How to invest in Web 3.0

In 2021, the prices of digital assets like livepeer, helium, and bittorent will skyrocket.
What exactly is Web 3.0? What is the purpose of this?

What exactly is Web 3.0?

In 1994, Web 1.0 became a reality.

This first version allowed us to obtain information, make purchases online, and connect with others via email.

About 10 years later, Web 2.0 was formed, transitioning from an era of Internet pages linked by hypertext links to an era of permanent connectivity between people all over the world.

Dale Dougherty coined the term web 2.0 to describe social networks (Facebook, Twitter, Instagram), online video platforms (YouTube), blogs, the proliferation of the connected smartphone, and wiki collaboration technologies.

While Web 2.0 has given users more control over the Internet by allowing them to produce content and connect in real time with one another, they have lost control over their data, which is generated and sold by centralized services like Facebook, Amazon, and LinkedIn.

Web 3.0 is a new internet vision that exists now. Its purpose is to give users back control over their data. Web 3.0 introduces a new form of web interaction between programs and content, with decentralization as the key phrase.

Web 3.0 employs blockchain technology, which allows web information to be distributed across computers that are members of blockchains, each of which serves a distinct purpose (managing passwords, carrying out financial transactions, storing videos, etc.).

Connections dynamically select the most efficient path through this new web while avoiding congestion or failing systems since content is copied across several computers and there is no central server coordinating traffic.

Members of the blockchain receive so-called “native” cryptocurrencies in exchange for the services they provide (storage, sharing, etc.). The main consequence of this completely decentralized manner of operation is that, in the long run, GAFAs will no longer be able to use data linked to online users.

The system of governance and the manner of operation of the Internet are both put into question with Web 3.0.

Web 1.0, as depicted in the diagram below (source: BKCM), has resulted in the creation of a massive global library that allows access to knowledge via a single database – the Internet. On this database, Web 2.0 enabled users to build their own content. However, it is firms like Facebook and Google who profit from this data. We will enter the era of the global database with Web 3.0. The ability to monetize one’s own data will now be available to both natural and legal persons.

Blockchain and cryptocurrencies have allowed for a paradigm change.

Web 1.0 to Web 3.0. Source

The most significant changes brought about by Web 3.0

Payments, decentralized services, and control, among other things, are among the primary innovations brought about by Web 3.0. Payment methods are “one” with the Web in the new Web.

Now we’re talking about “native” currencies, or currencies that are linked to the network. The new Web lowers the cost of cross-border payments and gives those who don’t have access to banks safer alternatives to keep and exchange money.

Decentralized services are likewise being paved over by the new web. This means that anyone can create, run, and use services without having to bow to a single dominating entity’s authority.

This new paradigm allows for significantly more efficiency in sectors like peer-to-peer commerce. Users can pay small sums to improve content, allowing authors to obtain a larger share of the revenue. As a result, some services may be subject to a new form of competition.

Consider YouTube, where content providers get compensated less for their work because a centralized authority (Google) sets high prices. On the Apple Store, the scheme is the same for game creators.

Control is the current craze. Indeed, Web 3.0 enables the monetization and usage of one’s own  data and identity – “resources” that are now exploited by companies like Facebook.

Study of a case

As previously stated, commercialization of personal data, as well as fixed resources such as storage, bandwidth, and processing power, is a key part of Web 3.0.

Filecoin, for example, allows users to convert their fixed storage space into a decentralized cloud service that they can sell out to others.

Instead of being dominated by a duopoly (AWS and Azure), millions of people can now offer storage and get compensated for it.

We discussed the Theta Networks network in these columns, which uses blockchain to decentralize the video streaming process and improve the quality of the video available to users.

Cryptocurrencies are being used in the project to incentivize Internet users to protect and use the network. Users of the Internet can watch a live video while also sharing their resources and bandwidth with others. As a result, the network is devoid of expensive centralized infrastructure, allowing for smooth, high-quality video streaming at a lower cost. Those that authorize the transmission of “streams” receive “tokens” (digital tokens) THETA in exchange for their contribution to the Theta network.

Data censorship is another intriguing application. NASA, for example, wants to preserve climate change data in a way that renders it immutable, meaning that no one can change it.

Finally, consider political censorship. The Spanish authorities prohibited the IP addresses of any Web 2.0 sites that supplied information about polling locations during the 2017 Catalan referendum.

Developers were able to open up access to voting data by using IPFS, a Web 3.0 standard.

Using cryptocurrencies to invest in Web 3.0. Source: pexels

Using cryptocurrencies to invest in Web 3.0

While the most well-known cryptocurrencies (bitcoin, ether, and so on) had a terrible second quarter in terms of performance and volatility, many experts began to investigate the digital assets connected with decentralized Internet ideals.

The “Web 3.0 tokens” category contains these tokens. “Web 3.0 tokens” have been on a strong trend since the beginning of the year, according to Messari’s database, with an average performance of over 250 percent.

Despite the dramatic decrease in the crypto market since April, the value of specific tokens such as livepeer (LPT), helium (HNT), and bittorrent (BTT) has surged by over 1000 percent this year. Storage, creation, and distribution of material, bandwidth, computing, financial services, and identification are the major services associated with these cryptocurrencies.

The Ethereum-based Livepeer protocol, for example, serves as a marketplace for video infrastructure providers and streaming applications, while Filecoin and The Graph offer decentralized file storage and data management networks.

Helium incentivizes consumers and small companies to provision and validate mobile network coverage and transport device data over the wireless network by using blockchains and tokens.

If we eliminate Chainlink, Messari believes that the category of Web 3.0 “tokens” now contains more than 40 tokens with a valuation of more than $25 billion (this blockchain is more associated with decentralized finance and has a market capitalization of 10 billions of dollars).

When only top-tier initiatives like The Graph, Filecoin, Helium, and Livepeer are taken into account, the market capitalization of Web 3.0 tokens is less than $15 billion. This is only 2% of the total market capitalization of bitcoin. Web 3.0 tokens have not yet piqued the general public’s interest, owing to the relative complexity of the underlying technology.

Note that DeFi tokens have gone through similar stages. Indeed, the DeFi boom started only a year ago; in the meantime, the market capitalization has grown from 5 billion at the start of 2020 to more than 50 billion.

Regardless, institutional investors appear to be taking an interest in this promising sector.

Multicoin Capital has invested in The Graph, Helium, and Livepeer as a result of this.

In March, Grayscale, the world’s leading digital asset manager and investment vehicle for institutional investors looking to get exposure to digital assets, announced the establishment of a “Livepeer Trust.”

Finally, many of these Web 3.0 tokens provide significant returns via Staked, a platform that allows investors to earn returns by staking their tokens.

Helium’s HNT token, for example, now provides an annualized nominal return of 8.7%, whereas The Graph’s GRT provides a 15% return and LPT provides a 30% return.

Web 3.0’s limitations

Some have pointed out that Web 3.0 is not a foregone conclusion. For example, many observers continue to feel that a service controlled by centralized authorities or a single firm can have a more coherent vision of the product and can iterate on new functions requested by users more quickly.

It’s yet unclear whether the economies of scale realized through the use of decentralized applications will materialize.

Another point of issue is the product’s marketability. Some think that users aren’t excited enough since they believe the majority of people don’t care whether their data is misused by third parties.

Furthermore, because governments and authorities are skeptical of cryptocurrencies, there is still a lot of educational work to be done around blockchain.

Not to mention the potential for pressure from the Web 2.0 behemoths…

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