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How to Invest in Web3

Sep 6, 2022 | Finance

Did you know that there’s almost $1 trillion invested in various cryptocurrencies around the world?

Despite the volatility of some cryptocurrencies, the underlying technology is groundbreaking. This is often referred to as the most innovative new technology on the market today. These new technologies are the next generation of the internet, Web3.

You can be an early investor in Web3 by investing in the underlying technology or starting your own Web3 company from scratch. Whichever you choose, it’s important to diversify your portfolio and learn how to invest in Web3 technologies to diversify your portfolio.

Interested in learning more about Web3? Here’s everything you need to know about the next generation of the internet and how to secure your spot as an early investor.

What Is Web3?

In simple terms, Web3 is the general push for a more decentralised internet. This means that websites, platforms, and digital assets can be created, utilised, and maintained by the users themselves. Web3 seeks to accomplish this by using blockchain technology to essentially transform users into owners.

While this term has gained in popularity over the last few years, its origins date back to 2014. This term was created by one of the most successful blockchain developers, Gavin Wood. This technology sparked an entire social movement to prioritise modern ideologies such as privacy, security, transparency, and decentralisation.

What Is Cryptocurrency?

Cryptocurrency is a digital currency that’s based on a decentralised blockchain network. This means that the currency does not get its value or price from a central authority but is rather in the hands of users and owners alone.

This differs from traditional fiat currency which gets printed and distributed by a central bank within a specific territory. This currency is only valuable in that country and cannot be used freely throughout the world. If you wanted to spend money in another country, you would need to go to a currency exchange to convert your money to the currency you want.

Cryptocurrency works around these issues by creating a single currency that can hold and maintain its value throughout the world. This currency is based on blockchain technology to ensure that records remain accurate and secure.

Cryptocurrency Value

Cryptocurrency comes with a host of benefits for both consumers and businesses. However, there has been some controversy stemming from what gives cryptocurrency its value. For example, the Federal Reserve handles printing and distributing the dollar.

This means that the Federal Reserve is the authority that gives value to the paper currency that we use. The relationship between the money, the Federal Reserve, and the United States Government is what gives the U.S. dollar value in the market. This goes as far as to give the currency value in other countries as well.

Cryptocurrency does not have that kind of relationship but rather has a decentralised relationship between all the people that hold the currency. You can hold cryptocurrency on exchanges and in special wallets. These digital wallets can hold various cryptocurrencies and come with a unique code that’s visible on the blockchain.

Cryptocurrency Controversy

While the code is visible, the owner of the wallet is completely anonymous. This has brought up more issues with the currency as transactions are visible but impossible to accurately track. The blockchain is viewable by the public and can show you how much money is going where but won’t give you any personal information about the wallet that received the money as there is no information to give.

At the end of the day, crypto wallets are just a collection of numbers and letters. This makes transacting with crypto almost entirely anonymous. Although the privacy is a clear benefit, it also opens the door to illegal funds moving in large amounts without a trace.

In the past, illegal proceeds and money would have to remain in cash to stay anonymous. However, cryptocurrency allows users to send large amounts of money anywhere in the world in just a few seconds without anyone having to know who you’re sending it to.

This has raised some serious cause for concern within the financial industry and has even caused politicians to start discussing possible legislation to regulate the crypto market.

Blockchain Technology

The blockchain is a distributed public database. This database is copied thousands of times and is hosted on various computers that are connected to each other through some kind of network. The purpose of copying the database and hosting it in different locations is to maintain the integrity of the data that it holds.

This is because if anything were to happen to the data in one specific database, there are other copies present to spot and rectify the mistake. In this way, the database becomes almost impossible to hack. Once a hacker enters one database and makes a change, the other databases can instantly spot the difference and undo the change.

Unlike a traditional database, the blockchain groups information together in blocks and holds that information securely within a network. Each block has a specific capacity and will link to the previous block when it’s full. This creates a chain of raw data that differs in structure compared to a traditional database.

One of the most notable features of the blockchain is that all transactions are permanent. This means that once a transaction gets registered into the blockchain, the transaction is permanent and can never be undone or removed. Displaying this information promotes transparency and increases database security throughout the network.

