How to Invest in Web3 in 2023

You’ve probably heard the term “Web3” or “Web 3.0” mentioned in IT and financial circles and its relationship with the blockchain technology. Blockchain has already caught the attention of financial firms and tech giants such as Apple, Alphabet, Meta, and Amazon. If you are unsure how to invest in Web3, keep reading, as we will cover multiple investment methods, including what stocks and cryptocurrencies you should consider buying.

Table of contents

What Is Web 3.0?

Web 3.0 is the next evolutionary step of the World Wide Web which relies on technologies such as Blockchain, AI and Machine Learning.

Before investing in Web3, you should understand where it all started. The Internet was quite different by the end of the millennium, and it took some time to get to where it is today.

From Web1 to Web2

The first iteration of the internet, or Web1, became available to the public in the 90s. Websites were static pages with primarily written content such as news, classified ads, and images that took forever to load with limited bandwidth. Users could only read content available online, send emails, and use IRC-based software for instant messaging.

Increasing internet speeds brought the dot-com boom, which spearheaded the evolution of Web2. More options for interaction and socialization were the main features of the first internet evolution. The creation of social media and personal websites marked the rise of tech giants such as Google, Apple, and Facebook at the expense of user privacy.

Internet today – Web 3.0

Internet users have become the product that large corporations exploit by selling their data for financial gain. Therefore, it’s reasonable to conclude why Web3 is the next logical step.

Web3 stands to empower users by letting them own their data and having the option to monetize their content without a centralized structure. With Web3, users are now able to choose if they want to share their data or stay anonymous, and if they do share, they are the ones who will profit from it and not giant tech companies. Blockchain technology can create a safer internet, create a more affordable transaction environment for its users, and build on decentralized systems.

Web 3.0 Ecosystem and Underlying Tech

The Web3 ecosystem includes some of the features that will define the next step for the internet. Good Web3 investment opportunities are likely to be related to one of these technologies of the Web 3.0 ecosystem:

Artificial intelligence and natural language processing (NLP) will enable computers to distinguish information like humans do and produce better and quicker results.
Semantic Web is a way of structuring and organizing data on the web to make it more easily understood and processed by computers. Its goal is to provide better search results by understanding the meaning of words rather than relying on keywords.
Distributed Ledger Technology is a database that is practically impossible to crack and manipulate by malicious parties and enables virtual ownership.
Smart contracts are programs deployed on the blockchain. These can act as real-life contracts, but they eliminate the need for having a middleman to enforce. Furthermore, anyone can deploy smart contracts on the blockchain, enabling the creation of decentralized applications.

Before diving deeper into how to invest in Web3 and crypto, you should have at least a basic understanding of how the “new web” will operate and about its underlying tech.

Layer 0 – Infrastructure

A layer 0 is a type of protocol that enables developers to launch various networks like Bitcoin, Ethereum and many more.

Layer 1 – Network

Layer 1 refers to a base network, such as Bitcoin, BNB Chain, or Ethereum, and its underlying infrastructure and functions.

Layer 2 – Protocol

Layer-2 refers to a network or technology that operates on top of Layer 1 blockchain protocol to improve its scalability and efficiency.

Layer 3 – Services

It is a layer that hosts decentralized networks applications (DApps) and the protocols which excel at executing specific tasks.

Layer 4 – End User Application Layer

End users are likely to interact with software developed on this layer of technology. Therefore, Layer 4 solutions mostly rely on user experience and support rather than implementing innovative features. Anyone already making Web3 investments will likely be familiar with some examples, such as Brave (browser), Metamask (wallet), OpenSea (NFT marketplace), and CoinMarketCap (price listing website).

How to Invest in Web 3.0

There are two main asset classes you can invest in the Web3 industry. These are equities in companies that are developing projects in the industry and digital assets such as cryptocurrencies. There’s no need to limit your investments to just one type of asset, especially considering the multiple benefits of having a diversified portfolio.

Web 3.0: Passive Investing vs. Active Investing

The most crucial step for you as an investor is to choose the right strategy. You must decide if you want to take an active or a passive approach.

Do you have the time and the energy to learn more about the companies or cryptocurrencies you invest in? Are you more comfortable doing your research and handling risk? If you answered yes to any of these questions, an active investment approach could be best for you.

If you aren’t as familiar with Web3 and how to invest while effectively managing risk, you will be more comfortable with a passive investment strategy.

