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Jerett Gordon
- Updated March 18, 2023
Are you trying to figure out how to invest in Web3? The latest advancements in technology have opened up a new world of opportunities for making money online.
From passive investments such as buying cryptocurrency and non-fungible tokens (NFT), to active strategies like Initial Coin Offerings (ICO), blockchain-based projects, and monetizing your own blog with Web3 technology, there is no shortage of options when it comes to how to invest in Web3.
In this blog post, we’ll demystify Web3 and discuss specific Web3 investment strategies so you can get started on your own journey in this emerging and exciting ecosystem.
Let’s launch into understanding why now might be the perfect time to invest in Web3.
What is Web3?
Web3 is the latest iteration of the internet. It is a more user-centric version where you own your data and payments are performed peer-to-peer without the need for a third party to verify those monetary transactions.
This means that individuals (NOT tech giants or large institutions) can control much more online, and hence there are vastly more opportunities to make money online.
Partly due to the Web3 opportunity, 1 in 6 Americans makes money online, and that number will continue to grow as more people see the superiority of Web3 for individuals.
In Web1, the internet was just emerging and online transactions were not efficient nor very secure.
In Web2, companies such as Facebook and Google make vast sums of money by collecting and selling data provided by users (us) as they perform actions online such as searching for things.
There are plenty of opportunities for smaller players to make money online in Web2, such as ecommerce, affiliate marketing, and selling products, services, and content online, but in Web2 those strategies come with certain limitations.
Web2 is the current dominant version of the internet.
However, Web3 is rapidly expanding and will soon be the dominant version of the internet, and that should be a good thing for us smaller guys.
Web3 is a combination of different technologies including blockchain, distributed computing networks, artificial intelligence (AI), and other emerging technologies that provide users with greater control over their digital identity and privacy.
Web3 provides users with many unique tools such as the following:
- cryptography for secure communications,
- digital wallets to store cryptocurrencies safely and securely,
- decentralized exchanges (DEXs) for trading tokens (digital currency) without intermediaries,
- non-fungible tokens (NFTs) for unique digital assets,
- tokenization platforms that facilitate asset management solutions,
- stablecoins that offer price stability in volatile markets.
What does all this mean? The capabilities of web3 provide tech-adept users with the advantage when it comes to managing their own data security and identity and investing in digital assets.
Investment opportunities in web3 are vast but require an understanding of the underlying technologies involved and how they might be applied to making money online beyond the dominant Web2 money making scenarios.
Understand Web3 Investment Opportunities
Web3 investment opportunities are growing rapidly, and they offer a wide range of advantages over traditional investments.
Before jumping into the latest Web3 wave, it is smart to thoroughly understand the investing landscape so you can choose the right strategy for you.
The most important part of investing in Web3 is choosing the right strategy.
Do you want to invest passively or actively? What does that even mean?
Do you want to take a risk on emerging projects, or invest in more established ones?
How much do you want to invest, and for how long? What return on investment are you looking to achieve?
To answer these questions, you need to gain a broad and deep knowledge of how you can use Web3 technologies.
Web3 is a collective phrase for the emergence of decentralized applications (dApps) that are created and operated on blockchain networks. These dApps can be used for everything from payments and banking to social media platforms and data storage.
The biggest advantage of investing in Web3 is increased efficiency. Transactions on Web3 are now more expeditious, safer and cost-effective due to the decentralized ledger technology employed in these systems.
Additionally, many projects built on Web3 have automated processes that reduce manual labor costs significantly compared to traditional investments or operations.
Another major benefit of Web3 investment opportunities is improved security. The use of smart contracts ensures transactions occur securely without any third-party interference or manipulation. This reduces fraud risk while increasing trust between parties involved in a transaction.
Since all transactions are stored publicly on the blockchain network itself, there’s no need for costly intermediary services like banks or brokers – meaning your funds remain safe at all times, and transactions are generally cheaper.
With Web3 investment opportunities, both passive and active strategies have their own advantages depending on what kind of return you’re looking to get out of your investment.
Take some time to understand each Web3 money making strategy and whether its tokenomics make sense within current market conditions. This will help ensure success down the line regardless of which strategy you decide to go with.
How to Invest in Web3
There are two main types of Web3 investment: active and passive investing.
Active investing in Web3 involves you inputting your effort and resources to build value within the Web3 ecosystem. This takes more effort and possibly more risk than passive investing, but the reward could be greater.
Passive Investing in Web3 pertains more to financially supporting or investing in a Web3 product and letting the value increase over time due to factors external to your actions.
Here are some top ways to actively invest as well as passively invest in Web3:
Work in the Web3 Ecosystem
Join a decentralized autonomous organization (DAO) Web3 startup, look for job postings online, and attend crypto industry events.
