The Web 3.0 ecosystem is rewriting the internet and the financial world. While it might be difficult to initially understand, given that prominent investors and technologists are so excited, it’s probably time you paid attention to NFTs, decentralized finance, and the Metaverse.

Unless you’ve been living an offline life, you’ve probably heard of Web 3.0.

To date, $27+ billion has been invested in the Web 3.0 ecosystem, while at the same time, the term “Web 3.0” has skyrocketed in Google searches.

Dubbed “the biggest thing since the invention of the internet,” Web 3.0 is attracting the attention of some of the smartest people in the world. Since thousands are leveling up to better understand Web 3.0, you may be wondering if you need to, too.

So, let’s dive in. What the heck is Web 3.0, and does it even matter?

What is Web 3.0?

According to Web 3.0 expert and CEO of Ether Capital, Brian Mosoff, Web 3.0 is about creating the next generation of the internet that’s more open, user-controlled, and decentralized.

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Unlike today’s internet (Web 2.0), where most of the value that’s generated by its users (e.g., data) is captured by large organizations like Meta and Google (centralized platforms), Web 3.0 aims to give the power of the internet back to its users.

Giving back control of user data and privacy and enabling digital asset ownership — while minimizing the risk of hacks — are the tenants that make up Web 3.0.

As whole, however, the ecosystem is still in rapid development and major things like regulation, reducing volatility, and further infrastructure development must be done for widespread adoption.

Where did Web 3.0 come from?

Today’s version of the internet is very different than the one Web 3.0 aspires to create. In its current form, a significant part of the internet’s infrastructure is owned by individual large companies and its users don’t own the data they create. In fact, the main “product” of the internet today is its users because they create data that is monetized by the owners of the internet’s infrastructure.

Web 3.0 was born alongside the mechanics and ethos of cryptocurrency and blockchain networks, where those who participate in the operation of the network benefit from doing so through rewards.

Bitcoin, the world’s first cryptocurrency and blockchain network, started this in 2009. But it was the launch of Ethereum in 2015 that enabled Web 3.0 to take off.

Read more: 8 alternatives to Bitcoin – what will be the next Bitcoin?

Unlike Bitcoin, the Ethereum blockchain enables communities of developers to build programs on top of its blockchain, called Decentralized Applications, or Dapps. This means that entire companies can be built on technology that’s not owned by a single entity.

What makes these apps special is that their backend is based on things called Smart Contracts. Once deployed, Smart Contracts run themselves and can’t be changed. This creates a shared sense of “programed trust” across those who use the programs.

This “programmed trust” and the management of such programs across distributed networks are the foundations that underly Web 3.0.

Why is Web 3.0 so difficult to understand?

Web 3.0 can be difficult to understand for two core reasons, according to Mosoff:

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“Web 3.0 is hard to understand because most people probably don’t spend time thinking about the plumbing of the internet and how it works. It’s hard to get your head around why it has value if you don’t understand how the internet services you use work. Many problems and risks exist in how the internet is built today but these ideas are abstract,” he says.

“The second reason is because Web 3.0 is now a catch-all term and can mean something different to anyone. Blockchains, cryptocurrency, NFTs, the Metaverse, decentralized finance (De-Fi) or even just decentralizing any of one’s data can fall under the Web 3.0 umbrella.”

Why you should care about Web 3.0

There are several aspects of this space worth understanding, with three being particularly important for today’s investors:

1. The creator economy and NFTs

Since the ethos of Web 3.0 is centered on enabling individuals to undisputedly own and manage their data and assets digitally, it’s transforming the creator economy through NFTs (non-fungible tokens).

NFTs allow creators, artists, musicians, gamers, and others the ability to own and indisputably verify the authenticity of digital assets. Art, album covers, digital images, and even screenshots of tweets have been created as NFTs. They are enabling the monetization of creativity in ways that couldn’t be done before. Many people are making bank as a result. If you know how to play the space, there can be major opportunities for investors.

Read more: The complete guide to buying your first NFT

Admittedly, NFTs have attracted criticism over their long-term future, and interest in NFTs has taken a hit recently due to changing macro-economic factors and cyrpto market volatility. But with $5.4+ billion of profit generated in 2021 through NFT sales, more companies — from the NFL to McDonald’s — are taking notice.

2. Decentralized finance, or De-Fi

As of June 14, 2022, over $79 billion has been tied up in the decentralized finance ecosystem.

Decentralized finance, or “De-Fi,” is the financial side of Web 3.0 that leverages blockchains and crypto to exchange, lend, and earn interest from crypto assets. The ecosystem is facilitated by individually owned digital wallets and Smart Contracts, and doesn’t rely on central parties like banks.

For example, millions of people are able to generate staggering amounts of interest (much higher than you would get at a bank on your cash) on their cryptocurrency in De-Fi by lending out their holdings or locking them in software that’s used to operate blockchain networks (similar to how bonds work).

Read more: Crypto lending explained (and how to invest in it)

While, unfortunately, there have been several recent examples of large meltdowns in De-Fi that have literally erased billions in value (Terra and LUNA), De-Fi remains one of the most exciting aspects of Web 3.0 and has the potential to completely revolutionize our financial system.

It’s still early days and clear regulations don’t exist yet to govern this high-risk area, but if you are interested in the next generation of finance, start learning about De-Fi.

3. The Metaverse

Since Facebook rebranded to Meta Platforms, everyone has been talking about what the Metaverse is and what it can become.

By 2024, the metaverse is expected to be an $800+ billion market centered around things like live virtual entertainment, AR/VR gaming, next gen social networking, and more. The Metaverse might even become a means of earning a living through play-to-earn games like Axie Infinity or Roblox.

Read more: How the Metaverse will change our financial landscape

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Given the excitement around the space, big players are lining up to get involved. JP Morgan has set up a branch in the Metaverse. Ed Sheeran has performed in the Metaverse. Millions have been sunk into Metaverse real estate. Warner Music is setting up a live music venue in the Metaverse. And companies like Nike and Gucci have been exploring how to get involved. Even Microsoft CEO Satya Nadella is talking about how the Metaverse can transform the way we live, interact, and work.

Nobody knows what the Metaverse will become, but the amount of money going into it brings lots of opportunity. A whole new set of careers could be created through working on the Metaverse. NFTs and gaming are leading the way in Metaverse applications but it’s not unreasonable to think that one day, we could all be involved in it somehow.

How to start investing in Web 3.0

For those looking to get started in the space, Mosoff offers the following advice:

“The best way to start learning about Web 3.0 is by following the crypto community on Twitter and researching the different blockchain projects out there. Once you’ve done some research, get an understanding of how wallets work and invest a small amount in a cryptocurrency or NFT project you understand. This will help you get a taste of the ownership experience. There are lots of crypto exchanges or NFT marketplaces out there to choose from. Once you dip your toes in and see how it feels, you can go deeper into more complex applications.”

Featured image: optimarc/Shutterstock.com

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About the author

Total Articles: 8
Aubrey Chapnick is a side hustling freelance personal finance, business education, and careers writer who contributes to online and print media outlets in Canada like The Globe & Mail. He holds an MBA from the University of British Columbia and has several years of experience in the banking, investments, and technology industries. When not writing, he’s busy watching Formula 1, staying active, and managing his investment portfolio. All thoughts and opinions expressed by Aubrey are his own and not those of his current employer.