Here are some advantages and disadvantages of active and passive investing:

Passive investing A/D

Passive investing in Web 3.0 advantages:

Diversification: Passive investing allows you to spread your risk across a diversified portfolio of Web 3.0 assets, which can help to reduce the impact of market volatility.
Low fees: Passive investment products, such as ETFs, often have lower fees than actively managed funds, which can increase your potential returns.
Simplicity: Passive investing requires minimal effort and decision-making, making it an easy and convenient way to invest in the Web 3.0 market.

Passive investing in Web 3.0 disadvantages:

Limited upside potential: Because passive investment products are designed to track the market, they may not offer the same upside potential as actively managed portfolios.
Lack of control: With passive investing, you have little control over the specific assets in your portfolio, which means you may miss out on potentially lucrative opportunities.

Active investing A/D

Active investing in Web 3.0 advantages:

Potential for higher returns: By hand-picking specific Web 3.0 assets, you may be able to achieve higher returns than with a passive investment product.
Greater control: With active investing, you have the ability to choose the specific assets in your portfolio and make timely buy and sell decisions based on your analysis and strategy.

Active investing in Web 3.0 disadvantages:

Higher risk: Active investing carries a higher level of risk, as you are relying on your own analysis and decision-making rather than a diversified portfolio.
Higher fees: Active investment products, such as managed funds, often have higher fees than passive investment products, which can reduce your potential returns.
Time and effort: Active investing requires a greater time and effort commitment, as you must continuously monitor the market and make investment decisions.

Both passive and active investing can be valid approaches, and the right approach for you will depend on your financial goals, risk tolerance, and available time and resources. You can also always combine these two strategies and use them simultaneously.

Active Web 3.0 Investments

You can invest your money, time, or yourself in several ways in Web3.

Finding Work in the Web3 Industry

With the right education and skill sets, finding a job in the Web3 market could be the most lucrative way of investing. You would be at the forefront of the industry and learn about it straight from the source. Developer jobs in Web3 usually have a high income, which you can set aside to invest directly in digital currencies and equities.

To find work in the crypto industry, you can:

Join a Web3 startup.
Look for postings on websites that include the crypto industry.
Attend crypto conventions and events and network with people in the industry.

If you already have previous experience as a developer, you can start creating a portfolio of dApps that will get you a position in the Web3 industry. Alternatively, you can earn revenue directly from creating practical applications the community will use.

How to Make Money in Web3 Through Airdrops

Airdrop is the term used for the usually free distribution of coins or tokens to the community that follows a blockchain project. While it’s primarily used to gain new followers and attention, it also expands the user base of a specific crypto project.

These airdrops can be profitable if you pick the right time to sell your freely earned digital assets. However, not all airdrops are as promising, so it’s vital to find trustworthy projects that are sure to experience growth.

You can join relevant Telegram groups to find such projects, as it’s a popular messaging app among the Web3 and crypto communities. Users are always discussing various investment opportunities, including airdrops.

Patience is a virtue when it comes to airdrops. It can take a lot of time till coins are distributed to eligible wallets. On top of that, it takes even more time while those coins are listed on reputable exchanges, and you can turn a profit.

Crypto Mining

While it’s not currently the best Web3 investment, mining cryptocurrencies is still a viable option. After Ethereum has switched to the Proof-of-Stake consensus mechanism, mining with graphics cards (GPUs) has become less popular since other projects don’t provide such a return on investment in mining equipment. However, mining can still be profitable for you if you live in a country with cheap electricity, or you have access to alternative and more sustainable power sources such as solar energy.

ASIC (Application-Specific Integrated Circuit) miners used to mine Bitcoin, and other cryptocurrencies based on similar systems can provide decent returns. These specialized computers are built only to mine cryptocurrencies, making them more expensive than regular computer hardware. However, they are significantly more efficient in what they can achieve.

Play to Earn Web3 Games

So, can you invest in Web3 by playing games? Yes, you can. Several projects, such as Gods Unchained, Axie Infinity, and Splinterlands, are built on the blockchain and allow you to earn the native digital asset by playing.

Passive Way to Invest in Web3

You don’t have to be actively engaged to earn a profit in the upcoming Web3 evolution. There are ways of investing that are similar to the traditional stock market and require less involvement from you.

Buying Crypto

While it may sound simple enough, buying cryptocurrencies and holding them long-term is an excellent way to earn a passive income or deal with inflation. The crypto market, despite its volatility, has been the most appreciative investment asset in the recent decade.