You could also create your own decentralized applications (DApps) with Web3 developer platforms.
Make Money With Your Data
When we interact online with tech platforms such as Google, Facebook, Twitter, and every other social media company, we are offering our data to them for free, and they use it to make a lot of money for their corporations and shareholders via various revenue streams such as ads.
This is the Web2 scenario, which is not going to change anytime soon.
However, Web3 offers an opportunity for individuals and smaller companies to obtain a little return on the data we create when we go online.
This is made possible by blockchain, the foundational Web3 technology.
A blockchain is a distributed database that is shared among the nodes of a peer-to-peer computer network.
The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.
This means that the data generated on a blockchain stays with and are owned by the people who generate it. In Web3, we can collect, secure, and monetize our own data as we see fit, not according to another entity’s terms of service.
Mint Your Own Currency
In Web3, you can literally create your own money. This money takes the form of digital currency called tokens or cryptocurrency. Using cryptocurrency platforms, you can create a new cryptocurrency or and offshoot of an existing cryptocurrency in what is know was a token.
The value of these personal cryptocurrencies or tokens is usually determined by their scarcity (i.e. there are only 21 million Bitcoin) and demand for use in transactions.
Personal crypto and tokens can be digitally distributed to others, and those produced can be used to pay for products or services, particularly products from the creator of the currency.
Thus, based on the quality of the products you create, the bigger your following, the more personal tokens in circulation, and the more transactions that occur, the more a currency will increase in value. With more transactions, the value of the personal token increases, as does demand.
Best of all, the creator remains in control of the overall supply of these tokens.
Those who have tokens of their own are incentivized to share the content they purchased with the tokens, in order to increase demand and therefore the value of the tokens they own.
For example, you can buy content from a content creator, such as a course on how to make money online, using their personal tokens, minted and controlled by the content creator themselves.
This benefit can be extended to many other industries, such as artists, content creators writing code, building their own apps, or making any kind of digital content to buy and sell on the crypto marketplace.
Earn Money in Web3 with Airdrops
Airdrops are when a blockchain project gives away free tokens in exchange for promoting the project. The goal is usually to increase awareness of the project.
You could profit from getting these free tokens if their value increases over time.
Here are some tips for finding and getting airdrops:
- Locate trustworthy airdrops: There are quite a few scams in the crypto world, so make sure you only try to get airdrops from trustworthy blockchain projects.
- Join relevant social groups: Telegram is a popular messaging app often used by crypto projects. Join some of the groups that discuss airdrops so you are ready when they come along.
- Wait: Airdrops are not a get-rich-quick plan. It often takes weeks to get tokens, and the token value can take years to increase in value, or might not ever.
When you get tokens from an airdrops, you can hold onto them in hopes they increase in value, or often sell or trade them for fiat currency or possibly other cryptocurrencies.
Play to Earn Model Gaming
Games in Web3 are starting to incentivize users to earn cryptocurrency while playing.
Players either perform specific actions that promote the game ecosystem, such as farming, staking, or questing, or they just play the game.
Some popular games that use these incentives are Axie Infinity, Decentraland, Alien Worlds, The Sandbox, and My DeFi Pet.
These games can be a fun way to earn digital assets in Web3.
Sell and Purchase Fractions of Decentralized Real Estate
Physical assets such as real estate, condos, apartments, vacation homes, and commercial property are a top place where value is held.
In Web3, instead of listing a property for sale in the local real estate market, an owner can market their physical property as a digital asset backed by an NFT. The property can be sold in small increments, such as 1% of its value, by individuals who purchase portions of its value with cryptocurrency. Property sold and purchase in this way is managed by a decentralized insurance pool.
Blockchain applications in real estate are rapidly growing. The big benefits with blockchain in real estate are security and transparency of transactions and deals.
There are two money making opportunities here: for real estate owners, who want to have a new market for their properties apart from the traditional real estate industry, and for average individuals to safely invest in fractional amounts of real estate in attractive markets with good returns.
Peer to Peer Crypto Lending Platforms
Peer to peer lending platforms are online platforms that enable you to lend crypto to borrowers who then pay you interest.
With this approach, you can earn passive income and diversify your investments.
You need to research the different peer to peer lending platforms before choosing one because they each have their own unique features and requirements.
Peer-to-peer lending sites have been around for a while, but in Web3, crypto lending platforms are emerging as a more secure and transparent way to lend and borrow money.
Monetize Your Blog with Crypto
If you have a blog that publishes content, then you could monetize your content online in new ways with Web3 technologies.