The decentralised nature of the blockchain means that no one person or authority has full control over the database.

Commercial Opportunities

While the blockchain is commonly associated with cryptocurrencies, the truth is that the technology can help revolutionise a variety of other sectors. Since the public ledger is great at verifying data, the blockchain can be great for proving the validity of items such as tickets and art.

Reasons To Invest in Web3

Web3 has the ability to completely revolutionise the modern economy. Here are some of the best reasons why you should consider investing in Web3.

Increased Privacy

Privacy is at the centre of Web3. The decentralised nature of Web3 promises that users will become owners of their own data. This means that users can interact with platforms anonymously and own the data that would otherwise be sold off to third-party advertisers.

Web3 is filled with themes of privacy, ownership, and decentralisation. This directly relates to modern-day internet users as privacy becomes one of the most important social movements within the tech industry.

Web3 companies and services are based on modern technology that prioritises security and privacy. Investing in these kinds of companies resonates with modern internet users and is more likely to be a success over the long term.

Enhanced Security

Data hacks are becoming more and more frequent in the modern age. These hacks are specifically targeted at data centres and data collecting companies. These hackers gain access to private servers and hold data that they collect for ransom.

Blockchain technology seeks to protect against these kinds of attacks by encrypting data and storing it in a decentralised way. This means that there is no single location that holds important data, but that data is rather stored in various locations around the world.

This decentralised system is also effective against hackers trying to alter records as well. This is because the blockchain works as a decentralised ledger that’s copied and held in various locations. This means if you were to hack into one database and alter a record, the other versions of that database would still exist and immediately notice that something is wrong.

This technology makes hacking to alter records virtually impossible, making entire platforms and digital processes safer on the internet.

Diversify Your Portfolio

Diversification is one of the most important concepts to understand in the world of financial management. While some investments may seem solid at first, it’s always a good idea to keep your entire investment portfolio diversified to mitigate risks.

When it comes to financial diversification, this can look different depending on your individual financial goals. If your goal is to save and build for the future, you may want to diversify in a few industries that you think will dominate in the future.

However, it’s also important to remember to diversify the asset classes that you hold. This means not holding too much cash compared to stocks, bonds, and alternative investments. Adding cryptocurrency to the mix can help you take your portfolio to the next level.

This is because the decentralised nature makes crypto less affected by market trends, conditions, or other economic factors. The only thing that dictates the price of crypto is the buying and selling of the asset online. This leaves all the power with users, which some argue is better than most other traditional investments.

Futureproof Investments

Many commentators are seeing the direction that the internet is heading and agree that Web3 is undoubtedly the future. While many may still debate whether cryptocurrencies will gain traction, the underlying technology is already being trailed by many Fortune 500 companies around the world.

Banks are leveraging the security and privacy aspects of the blockchain to develop new internal systems for their operations. This kind of technology can help revolutionise the banking industry and help keep bank accounts and personal information more secure.

In this way, investing in blockchain technology and other Web3 technologies can be seen as a natural evolution of the economy. This means that investing in Web3 can help futureproof your entire portfolio.

Early Investors See the Best Returns

Web3 may have been around for a few years now, but it’s still very much in its infancy. Even though large technology companies like Facebook have decided to rebrand to embrace the next generation of the internet, there are only a handful of Web3 companies operating today.

This means that there is still significant room for growth within the sector. This is evident in the cryptocurrency market as Bitcoin remains the most popular cryptocurrency on the market, with no competition anywhere in sight. As time goes by, other cryptocurrencies may arise to compete with Bitcoin, offering a unique investment opportunity along the way as well.

Early adopters can take advantage of this to buy in when the market is low. This concept allows early adopters to receive massive returns on their investments in the long run. A great example of early adoption is within the private equity space as many investors managed to turn thousands of dollars into millions of dollars in just a few years.

How To Invest in Web3

Web3 is undoubtedly the future of the internet. This makes it one of the best investments you can make for long-term growth. Here are some of the easiest ways to invest in Web3.

