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How to Invest in Web3 and Why Doing So?

How to Invest in Web3 and Why Doing So?

GamesPad: What Is Web 3, and Why Should You Invest in it?

In today’s world, people are more connected and working online than ever before. Major internet companies like Google and Microsoft dominate much of the digital landscape. However, Web3 is an emerging concept that aims to prioritize user control and security on the internet. The increasing interest in Web3 has sparked curiosity among investors about how to invest in this new frontier. In this post, we will delve into the meaning and significance of Web3, how to invest in it securely, common risk factors, and essential knowledge to help you learn how to invest in Web3. What Is Web 3.0

Web3 as the next iteration of the internet

Source: FreepikWeb 3.0, or Web3, represents the third generation of the Internet. Although there is no precise definition, Web3 can be understood by its primary purpose: creating a decentralized web that leverages public ledger technology to secure and manage data. Often referred to as the next evolution of the Internet, Web3 emphasizes user control and data privacy.A Web3 company utilizes Web 3.0 to offer digital services. While Web3 is still in its early stages, it has already seen significant advancements. Events like the MiamiWeb3 Summit and Web3 Expo, along with fundraising incubators and accelerators, play a crucial role in fostering the development of Web3 services.Before we explore how to invest in Web 3.0, let’s examine a few key characteristics of this rapidly growing sector.Decentralization: Web3 is built on peer-to-peer digital ledgers or a blockchain ecosystem, distributing control among many participants. This contrasts with the centralized, process-heavy nature of current Web2 businesses.Data Control: In Web3, your data is stored securely on a blockchain network rather than on the servers of a centralized company. This ensures your data isn’t sold to the highest bidder, as is often the case with many Web2 social media platforms.Efficiency: Web3 leverages smart contracts to streamline various processes that typically require significant resources in Web2 companies.Trustlessness: Web3 operates mainly on the Ethereum network, a trustless blockchain where all participants have a say in the network’s state. The decentralized nature ensures that malicious actors cannot easily disrupt the system, as the majority will act in their best interest.Web3 emerged from a group of developers frustrated with the centralized nature of the Internet. They envisioned a more decentralized and user-friendly digital landscape and set out to create it using blockchain technology. In 2014, Gavin Wood, the founder of Polkadot and co-founder of Ethereum, coined the term ‘Web3’. Fast forward to 2024, and people are actively exploring the best options of how to invest in Web3 to grow their wealth. Why Invest in Web3?

Invest according to your risk tolerance

Source: FreepikInvestment in Web3 looks very lucrative in the long term. By 2025, the Web3 market is expected to grow to an immense $176 billion, which will make a 700% increase compared to 2020.Web3 will enable users to create content and share it and own data. This digital ownership will enable everybody who, in one way or another, contributes to the third-generation internet based on blockchain technology to earn passive income.Many companies are continuously attracting Web3 investment for their Web3 projects. Some recent notable Web3 fundings include $132 million for Barça Vision of FC Barcelona, $13 million for ZTX’s Web3 creator infrastructure development, and $50 million for Web3 investments by Illuminati Capital.While the decision to invest in Web3 is personal, here are some key reasons why people are choosing to do so:

  • Revolutionary Potential: Web3 has the power to transform how we interact with the internet and each other.Decentralization and Security: There is a strong belief that Web3 will be more decentralized and secure than the current web.New Opportunities: Web3 offers the potential to create new opportunities for individuals and companies involved.Early Development Excitement: The effectiveness and promise of Web3 in its early stages generate significant excitement and interest among retail investors and venture capital firms.

  • How to invest in Web 3?

    Invest based on the modern portfolio theory, explore the options for your risk tolerance

