How to Invest in Web3: Investor’s Guide 2024

Wondering how you can invest in the next phase of the Internet? 

In this guide, we’ll break down what Web3 is and share a few steps that can help you get started investing. 

Disclaimer: This article does not constitute investment advice and any crypto-assets/stocks mentioned in this article are not necessarily recommended investments. You should be aware that crypto-assets are volatile and be aware of any associated risks before investing. 

What is Web3? 

Web3 is a phrase that refers to a new phase of the Internet built on decentralized blockchains — where businesses and content creators can control and monetize their data with the help of aggregation platforms like Google, Facebook, and Instagram.

What does Web3 mean? 

To better understand what ‘Web3’ means, we should walk through a condensed history of the Internet and explain the terms Web1, Web2, and Web3. 

Web1 refers to the early days of the Internet. During this time, many businesses and content creators created their own websites to reach users all around the world. However, the sheer amount of content on the Internet made it difficult for users to find relevant products, services, and content. 

Web2 saw the rise of big aggregation platforms like Google, Facebook, YouTube, and Instagram to help users easily find relevant content and sort through the noise of the Internet. 

While Web2 allowed them to have greater reach, businesses and creators no longer had control over their data and were often at the mercy of the aggregators. A simple shift of the algorithm or an unexplained ban could cause a giant loss in revenue. 

Web3 represents a future where businesses and content creators can reach audiences all over the world while maintaining control of their data. Instead of using aggregation platforms to build audiences, creators can use the blockchain to reach and monetize audiences and potential customers directly. 

How did Web3 get started? 

The term ‘Web3’ was coined by Polkadot founder and Ethereum co-founder Gavin Wood in 2014. The term was further popularized by cryptocurrency proponents such as venture capitalist Chris Dixon, who wrote an article titled Why Web3 Matters. 

What is the Web3 ecosystem? 

The Web3 ecosystem is built on blockchain technology. ‘Smart contract’ blockchains like Ethereum allow developers to create NFTs and decentralized protocols — which may form the backbone of Web3 in the future.

NFTs allow creators to monetize their audience directly. Instead of building audiences on platforms like Facebook and YouTube, NFTs allow creators to sell NFTs directly to their biggest supporters. These NFTs can come with benefits — such as access to a community and exclusive content! 

Meanwhile, decentralized protocols allow a new approach to building a company. Protocols have the ability to airdrop tokens to early users — giving them a stake of the platform and a voice in future governing decisions. For example, in September 2020, Uniswap airdropped UNI tokens to early users. These UNI tokens grant voting rights and can increase in value as the Uniswap platform grows.

How to invest in Web3 

Let’s walk through a few different assets that will give you exposure to Web3. You should do your own research before investing in any of the assets mentioned below. 

Cryptocurrencies

It’s likely that Web3 transactions will be facilitated through blockchains that enable NFTs and decentralized protocols. As a result, many Web3 proponents invest in cryptocurrencies that allow these blockchains to function — such as Ethereum, Cardano, and Solana.

Stocks 

While there’s no stock that represents the entirety of what Web3 could be, there are stocks that can give users exposure to Web3. 

1. Coinbase: Coinbase is one of the world’s largest and well-known cryptocurrency exchanges. If Web3 reaches its potential, it’s possible the platform could be the on-ramp for millions of new users. 
2. Meta: Meta is known as the parent company of platforms like Facebook and Instagram. In recent years, Meta CEO Mark Zuckerberg has dedicated considerable resources to his version of the Metaverse — 3D virtual spaces that will include crypto-assets like NFTs. 
3. Unity Software: Unity Software creates one of the world’s most popular game developer engines — Unity. Recently, Unity introduced a ‘Decentralized’ section of the game asset store to allow developers to introduce crypto-assets into gameplay.  

NFTs 

Many proponents of Web3 say that NFTs could play a critical role in the digital economy of the future. Instead of monetizing on Web2 platforms like YouTube, creators can potentially use NFTs to build a direct relationship with their audience. 

NFTs often give users relevant benefits and access to communities. 

For example, NFT communities like Bored Ape Yacht Club (BAYC) allow users to become part of the BAYC community — which includes celebrities like Steph Curry and Eminem — and receive digital airdrops from the BAYC team. 

Can I invest in Web3 if I don’t have money? 

Don’t have the money to make a substantial investment just yet? Here are other ways that you can get started in Web3. 

Find a job with a Web3 company 

One way to invest in Web3 is to find a blockchain job with a company or startup in the space. If you have experience with coding, marketing, or sales, it’s likely that blockchain-related startups need your skills! 

Play cryptocurrency games 

You can play cryptocurrency games that give crypto rewards through the course of gameplay. For example, Axie Infinity gives users cryptocurrency in exchange for winning in-game battles with Pokemon-like creatures known as Axies. 

Use a cryptocurrency browser 

Cryptocurrency browsers give you cryptocurrency rewards after viewing ads on the browser. Brave Browser is a popular choice for cryptocurrency investors, paying out rewards in the form of Basic Attention Token (BAT). 

For more information, check out our guide to earning cryptocurrency for free. 

Can I passively invest in Web3? 

At this time, there’s no ETF on the NYSE that tracks the total value of Web3 technologies. 

However, there are alternatives that you can explore. For example, the cryptocurrency Total Crypto Market Cap (TCAP) is meant to track the total price of all crypto-assets. This coin could increase in value if Web3 reaches its full potential.

What are potential risks of Web3 investing? 

It’s important to remember that investing in Web3 projects comes with several risks. Here are a few you should consider before you invest. 

Will Web3 reach its promise?: Many critics claim that Web3 proponents often make grandiose promises that may never come to fruition. You should do your own research on Web3 and relevant projects before you make any investment decision. 

Which blockchains will Web3 be built on?: At this point, it’s unclear whether Web3 will be built on Ethereum or another blockchain that enables smart contracts such as Solana or Cardano. It’s possible that an investor who chooses one blockchain may miss out on future returns if future Web3 entrepreneurs choose to build elsewhere. 

What NFTs/protocols will be relevant in the future?: Some Web3 proponents choose to invest in niche NFTs and decentralized protocols. Unfortunately, there’s no guarantee that any of these projects will be successful — even in the event that Web3 reaches its potential. 

Want to calculate your potential profits from Web3 investing? Check out our free online Crypto Profit Calculator.

Frequently asked questions

Is there a Web3 stock?

While there is no weighted index stock that tracks the complete value of Web3, certain stocks like Coinbase can give you exposure to Web3. 

How much will Web3 be worth? 

While it’s unclear how much Web3 will be worth in the future, Web3 proponents believe that the potential is in the trillions. Venture capital firms like Andreesen Horowitz have already poured billions of dollars of investment in the ecosystem.

Is Web3 a good investment? 

It’s important to remember that crypto-related assets are often volatile. Before you invest in Web3 projects, you should do your own research. 

How do I make money on Web3? 

You can make money on Web3 by creating NFTs and receiving airdrops from decentralized protocols.