymous and not provide their data to anyone. Moreover, ordinary users will be able to receive a reward for viewing published content.

Decentralization will also help further develop free speech on the web and keep users safe (a decentralized web is extremely hard to hack). It is worth noting that decentralized networks give users the opportunity to provide the power of their devices to other users, and this will increase the speed of the Internet.

How Can You Invest In Web3?

NFTs

How to invest in Web3? Non-fungible tokens are one of the new assets attracting the attention of investors. This is one of the fastest growing segments of the crypto market. Not only is the total volume of transactions growing, but also their average cost, as well as the number of popular NFT marketplaces, such as OpenSea and others.The advantage of investing in the Web3 NFT sector is the great development potential. It's not just collecting pictures anymore. The technology is evolving in areas where digital proof of ownership is important: from music and fan tokens, to clothing and wealth management in the metaverse.

Metaverses

Metaverses are virtual worlds, often with gaming functionality, that support the possibility of earning and purchasing various digital assets. Events and concerts, marriages and business meetings take place within the metaverses. There you can buy land and luxury property, rent an office or advertising space. Taking into account the fact that transnational corporations and institutional players are investing in the creation and development of metverses, it can be assumed that this trend has a great future.

Cryptocurrencies

Metaverse tokens and projects that develop them are another tool that can bring significant profit to an investor. These digital assets are listed on exchanges and are available for purchase by any investor. This is perhaps the easiest and most affordable way to invest in Web3.

Company Shares

Another way of Web3 investments, the most conservative, is to buy shares of companies that build metaverses or are involved in their development. Meta, Adobe, Microsoft and other firms have been on the market for a long time and have proven their worth.

What Are the Risks of Investing in Web 3.0?

Like any new technology, Web 3.0 has its downsides. From a social point of view, the main fears are associated with uncontrolled flows of information that can be dangerous for society. Modern parents are worried about the lack of control over their children and possible hater actions on the network.

In terms of investment, there is no guarantee that NFTs or real estate in the metaverse will be worth more over time than it is now. Skeptics believe that the bubble will burst soon, but most likely in the coming years we will see the development and growth of this market.

The introduction of new technologies is associated with possible conflicts with previous solutions, with the need to learn something new and the difficulties in accepting a new paradigm as a whole. But, as experience shows, children's diseases of new technologies are treated quite quickly. It means that you can invest in Web3 quite safely.