It is now hard for many of us to think of a time without the internet. Yet the internet itself has changed dramatically in just a few short decades. Currently, we inhabit the “third generation” of the World Wide Web (Web 3.0); another milestone in a series of future evolutions which are sure to pass. In this industry report, we explore the nature of Web 3.0, the journey it has come along and major players for the attention of investors. We also outline some key trends, risks and opportunities for investors in 2022. We hope this is helpful to you.
What is Web 3.0?
Web 3.0 is not a static concept. The internet is still continually evolving, shifting the parameters of what is acceptable within the definition. Yet Web 3.0, overall, emphasises the increasingly “decentralised” nature of the internet. Technologies such as blockchain, for instance, fit within this idea due to the peer-to-peer nature of its network. Machine learning and artificial intelligence (AI) also play an important role in Web 3.0, allowing for the development of smarter and more independent applications.
The journey to Web 3.0
Do you remember the early days of the internet? The era of Web 1.0 was roughly from 1991 to 2004. This featured websites with largely static pages with content served from the server’s file system. Elements on pages were build using frames and tables. Overall, a relatively small number of websites dominated the Web, leading to a fairly centralised model of the internet. Things started to change in 2004 after the First Web 2.0 conference.
Here, Web 2.0 highlighted the increasing importance of user-generated content such as personal blogs and participative social media posting, creating a virtual community. Content became more dynamic and responsive to user input. APIs were developed to allow more self-usage and integration between applications. However, many key platforms became the focal points for this online behaviour – e.g. social networks like Facebook, search engines like Google and curators such as RSS.
Today, however, we are moving more into an era of The Semantic Web (3.0). Now, almost all devices are Web-connected and content can be accessed by multiple applications. Information is stored in multiple locations simultaneously and is based on open-source software. This moves closer to Tim Berners-Lee’s original vision for the internet: “No permission is needed from a central authority to post anything on the web, there is no central controlling node, and so no single point of failure…and no ‘kill switch’! This also implies freedom from indiscriminate censorship and surveillance.”
Key players, opportunities & risks for investors
Investing in Web 3.0 involves a range of opportunities due to the diverse technology on offer. Cryptocurrencies, for instance, arguably form a key part of Web 3.0 due to their basis on blockchain. Here, investors can invest directly into specific cryptocurrencies (e.g. Filecoin), the mining companies underpinning them and crypto funds. However, investors need to exercise due diligence with these investments. Whilst the potential for very high returns is available, cryptocurrencies are highly volatile and can be affected by events in the political landscape (e.g. China effectively banned them in 2021).
Blockchain, however, is not solely used for cryptocurrencies. It is also increasingly used by tech companies to offer a wide range of innovative solutions to different verticals. Major players such as IBM, Amazon (AMB) and Intel offer blockchain-based services, for instance, and you can invest in their publicly-traded stocks on most recognised exchanges. However, an exciting range of blockchain startups and early-stage companies are also on offer to investors. Mintable, for instance, was set up in 2018 to help uesrs create, distribute and trade digital files on the Ethereum network. The company has raised $13m so far in Series Al funding, including from investors such as Mark Cuban. Startups such as these have potential for high growth. Yet they are also often vulnerable to downward trends in the wider crypto markets.
Other promising companies within Web 3.0 include those offering solutions based on AI and machine learning. OneTrust is an interesting case. Founded in 2016 in the USA, OneTrust offers comprehensive enterprise privacy management software to large and small businesses. It has been used by over 8,000 customers so far and raised £546m over three funding rounds, now standing at a £4.3bn valuation (officially making it one of the UK’s “unicorns). AI is bound to feature heavily more and more in different spheres of life in the near future, making it a promising area of investing.
Web 3.0 is not the beginning or end of the internet. Yet it forms a key step along the journey towards a more digitally-connected world. With new technologies rapidly emerging all the time, investors have plenty of opportunity to add promising Web 3.0 investments to their portfolios. However, the pace of innovation also presents risks. Investors need to carefully weigh whether a company’s offering will continue to be relevant in the years ahead. It is also important to make sure you understand the Web 3.0 technology in question when considering an investment. Those based on AI and machine learning can be highly complex in nature.
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:
+44 160 334 0827