    Source: FreepikAt the moment, we cannot speak about one blockchain project that completely complies with the Web3 idea. However, many of those reputable projects are working on speeding up the crypto’s mainstream adoption and mass acceptance of Web3.You can start investing in those crypto projects right now. The following active investing options are available.Invest in Blockchain Startups Investing in promising blockchain startups can be highly lucrative and is often considered one of the best ways to invest in Web 3.0. Research and identify startups with innovative solutions and strong teams. Early investments, such as through Initial Coin Offerings (ICOs) or as an angel investor, can yield substantial returns if the project succeeds. You can also invest directly in local software companies with experience in cryptocurrency software development.Invest in Web 3 StocksInvesting in Web3 stocks allows you to profit from home. Look for companies actively engaged in Web 3.0 technologies, such as blockchain, decentralized finance and decentralized applications, digital currencies, virtual real estate, or other emerging tech. Online brokers make it easy to access and manage your stock investments.Invest in Non-Fungible Digital Assets for a More Diversified PortfolioNon-fungible tokens have revolutionized the digital world. Investing in non-fungible tokens involves purchasing unique digital assets linked to digital art, collectibles, digital identities, or virtual real estate in virtual reality or augmented reality. Prioritize authenticity, research the artist or creator, and stay updated on crypto market trends. Reliable NFT marketplaces include OpenSea, Rarible, SuperRare, and Nifty Gateway. Invest in Cryptocurrencies Cryptocurrencies like Bitcoin and Ethereum are central to Web 3.0. You can invest by purchasing and holding these digital asset classes, aiming for growth in value over time. Additionally, explore decentralized finance (DeFi) platforms and decentralized protocols (DeFi protocols) where you can borrow and earn interest on your crypto holdings, or opt for staking crypto or crypto mining.Invest in AI and Companies Actively Engaged in Its DevelopmentArtificial Intelligence (AI) introduces a powerful dimension to Web 3.0 innovations. Tech experts believe AI has the potential to transform industries and enhance efficiencies. Consider investing in companies focused on AI or technologies driven by AI.Invest in the Metaverse The Metaverse, where virtual and physical realities merge, is an emerging concept attracting significant investment from tech giants. You can invest in Metaverse technologies, including virtual reality (VR), augmented reality (AR), and related digital experiences.Join an ETFJoining a popular ETF issuer such as Roundhill Ball Metaverse ETF may be a good option if you want to invest in Web3 and if you don’t have enough experience in digital currencies selection for investment.Such funds know how to look for the most promising projects. They can advise you on active investing options, assist you with your asset management and risk management, and even virtual real estate projects and traditional stock are on their list of investing opportunities.Dividend-paying tokensSome projects pay dividends for the holders of their tokens. The dividends are distributed by smart contracts based on the number of tokens that an individual holds. So, while the project is afloat, you get free crypto assets every predetermined period which is the best bet if you want to generate a passive income flow.What Are the Top Challenges for Web3?Web3 has the potential to revolutionize the Internet in the 21st century, but it faces several challenges that must be addressed. Understanding these challenges is crucial if you are considering investing in Web3 stocks or promising digital assets and projects.ScalabilityOne of the biggest challenges for Web3 is scalability. The current blockchain network infrastructure struggles to handle the traffic that a truly decentralized internet would generate. Significant improvements to the underlying technology are required to support Web3’s growth.SecuritySecurity is another critical challenge for Web3. While Web3 technology is designed to be secure, recent high-profile hacks have exposed vulnerabilities. Addressing these security issues is essential to ensure the technology’s reliability and trustworthiness.DevelopmentThe development cycle for Web3 applications is still in its early stages. There are many uncertainties about how these applications will function and how users will adopt them. This uncertainty makes it difficult for Web3 to gain widespread adoption and makes investment in it highly risky.Additional Potential Challenges

  • Energy Consumption: Blockchain technology consumes significant energy to power the computers that process transactions with crypto coins, posing a major issue for widespread Web3 adoption.Regulation: Unlike the case with traditional banking, the legal status of Web3 remains unclear, making it challenging for businesses to operate in the world of decentralized applications.User Experience: Web3 can be difficult to use for those unfamiliar with blockchain technological advancements, hindering its accessibility.Lack of Standards: The absence of standards in Web3 makes it difficult for different applications to interoperate effectively.

  • Despite these challenges, Web3 holds the potential to be a disruptive force in the technology industry. Overcoming these obstacles could revolutionize how we interact with the internet.Assessing risk vs reward with investing in Web 3Before you invest in Web3, make sure you understand all the related risks and the possibility of rewards. Before investing in Web 3.0, it is important to consider several key factors carefully. Understanding these aspects will help you navigate this complex technological landscape and make informed investment decisions for both an active and a passive investor.Top Factors to Consider When Investing in Web 3.0
  • Understanding Web 3.0 Basics

  • Learn the fundamentals of Web 3.0 before investing. Without a basic understanding, making informed decisions about how to invest in Web3 will be challenging.

  • Evaluating Projects and Technologies
  • Web3 offers many unique solutions. Research and understand the various projects to identify those that align with your investment goals.

  • Risk Assessment
  • Recognize that the Web 3.0 landscape is still evolving, and not all projects and digital assets will succeed. Diversify your investments to spread risk across multiple assets, reducing the impact of and direct exposure to any single project’s failure.

  • Due Diligence
  • When investing in startups, investigate the team’s background, their experience in the field, and their track record. Understand how their ideas can solve real-world problems.

  • Market Volatility
  • Web 3.0 investments can be highly volatile. Be prepared for potential losses and avoid investing in crypto coins more than you can afford to lose.

  • Regulatory Environment
  • Stay updated on cryptocurrency and blockchain regulations to ensure your investments are legal and viable. Compliance with the law is crucial to avoid legal complications.

  • Long-Term Vision
  • Web 3.0 requires a long-term investment perspective. Many projects are still in their early stages, and significant developments may take time. Be patient as the technology matures and adoption grows.

  • Security Measures
  • Security is critical when investing significant amounts in Web3, as it is a relatively new technology. Use a secure wallet and reliable exchanges, and consider hardware wallets for added protection against cyber threats.