Using Mirror.xyz, you can turn each of your blog posts into an NFT, then charge a fee or subscription for access.
Another unique revenue stream to use in conjunctino with the access fee is that you can have followers invest in your work, and then offer a dividend return for those investors as your work grows in revenue.
You can also partner with marketers by selling them promotional opportunities or ads as an NFT.
Web Advertising
The web advertising in the Web3 space is a bit different than the traditional ad models.
In Web2, our browsers see what we do online, and one way they respond is by showing ads from companies that might be relevant to our online activity. All the revenue generated by ads in this way goes to the companies who advertise and to the browser that serves the ads.
What if this revenue was shared equally between the ad company, the browser company, and the individual generating the actions and searches? With the Web3 infrasctucture, this is a reality.
Thus, individuals will be able to earn revenue by performing actions online, which makes sense because these individual surfers are technically the ones who generate the actions!
The Brave web browser currently has this capability. Advertisers pay for ads on Brave just like other browsers, and Brave shows relevant ads to users based on their unique behavior.
What’s different about Brave is that any revenue generated by the ads will be shared equally between Brave, the advertiser, and the invididual who performs the online actions (you).
Thus, the person becomes a kind of crypto, which Brave calls BAT, or basic attention tokens. These tokens are given out and controlled by Brave. This means that when you earn BAT, some of the value you create just by searching online is returned to you in the form of real compensation.
Crypto Mining
In the crypto industry, mining is the process that Bitcoin and other cryptocurrencies use to generate new coins and verify new transactions on a blockchain.
Generating new Bitcoin and Ethereum is very computationally intense, and only specialized companies with the right amount of efficient computing power attempt this type of mining now.
However, it is still vitally important and lucrative to verify transactions on a blockchain.
If you choose this Web3 strategy, then you will want to use Bitcoin mining software or Ethereum mining software.
You will also need the right computer setup, but that is not overly difficult.
As more Web3 technologyis adopted and more transactions occur on various blockchains, such as the ethereum blockchain, it will become increasingly profitable to mine crypto to verify transactions.
This investment opportunity requires research and the right equipment to maximize your profits, so be sure to learn all you need to know before jumping into one of these investment decisions.
SaaS Software as a Service – Host another company’s crypto wallet
Software as a Service, also called the SaaS business model is nothing new in the world of making money online. Businesses in Web 2 charge subscription fees for individuals or other businesses to use a software that helps them do things.
The opportunity in Web3 is that you could create a blockchain, or crypto wallet, for other people or businesses and change them a fee for the service.
For instance, if your local donut shop wants to allow customers to purchase donuts in crypto, then you could host the shop’s crypto wallet for a monthly fee. You could even get paid by them in their particular crypto.
BaaS – Backend as a Service
Traditional (Web 2) Backend as a Service companies charge monthly service fees to provide products such as website hosting and data storage.
In Web3, this revenue-generating strategy is taken to a new level. BaaS becomes Blockchain as a Service in Web3, where products can be given unique identifiers that securely verify their authenticity and origin.
This is useful for businesses that market high-end consumer products such as watches and purses. Buyers can be sure they are buying an authentic product and sellers can focus on producing.
Dragonchain, Ethereum, and Solana offer platforms to build such blockchain applications.
Some other ways BaaS is being used are companies like TrustFi offering decentralized finance (DeFi) backend support, crypto asset assurance, liquidity management, DAO governance, and setting up the blockchain where company protocols are kept.
Decentralized Finance (DeFi)
Decentralized finance platforms provide financial products and services that don’t need a third party to verify actions.
A few of these online platforms are Decentraland, Ethereum Name Service, and MakerDAO.
DeFi platforms provide an opportunity to make new and creative investments in the changing Web3 market today.
Ultimately, it comes down to personal preference:
Do you want to expend more effort and take on more risk with active strategies to actively build value, or would you prefer a likely slower and more speculative growth through passive investments?
Which specific strategies appeal to you?
Weighing the advantages and disadvantages of each path is critical when deciding on financial moves in this market.
Keeping updated with the latest Web3 investments is essential for making informed decisions that will benefit you and your business growth.
Keeping Updated with the Latest Web3 Investments
Staying informed of the latest Web3 investments is key to any successful investor.
With new technologies emerging and opportunities arising all the time, it’s important to stay ahead of the curve in order to make sure you’re making sound decisions when investing.
Investors need to be well-versed in a range of areas, including crypto markets, blockchain tech, tokenomics and more, so as to remain abreast of the latest Web3 investments.
Cryptocurrency Markets:
Cryptocurrency markets are constantly changing and evolving. Staying attuned to these developments can help investors identify potential investment opportunities and gauge the future value of their investments. Furthermore, monitoring current market values can give investors a glimpse of the possible value their investments could yield in time.
