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It commonly known that those who were properly invested in Web1 and Web2 early on were heavily rewarded. The question that comes from this is how to invest in Web3 in both a passive and/or a direct manner. This article explores 8 ways you can invest in Web3.
Web1 was all about static pages, while Web2 was dynamic. However, as time passed, Web2 was dominated and controlled by large tech companies. While users generated content, it was primarily dictated to them, and corporations held power. Tech companies make money from user-generated content. Users like you and me needed permission from a faceless entity to do what we wanted.
Now, we have Web3, a decentralized, permissionless, user-built, and operated version of the internet. To fully understand the concept of Web3 and determine how to invest in this rapidly growing ecosystem, let’s figure out its ins and outs.
What is Web3, and how is it different from the present-day internet?
8 Ways on How to Invest in Web3 in 2023
The next iteration of the internet is called Web3. It can be characterized as a blockchain-based, decentralized online ecosystem representing the third generation of web technologies.
Web3 aims to enhance several features of Web2, the current-day internet. With blockchain technology, Web3 seeks to allow users to read and write content while enabling them to own their data and digital assets. As a result, no one using it will need to rely on a third party to access the internet or validate their transactions. Web3 is more user-centric. Decentralized technologies, including NFTs (Non-fungible Tokens), blockchains, DeFi (decentralized finance) platforms, and VPNs (virtual private networks), are the primary focus of Web3.
In Web2, giants like Google, Facebook, and Apple have created a monopoly and have been limiting, censoring, and banning users with little repercussions for privacy violations and data leaks. The shift to Web3 will address this issue by allowing users to selectively share or monetize their data.
How to Invest in Web3
Web3 is a place of shared commitment between both crypto and traditional companies. Therefore, investors get two asset classes to choose from, i.e., equities and digital assets. There are several active and passive ways through which you can invest in Web3.
A passive investment means purchasing an investment you have little control over, and investments are already picked for an investor. On the other hand, active investing means hand-picking individual digital assets that the investor believes will perform better over time.
Modes of Passive investments
Through passive investing, investors can hold on to the virtual assets for the long term and accrue value on them. If you plan to invest in Web3 passively, you can select any investment options below.
ETFs
You can invest in a few ETFs (Exchange-traded Funds) in the Web3 space to try and profit. The Simplify Volt Web3 ETF was the first Web3 ETF to hit the market. You also have blockchain ETFs like First Trust Indxx Innovative Transaction & Process ETF, Siren Nasdaq NexGen Economy ETF, and Amplify Transformational Data Sharing ETF. In October, Bitwise Asset Management announced the launch of the Bitwise Web3 ETF.
Metaverse
Web3 is incomplete without the Metaverse. Metaverse, with its virtual reality, is an integral component of Web3, and users can use it to build social connections and conduct business. Many tech companies are frequently upgrading their technology to upgrade it. Notably, investors can use thriving Metaverse platforms like Decentraland to buy plots of land in the Metaverse as “virtual real estate investment.”
You can invest in the Metaverse through Metaverse native cryptocurrencies like MANA and SAND. You can also invest in metaverse stocks, as mentioned earlier in the article. There is also a Metaverse ETF.
NFTs
NFTs represent digital assets like music, art, or virtual real estate. Many NFT platforms have sold popular NFTs like Bored Ape Yacht Club for over a million dollars. NFT investments, too, are a lucrative form of passive income. You can rent out your NFTs to earn passive income.
4. Web3 company stocks or crypto lending platforms
Stocks can generate long-term profits for investors. You can purchase stocks in Web3 firms like Meta, NVidia, Coinbase, and IBM, which are currently experiencing rapid growth. Investors can also choose to invest in smaller Web3 firms, which are now less expensive but may soon be very valuable.
Additionally, several platforms offer crypto lending services, from which investors can borrow money to speed up their crypto investing. Investors with excess funds might loan out their crypto to other traders in exchange for interest income. It’s a fantastic source of passive income, but one must carefully consider the advantages and disadvantages of each platform before choosing one.
Modes of Active investments
Active investors have a Web3 portfolio consisting of global digital assets and stocks. Usually, these are some of the famous active Web3 investment modes:
Crypto mining
Crypto mining is the process of using the proper setup of hardware and software to solve complex codes. One can verify new blocks of transactions to get cryptocurrencies as a reward. With Web3 evolving rapidly, this process has become even more profitable. However, those opting for this mode should research well and understand the equipment needed for this.
NFT Creators
Investors may generate their digital assets and turn them into NFTs using AI, which is now offered by several decentralized applications.
Joining communities for Airdrops
Airdrops are a great way to get free crypto tokens. When a startup gives away free tokens within its communities, an Airdrop is said to take place. Organizations use this mechanism to boost awareness regarding new blockchain projects and encourage their adoption amongst investor communities. On the other hand, the investors can either hold or sell them for a profit. However, as crypto is susceptible to fraud, one must join reputable projects only.
Getting involved in Web3 projects
Many Web3 projects let investors earn money through their play-to-earn models. There are games like Splinterlands and Polygon which reward players using digital assets. Moreover, one can join projects like Theta or Ocean Protocol that use innovative blockchain technology to bring services to their users.
Cryptocurrencies
Cryptocurrencies can be used as both active and passive options for Web3 investing. You can directly invest in cryptocurrencies like Bitcoin, Ethereum, Solana, Litecoin, and others. This is active investing.
You can also utilize tools like DappRadar, CoinMarketCap, and DeFi Llama to discover projects inside the Web3 ecosystem and choose from the thousands of cryptocurrencies available.
However, before investing in them, one should be aware that these digital assets are highly volatile. One should only invest in them after carefully examining the project or consulting an investment advisor.
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