What is Web 3.0? Should we not just speak of “the internet”? Particularly for the young, the web may feel like a natural, constant part of life. Yet it has evolved significantly since its inception, to the point where, today, innovators are conceiving a web built on data decentralisation, across a secure environment defined by transparency and security. For those looking for tech investment opportunities, companies driving these innovations present exciting avenues to generate promising returns. In this 2021 Industry Report, our team at Bure Valley Group analyses the Web 3.0 landscape and prospects for the months and years ahead.
Web 3.0 – what it is & how we got here
When the internet was first created around 20 years ago, there were no “versions” of the web (i.e. Web 3.0). Rather, categorisations have been placed by internet historians to describe its evolution. At the outset, the vision of Tim Berners-Lee in 1989 was to create “a collaborative medium, a place where we [could] all meet and read and write”. Here, scientists could share experiments via an interconnected computer network which soon came to be commanded by the likes of AOL, Yahoo! and others. In 1994, the “browser wars” started following Netscape’s release of the world’s first web browser. This period is largely designated Web .10, where the consumers of content were pervasive – but content creators were few.
Web 2.0 ushered in a new era for the internet, however, between 1999 and 2004. This was the period where content creation began to open up to blogs, social media platforms, forums and more. Formerly static, desktop-based web pages were replaced by interactive experiences and user-generated content, bringing Facebook, Instagram and others to dominate across the three main Web 2.0 “pillars” – cloud, social and mobile (especially after 2007 after the iPhone launch) .
This may sound like the internet we are all still largely familiar with in 2021. Yet the landscape is dramatically shifting. Under Web 2.0, the infrastructure and application platforms are still largely in the hands of “tech giants”, which make their money (mainly) by selling user information to 3rd parties – for marketing purposes. Under Web 3.0, however, three pillars are expected to prevail:
- Permission-less. No authorisation from a governing company, institution or body will be needed for users to participate in the network.
- Open. Networks are built upon open-source software, made by developers across the world and transparent to everybody.
- Trust-less. A trusted 3rd party will not be needed for users to interact with each other.
Web 3.0 – market overview
Due to its decentralised nature, it is difficult to accurately measure the market capitalisation of Web 3.0. Some estimates, however, place the value of startups in the space at $822m, in the first half 2019 alone.
A good place to start is its underlying technologies – e.g. artificial intelligence (AI) and machine learning – as well as Web 3.0 business models which have been identified. On the latter, these include the following:
- Native asset issuing. Blockchain is the classic example here, since it requires a native digital asset to function. Bitcoin, for instance, relies on its native asset (BTC) and thus provides the foundation upon which engaged companies build their business models (e.g. data centres engaged in crypto mining).
- Network building (hold the asset). Some of the initial companies converging around crypto had one vision and business model : increase the value and success of their own networks. Examples here include Blockstream and ConsenSys, which have built their businesses by building infrastructure for Bitcoin Core and Ethereum, respectively.
- “Taxing” native asset speculation. The likes of Coinbase and Bitstamp spring to mind here. These provide a custodian, exchange and derivative provider service for native assets, allowing users to conveniently speculate on the likes of Bitcoin – taking a fee for the convenience.
- Payment tokens. Here, companies such as Bancor and Golem are commonly-cited case studies. These companies base their business models on payment tokens within their networks, allowing funds to be raised from communities and early adopters. Golem in November 2016, for instance, raised $8.6m in 29 minutes – effectively bypassing VCs.
How to invest in Web 3.0
In light of the snapshot above, investing in Web 3.0 means committing capital towards a new breed of companies which are more symbiotic, protected and growth-efficient. Indeed, Web 3.0 products and services, by nature, can be easily integrated into the building blocks of other apps (e.g. a car-sharing platform which synergises with existing services for driver reputation, car loans and payments).
A Web 3.0 e-commerce platform, moreover, could conceivably integrate a user’s social media profile images to make fashion suggestions without storing login details or browsing behavior. The finance industry is starting to take notice of the potential here too, with DeFi (Decentralized Finance) growing from $181m in 2018 to nearly $700M in early 2020. Here at Bure Valley, we are especially interested in Filecoin’s recent work with IPFS (peer-to-peer hypermedia protocol). This allows users to store and share data in the distributed web using a free, open-source system. Data is constantly available and able to be accessed quickly by users, safely backed up on the Filecoin network
If you are interested in expanding your portfolio into these kinds of exciting spheres of investing, then we invite you to get in touch with us here at Bure Valley and to consider joining our exclusive investor network:
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