Blockchain Technology:
Understanding blockchain technology is essential for anyone looking to invest in Web3 projects or tokens. This technology underpins many cryptocurrencies and decentralized applications (dApps). Investors can gain greater insight into where to allocate their funds by gaining an understanding of the purpose and operations of each project.
Tokenomics:
Tokenomics refers to the economics behind different tokens or coins within a given ecosystem or network. It involves understanding things like token supply, inflation rates, staking rewards and other factors that affect price movements over time so that you can get an idea of whether a particular coin has long-term potential or not.
Hot wallets refer to digital wallets connected directly online, while cold wallets are offline storage solutions used for storing large amounts of crypto assets securely without being exposed online at any point during transactions or transfers from one wallet address to another.
When investing in Web3 projects, it is important for investors to know which type of wallet best suits their needs depending on security requirements versus convenience levels desired when transacting with funds stored inside them.
Keeping updated with the latest Web3 investments is essential for entrepreneurs who want to stay ahead of their competition and maximize business growth. Moving on, let’s take a look at hot vs cold wallets as another important factor in investing in web3.
Buying and Selling Crypto: Hot vs. Cold Wallets
When investing in the web3 realm, a key choice for investors to be able to move their crypto around is whether to go with hot or cold wallets. Hot wallets are digital wallets that are connected to the internet, while cold wallets are not connected and stored offline.
Hot wallets offer convenience for investors who want easy access to their funds. They’re ideal for those who need quick access to their crypto assets such as day traders or people buying small amounts of cryptocurrency on a regular basis. The downside is that they’re vulnerable to hackers because they’re online all the time, so it’s best practice to store only a small amount of money in them at any given time.
Cold wallets provide much more security than hot ones since they aren’t exposed directly to cyberattacks but still give you full control over your funds with no third-party interference. This makes them great for long-term storage and larger investments where you don’t need frequent access, like when holding virtual real estate or other digital assets like NFTs (non-fungible tokens). Cold wallet users should keep multiple backups of their wallet data just in case something goes wrong with their device – better safe than sorry.
Overall, both types of wallets have advantages and disadvantages depending on what type of investment strategy you’re pursuing and how often you plan on accessing your funds.
For example, if you’re a venture capitalist looking for high returns from web3 projects then using a cold wallet may be preferable due to its increased security features compared with hot ones; however if you’re trading frequently then having access through a hot wallet would be more convenient.
Ultimately, the choice of wallet is personal and should be based on an individual’s risk tolerance and particular circumstances – there isn’t a universal solution.
How to Invest in Web3 – FAQ
Q1: Is Selling NFTs a Good Way to Make Money?
Non-Fungible Tokens (NFTs) have become increasingly popular in the crypto world, and many people are wondering if they could make a good source of income. NFTs are digital tokens that are unique and cannot be exchanged with other tokens, allowing them to be used to represent ownership of digital assets.
It is very feasibly to sell NFTs as a way to make money, and of course there are benefits and drawbacks to this new online money making trend.
Q2: Is Maching Learning Important for Web 3.0?
In recent years, machine learning has become a buzzword in the tech industry, and it’s no surprise that it’s now being used to power the latest iteration of the internet, Web 3.0.
As the web moves in a more decentralized and automated direction, machine learning is becoming increasingly important.
Q3: Does Social Media Help With Web3?
Social media has changed the way we interact with the world around us, and with the emergence of Web3, it has opened up a whole new world of possibilities.
Web3 is a decentralized platform that allows users to interact with the internet in a much more secure and private way. Social media can help users find the resources they need to get started with Web3, as well as help individuals and businesses promote their Web3 applications.
There are even compelling decentralized social media (DeSo) companies starting up, which is exciting for individuals who value their data privacy.
Q4: How Do Virtual Reality and Augmented Reality Factor Into Web 3.0?
In recent years, the development of virtual reality (VR) and augmented reality (AR) technologies has been advancing rapidly, unlocking a world of possibilities for content creators and consumers.
The potential of these technologies to revolutionize how we interact with the web is particularly intriguing with the rise of Web 3.0. From new ways to experience content to new tools for data analysis, VR and AR are set to be a major factor in the development of the web.
Conclusion
Investing in Web3 can be a great way to diversify your portfolio and take advantage of the potential for high returns. It is essential to grasp the associated hazards before investing any money when it comes to Web3.
With research and due diligence you can find attractive opportunities that fit your risk tolerance level while potentially reaping rewards from investing in web3 projects.
How do you plan to take your business to the next level by investing in Web3?