Web3, also known as the decentralized web, is the next generation of the internet. It aims to create a more secure, transparent, and user-controlled online experience by utilizing blockchain technology. With the rise of cryptocurrencies and the increasing adoption of blockchain technology, Web3 has become a hot topic among investors. In this article, we will explore the best ways to invest in Web3 and how you can get started on your journey towards this exciting new frontier.
Introduction to Web3
Before we dive into the various investment opportunities in Web3, let’s first understand what it is all about. Web3 is essentially the evolution of the current centralized web (Web2). It is built on the principles of decentralization, where data is not controlled by a single entity but rather distributed across a network of nodes. This makes it more resilient to censorship and hacking attempts.
Web3 also utilizes blockchain technology, which is a digital ledger that records transactions in a secure and transparent manner. This allows for trustless interactions between parties, eliminating the need for intermediaries such as banks or governments.
Now that we have a better understanding of Web3, let’s explore the best ways to invest in it.
1. Buy Web3 Stocks
Perhaps the easiest way to get exposure to Web3 is through the stock market. While this may not be the most direct way to invest in Web3, it is a good option for those who are already familiar with the stock market and want to dip their toes into the world of Web3.
Companies heavily invested in Web3 technology
Here are a few companies that are heavily invested in Web3 technology:
- Nvidia (NVDA): Nvidia is a leading manufacturer of graphic processing units (GPUs), which are vital in the development of Web3 technology. Its GPUs are used for mining cryptocurrencies, processing blockchain transactions, and running decentralized applications (dApps);
- Advanced Micro Devices (AMD): Another popular chip manufacturer building Web3 is Advanced Micro Devices (AMD). Its GPUs are also used for mining cryptocurrencies and powering dApps;
- IBM: IBM is deeply invested in blockchain technology and Web3. It offers blockchain services to businesses and has partnered with several companies to develop blockchain solutions.
2. Buy Web3 ETFs
ETFs (exchange-traded funds) are always a great way to diversify away single stock risk. Here are a few ETFs with exposure to Web3:
Amplify BLOK (BLOK)
Amplify’s BLOK ETF invests in companies involved in the blockchain space. Its top holdings include Microstrategy (MSTR), GMO Internet Group (GMOYF), and Coinbase (COIN). This actively managed fund has an expense ratio of 0.70% and has gained over 100% in the past year.
Siren BLCN (BLCN)
Siren’s Nasdaq NexGen Economy ETF seeks to track the NASDAQ Blockchain Economy Index. This ETF has a lot in common with BLOK, with its top holdings also including Coinbase (COIN), Marathon Digital (MARA), and Microstrategy (MSTR). However, BLCN is a passively managed fund with a lower expense ratio of 0.68%.
3. Invest in Crypto Coins & Tokens
One of the most direct ways to invest in Web3 is by buying cryptocurrencies. These digital assets are used as a medium of exchange on decentralized networks and can also be used to access various services and applications within the Web3 ecosystem.
Most Popular Cryptos by Market Cap
Here are the top 10 cryptocurrencies by market capitalization:
| Rank | Cryptocurrency | Market Cap (as of August 2021) |
|---|---|---|
| 1 | Bitcoin (BTC) | $900 billion |
| 2 | Ethereum (ETH) | $380 billion |
| 3 | Binance Coin (BNB) | $70 billion |
| 4 | Cardano (ADA) | $60 billion |
| 5 | XRP (XRP) | $50 billion |
| 6 | Dogecoin (DOGE) | $30 billion |
| 7 | USD Coin (USDC) | $27 billion |
| 8 | Polkadot (DOT) | $25 billion |
| 9 | Uniswap (UNI) | $20 billion |
| 10 | Bitcoin Cash (BCH) | $15 billion |
How to Buy Crypto
To buy cryptocurrencies, you will first need to open an account with a cryptocurrency exchange. Some popular exchanges include Coinbase, Binance, and Kraken. Once you have an account, you can fund it with fiat currency (such as USD) and then use that to buy your desired crypto coins or tokens.
It is important to do your own research and due diligence before investing in any cryptocurrency. The market is highly volatile, and prices can fluctuate significantly in a short period of time.
4. Invest in DeFi
DeFi (decentralized finance) is a rapidly growing sector within the Web3 ecosystem. It refers to financial applications that are built on decentralized networks, allowing for permissionless and trustless transactions. Some popular DeFi applications include lending and borrowing platforms, decentralized exchanges, and stablecoins.
Investing in DeFi can be done by buying tokens of these projects or providing liquidity to earn rewards. However, it is important to note that DeFi is still a relatively new and unregulated space, so there are risks involved.
5. Invest in NFTs
NFTs (non-fungible tokens) have taken the world by storm, with multi-million dollar sales of digital art and collectibles making headlines. These unique digital assets are stored on the blockchain, making them scarce and valuable.
Investing in NFTs can be done by purchasing them directly from marketplaces such as OpenSea or Rarible. You can also invest in companies that are building infrastructure for the NFT market, such as Enjin (ENJ) and Flow (FLOW).
Conclusion
Web3 is still in its early stages, but it has the potential to revolutionize the internet as we know it. As with any investment, it is important to do your own research and understand the risks involved before diving in. Whether you choose to invest in Web3 through stocks, ETFs, cryptocurrencies, DeFi, or NFTs, always remember to diversify your portfolio and never invest more than you can afford to lose. With the right approach and mindset, investing in Web3 could prove to be a lucrative opportunity in the years to come.