Can you profit from Web 3.0?
I am an investor in many companies. My portfolio is fairly diverse. But there is one common thread that binds most of the firms I have put some cash towards; they all place a high value on innovation. Often, that innovation is rooted in the development of technology. And the trends that emerge from it.
Throughout 2021, a lot of my attention was impacted by the rise of technologies that are trying to deliver Web 3.0. As we get started in 2022, I am asking what is Web 3.0 and where can you invest to make some money from it?
Understanding Web 3.0
Semantic Web, the intelligent web, Web 3.0. These terms, all of which refer to the third generation of Internet-based services, have been around for years. They describe a way of accessing and utilizing the internet that gives the power of control back to the users. The first iteration of the Internet was all about access to static content and information. There was not much you could do with it, other than consuming it.
Web 2.0
Web 2.0, the Internet as we have it today, brought with it many layers of interaction. You could now create content yourself and, using social platforms, post live updates of anything from anywhere in the world. And it didn’t stop with content either, eCommerce and service provision exploded. Whether you want to shop for groceries, learn new skills, or book hospital appointments, Web 2.0 could facilitate it all. But the challenge of this version is that ‘we’ are without control.
Limitations
We are constricted by the rules laid down by the leading platforms. The likes of Amazon, Twitter, Google, and so on, dictate how we can use the Internet. We must freely give up our personal data to be able to use many of the services that are available. The consumers are the product and our data drives the revenues of these commercial giants.
Control
Web 3.0 looks to take that power back by organizing data and platforms around users and communities. In theory, there is no centralized company that can set rules or controls the actions taken on these platforms. The promise of Web 3.0 is that the users will be aligned to the platform. They will be rewarded for their efforts and for any data they give up. This will give them control over what happens on the platform.
Metaverses
Web 3.0 Tech
The delivery of Web 3.0 is underpinned by the emergence of things like blockchain technologies, non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs). Each of these is fascinating to explore in and of themselves. I may cover more on these in future articles but I would suggest taking a look at the videos by Simply Explained on youtube if you wish to learn more right now.
The key area of Web 3.0 development interest for me at the moment though, especially from an investment perspective, is the metaverse.
Metaverse
The metaverse is a digital space, created and driven by communities where information can be shared. It consists of virtual worlds that are interconnected. It allows users to interact through games, music, messaging, learning, and more.
Unlike Virtual Reality (VR) technology that usually requires expensive hardware, the metaverse is accessible online via a browser. As it is not constrained by time and space, anybody can connect at any time. This plays into metaverses having scope for business, healthcare, education, and other non-entertainment-centric applications. Aside from the obvious approach of trying to invest in cryptocurrencies, it’s the metaverse space that seems to have been making news more recently.
Opportunities
Facebook to Meta
One of the biggest announcements of 2021 in this area came out of Facebook and the changing of the parent companies name to Meta. It’s a clear indicator of where they see their future. As well as owning Oculus Rift, the VR company, Meta is aiming to evolve Facebook into a virtual world where people can socialize rather than just through the app. It’s still a works in motion. But from an investment perspective, it may present a huge opportunity given Meta will likely aim to monetize this alternate world.
Nike, Roblox, and RTFKT
Another development that came late in 2021, was Nike’s announcements. They have created a virtual presence within Roblox, Nikeland, and then a month later acquired RTFKT, a studio that develops virtual collectibles. With Nikeland, as well as providing a place for people to play, compete and create their own games, they are setting up a digital showroom to showcase their latest real-world merchandise. It will also allow them to
- test customer opinion
- create new products driven by customer design
- get across younger audiences that play Roblox, creating long term customer relationships
At the same time, having RTFTK on board will allow the retailer to sell virtual sneakers that people can use to outfit their avatars. And it could work the other way with Nike allowing you to buy a real pair of sneakers that can be coded for use in virtual realms.
Start of the gold rush?
So where to invest and make some money? It’s these types of use case scenarios, as shown by Meta and Nike, that make looking at Web 3.0 driven developments so appealing for investment. They are ‘mainstream’ companies that are demonstrating how to affect their bottom line. Meta and Nike are bridging the divide between where we are today and what Web 3.0 will bring. They are going beyond just replicating the real world in a digital space and exploring new types of engagement that will result in new and improving revenues.
Others are joining the party. The likes of Pepsi, Reddit, Visa, Kickstarter have all announced Web 3 initiatives. And it won’t just be about the metaverses.
It’s difficult to lay out all the opportunities that are starting to present themselves through the lens of Web 3.0 as they are numerous.
- There is decentralized finance (Defi) that uses blockchain tech, where you can earn revenue through lending cryptocurrency.
- Startups that are set up as DAOs where money will be made through dividend payments.
- Creating, buying, and trading NFTs.
- And more still.
From a conservative perspective, I am going to be keeping a close eye on who is making a viable commercial approach to utilizing these technologies. These firms will likely prove a stable return on investments. For a more speculative approach, I will be watching those Defi platforms.
Come what may, it’s looking interesting.