Crypto Lending Platforms and Staking

With the development of DeFi, platforms that allow users to lend and borrow crypto are becoming increasingly popular. Lending is an excellent way of earning additional interest on your crypto assets. Most venues will have APY from 3% to 15%, making it more lucrative than saving fiat currency in traditional banks.

Similarly to lending, you can stake your coins to participate in verifying transactions that are added to the blockchain. Rewards are earned because you maintain the network’s security through participation, and Ethereum is one such example. Annually, you can earn up to 4.50% more Ether on the amount you staked.

NFTs

NFTs, or non fungible tokens, are among the most attractive web 3.0 investment opportunities and represent ownership of unique digital items. These can be everything from images, videos, audio files, and even real estate and objects in metaverse environments.

Bored Ape Yacht Club has been one of the most publicly discussed digital art projects, and at the time of writing, the average price of a single Ape NFT is around $100,000. Bear in mind that NFTs can be a risky asset to invest in, despite their worth. They have been the subject of many controversies in 2022, and you shouldn’t invest in them more than you are prepared to lose.

The Best Web 3.0 Coins to Invest in

Unfortunately, only some Web3 projects are potentially decent investments. Knowing which cryptocurrency project should be on your radar is an excellent start for building a profitable Web3 portfolio. Multiple Web3 crypto tokens should be on your radar if you are interested in investing. Here are some examples of web3 coins that may be worth looking:

Ethereum

Many people invest in Ethereum as a long-term asset, believing that it has the potential to establish itself as a significant player in the Web3 ecosystem and beyond. Ethereum platform has already established itself as a central spot for many emerging Web3 projects that use its infrastructure.

Decentraland

Anyone interested in how to make money with Web3 has heard of Decentraland, a virtual reality platform built on the Ethereum blockchain. Users can explore virtual worlds, interact with each other, and participate in various activities. The platform is powered by its native cryptocurrency, MANA, which purchases in-game items and virtual real estate. It could be considered a developing metaverse project, and it should be interesting for investors to follow how the project is developing.

Polkadot

Polkadot is a decentralized network that allows for the creation and connection of multiple specialized blockchains, known as “parachains.” It aims to enable scalability and interoperability for a wide range of applications. Polkadot is considered to be an indispensable part of Web 3.0. The founder of Polkadot is a co-founder of Ethereum Gavin Wood, one of the pioneers of the crypto world.

How to Choose Web 3.0 Stocks

You need to consider several factors when choosing what Web3 company stocks to buy.

Look for companies that are actively working on the development and adoption of Web3 projects. We’ve already discussed what kind of technologies they need to work on, which will be essential for the next step in the evolution of the internet.
Investigate who is leading the company and their experience navigating the rapidly changing Web 3.0 landscape.
Examine what partnerships and collaborations the company you want to invest in has. Furthermore, examine if established companies are building their tech on developing Web 3.0 platforms.
The company’s financial health will determine its longevity and if it can weather the bear market.

Companies Currently Investing in Web 3.0

You are not the only one looking for Web 3 companies to invest in. Many organizations interested in the emerging technology want to influence how the new internet ecosystem will look.

Some examples of companies that are actively involved in Web 3.0 include:

Alphabet (Google): Google is investing heavily in artificial intelligence and machine learning, and has incorporated these technologies into many of its products and services, including search, maps, and translation.
Microsoft: Microsoft is also investing in artificial intelligence and has integrated AI capabilities into many of its products, including the Azure cloud platform and the Microsoft 365 suite of productivity tools.
IBM: IBM is a leader in artificial intelligence and has developed a number of AI-powered products and services, including the Watson platform. IBM is also heavily involved in the development of the Internet of Things (IoT) and has created a number of IoT-enabled products and solutions.
Coinbase Global, Inc. is a digital currency exchange company that operates a platform for buying, selling, transferring, and storing digital currencies. In addition to its core exchange business, Coinbase has also invested in and acquired a number of companies and startups working on blockchain and cryptocurrency related technologies.

Investments in Web3 by these types of organizations can be a good sign for the future of the technology. It suggests that there is significant interest and belief in the potential of Web3 to revolutionize the internet and various industries.

Conclusion

Investing in a new emerging industry can be quite lucrative, but researching what to invest in can be a bit overwhelming. Our mission at Veli is to make smart crypto investing effortless. If you need help with making your first steps in Web 3.0 investing, sign up for our waiting list and get help from your personal crypto mentor.