  • Tips for making informed decisions when investing in Web 3How to choose the right investment opportunities when it comes to active or passive investing in Web3?There are some points to pay attention to.The team has the experience and is reliableWith Web3 and crypto projects popping up every day, it is important to understand to whom you are going to give your money.Check who is behind the project. Make sure those are real people. Search for them on social networks, and if those are real people, look for proof that they are really involved in the project.Project delivers valueSometimes, it is difficult to determine for a non-specialist whether a project may be valuable in the future or not. But if you see that somebody just created a coin and that’s it, most likely, no value shall be expected.Here are some problems that promising projects may be working on.Inter blockchain communication protocolCross-chain communication is one of the major obstacles to the Web3 mass adoption. While there are bridges that connect different blockchains, this technology is not reliable and vulnerable to attacks.Some projects are already working on solving this issue and creating platform-agnostic protocols that enable cross-chain communication. Once such a solution is created, it will gain traction, and its investors will benefit in the long run.Consumer-facing appsBlockchain technology has great potential, but it is not user-friendly at all. To access a DeFi platform, for example, a user needs to know what a wallet is and even to have one. Also, the basic knowledge of smart contracts is needed to understand how communication happens between different platforms’ components.For now, even to access a P2E game, users need to be more technologically aware than the average population is.That’s why in the future, we expect that teams will not only build digital ecosystems but will also create special apps to facilitate communication between ordinary users with these platforms and applications.And that’s why investing in a project that is working on eliminating the gap between the Web3 world and ordinary users can be a wise choice.ScalabilityThe scalability problem plagues many blockchains. Verifying transactions, for example, in the Ethereum or Bitcoin networks, may take a lot of time, especially if the network is congested.The so-called lightning network has partially solved the scalability problem for Bitcoin, and there are several Layer 2 solutions for Ethereum.But still, many projects continue working on this problem. There are many new projects that claim to have solved this problem. But even with their immense potential, they cannot scale up endlessly.That’s why for now, the scalability issue is still open, and thus, you can invest in a project that has a chance to develop something new in this sector.Play to earn crypto tokensWe all like to play, and if playing brings money, it is better. Play-to-earn model projects are among the most popular in the crypto sector, and it looks like their popularity will continue growing.But again, consider please that many teams are working on their P2E projects. That’s why it is important to choose those of them who bring something new and offer their players the top user experience.So, top-quality user experience, exciting gameplay, an opportunity to play for free for those users who aren’t ready to buy in-game items and characters, and sustainability are the features that a P2E project shall have if it wants to stay afloat.MetaverseEverybody is working on creating the best metaverses.For example, the founders of Bored Ape Yacht Club are working on the metaverse for the project. It may work out, considering that now, their NFTs are very expensive.But we recommend focusing on projects that apply Artificial Intelligence, VR, and other technologies of the future that will provide its users with those immersive experiences that we expect from a real metaverse.Moreover, the metaverse technology is used not only for playing but has many more applications. In such industries as construction, medicine, education, IT development, and many others, it is irreplaceable. That’s why projects focusing on these matters are the best for passive investments.Investment through DAODecentralized Autonomous Organizations (DAOs) are built on a distributed ledger and may become the major governing bodies in Web3 in the future. They also give smaller investors an opportunity to participate in new promising projects with smaller sums.There are many DAOs out there open to new investors, and thus, there are many DAO tokens to purchase. Buying these tokens can be compared to buying stocks in a company which makes investing in a DAO lucrative.Many more optionsWeb3 is in development, and it will take time for it to be adopted massively. But it is going to change the world we live in, just like virtual machines did it once. That’s why now, it is the right time to pick your favorite projects and participate in them.You can opt for active investing by building blocks for the internet of the future.You can provide computational power to verify transactions.Finally, you can create personal websites that will solve one or another problem of today’s web and help with moving to Web3.Comparing traditional vs Web 3 investment strategiesTraditional investing is investing in bonds, stocks, or other financial instruments that are under centralized control. You can access these options in public markets, and investing in them requires following some rules.In the traditional investment market, companies operate with billion-dollar treasuries. So, be ready that in the case of top projects, you need to be accredited to participate.Those investments are mostly passive. You get your dividends for what you hold.There are options to invest in Web3 companies’ stocks and bonds. We know that many public companies work on the development of Web3.Take Microsoft, for example. You can invest in Microsoft bonds and stocks to get your share from the profits made by the company in the future.Finally, you can invest in startups working on Web3 apps. This is one of the riskiest investments because this market is still not regulated properly; thus, protection for investors in case they are scammed is only provided to some extent.Would you like to start investing in the most impactful crypto gaming, NFT and metaverse projects with GamesPad? Learn how in this comprehensive tutorial!Disclaimer. This material should not be construed as a basis for making investment decisions or as a recommendation to participate in investment transactions. Trading digital assets may involve significant risks and can result in the loss of invested capital. Therefore, you must ensure that you fully understand the risk involved, consider your level of experience, investment objectives, and seek independent financial advice if necessary.