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In this final instalment of our investment series, we look at why being involved in crypto is about so much more than just purchasing and holding Bitcoin.
We’ve talked a lot about obtaining assets like Bitcoin, holding them, and waiting for the value of that asset to rise in the last three chapters (chapters 1, 2, and 3) of our basics to boardroom learning guide. However, the cryptocurrency market is far larger than Bitcoin.
At last count, there were more than 11,000 cryptocurrencies currently live and available to engage with, according to Nomics. Inside that there are a huge range of currencies and tokens that perform a number of unique features that help their networks do certain things.
In this last chapter we’re going to be running through a few examples and how you might use some of your earnings to help power the world of Web3.
The Web’s Evolution
To understand what Web 3 is, we first have to understand the previous versions of the Internet.
The first phase of the Internet and can be characterized by the way users initially interacted with the web. Most users, during the first iteration of the web, were passive consumers of content. In other words, Web 1.0 was about reading and not writing. It was static instead of dynamic. This changed with Web 2.0.
What is Web 2.0?
The next major phase of the Internet was all about interactivity and users.
In this phase, users created most of the content on platforms such as YouTube, Facebook, or Twitter. This Internet was more social and collaborative, but that usually came at a price. The downside of this more participatory Internet was that by creating content, users were also providing personal information and data to the companies that controlled these platforms.
What is Web3?
Web 3 is the next step in the evolution of the Internet. Because it is still being developed, there is no one, established description of what Web3 is or will be.
In general, Web3 refers to an Internet enabled by decentralised networks such as Bitcoin and Ethereum. The main innovation of these networks is the creation of platforms that are not controlled by a single body but can nevertheless be trusted by everyone. This is due to the fact that every user and operator of these networks must adhere to the same set of hard-coded rules known as consensus protocols.
The secondary innovation is that these networks enable the movement of value or money between accounts. These two things—decentralization and Internet money—are the keys to understanding Web 3.
But they go further still. New networks where value is created and held in the utility of that network are being invented and created constantly, as we explore below.
What are some examples of Web3 projects?
Below are a few examples of how different assets can use Web3 technology to create different types of value.
Filecoin is a decentralised technology that allows anyone to rent out excess computer storage space. Similarly, anyone can purchase storage on the network. Consider it similar to Amazon Web Services or Google Cloud, but instead of a single business managing the flow of data, anybody can participate in the process.
The token, FIL, is the money with which users purchase storage and storage holders are compensated.
If Filecoin aims to disrupt the storage sector, Golem aims to disrupt the cloud computing industry.
Golem is a distributed computing platform that offers pooled processing power to customers for a charge. The platform allows you to rent out your computer’s spare resources to those who require the extra capacity to conduct complicated computations and jobs, as well as for people in need of computing power to rent from others rather than cloud-based services like Amazon or Google.
Basic Attention Attention
BAT is a utility token that was created as part of a brand new digital advertising network called Brave. At its heart is a web browser that filters advertisements while protecting personal data and people’s identities.
While BAT protects people’s identities, it also monetizes users’ attention. The distributed ledger on which it is constructed can collect precise data on where the advertisements are going and how effective they are.
Advertisers can design stronger marketing strategies and budget more effectively armed with this knowledge. The network also employs a token, the BAT, which can be used to pay publishers for ad space as well as to reimburse users for viewing or clicking on their advertisements.
The whole point is that users can commodify their attention and earn directly, rather than feel exploited by advertisers.
Why invest in Web3?
If you were told in the late 1980s that there was a technology (the internet) that would transform the way we communicate, work, meet, travel, and entertain ourselves, but that it wouldn’t be realised for another 15 years, would you invest in it?
The Web3 era is introducing new methods for calculating the worth of our time, attention, computers, and hard drives. It also contributes to the creation of chances for investors to gain access to tools and services that were previously exclusively available to institutional investors in the fiat world.
Investing in Web3 assets also contributes to this age, as many projects require assistance in their early phases to attain critical mass.
Now that you’ve come to the end of this series, AAX has a lot more resources on trading strategies that include all the ideas we’ve mentioned above. Head on over to AAX where you can build on your trading knowledge.
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