Invest In Cryptocurrency

Cryptocurrency is a digital currency that does not depend on a single authority to authorise or validate it. This makes it completely independent from politics, governments, and international authorities. While this may be true in theory, the reality is that cryptocurrency is independent but still under the influence of general market conditions.

Cryptocurrency makes use of a decentralised ledger to keep an accurate record of all transactions. This makes crypto a great way to diversify your investment portfolio. While the most popular cryptocurrency is Bitcoin, there are tons of other coins and tokens that make use of the same Web3 technology.

You can buy and sell these coins as crypto assets on public exchanges such as Coinbase. Some trading platforms such as Robinhood also let you trade and hold crypto along with your other traditional investments. This makes it even easier to diversify your portfolio.

Web3 Investment Funds

While cryptocurrency can be a great way to diversify your investment portfolio, there are also Web3 investment funds that allow you to diversify your portfolio even further. These funds can be passively or actively managed but promise to distribute your investment to a wide variety of Web3 projects around the world.

These funds invest in start-ups and established businesses within the Web3 space. This includes blockchain companies, cryptocurrency platforms, and even DeFi tools. These funds often split their investment between small and large companies, allowing you to maximise your returns.

These Web3 funds allow you to invest passively as if you were putting money away in a savings account. However, these funds are generally quite new to the market. This means that it may be a while until you’ll see consistent dividends.

Start Your Own Web3 Business

Online businesses can incorporate various Web3 technologies to help modernise platforms and operations. This is especially beneficial in the eCommerce space as trillions of dollars are spent online every year. By incorporating modern Web3 technologies, you can evolve your business to be more efficient, secure, and futureproof.

Web3 has also invented completely new opportunities that were never there before. While blockchain technology can be adapted and used as a verification tool for various applications, the metaverse is an entirely new marketplace for businesses to take into consideration.

This concept has been embraced by some of the biggest names in tech such as Facebook and Microsoft. Facebook went as far as to rebrand its entire company to Meta in order to showcase its dedication to the development and expansion of the metaverse.

This new platform allows you to buy and trade digital real estate, engage with customers online, and even offer virtual services from the comfort of your own home. In this way, the metaverse serves as a modern way to interact with customers and clients around the world.

Artists have already conducted virtual concerts in the metaverse while companies like Microsoft are testing betas of virtual workplaces that will allow collaboration

Why Start Your Web3 Business in Dubai

If you’re thinking of starting a new business, Dubai is the best place to be. The United Arab Emirates offers a wide range of benefits that make investing an absolute dream. Here’s why you should consider starting your Web3 business in Dubai.

High-Speed Internet

Web3 businesses either operate by leveraging blockchain technology or cryptocurrency. Regardless of how your business relies on Web3, you are going to need a high-speed internet connection to keep everything up and running.

Dubai offers some of the fastest residential and commercial internet speeds in the world. What makes this special is the reliability of Dubai’s internet connection as well. This means that you can safely and reliably keep your business online.

Whether you’re accepting cryptocurrency as a form of payment or running an entirely digital business online in the metaverse, a reliable internet connection is essential. This is because if your internet connection goes down for even a few minutes, you lose money.

The cost of high-speed internet is also incredibly affordable. Basic home connections cost around AED 300 ($81) a month while you can get 500 Mbps lines for around AED 1,000 ($272) a month. In some areas, you can even apply for a 1 Gbps commercial line.

Central Location

Dubai finds itself in the perfect geographical location for an online business. This is because Dubai and the United Arab Emirates is dead centre on the map and can easily ship items throughout the world overnight. This is also made possible because of the major airports and airlines that call the United Arab Emirates home.

The UAE also has incredibly efficient ports, allowing you to easily import and export goods around the world. The efficient ports and shorter transportation times help cut down the overall shipping costs. This translates to bigger profits for your online store.

Tax Friendly Environment

If you were to start your business in the United Arab Emirates, you can benefit from having to pay zero corporate income tax. While there are plans to introduce a corporate income tax for large businesses in the future, you can save 20% to 30% by starting or moving your business to the UAE.

There are dedicated areas in and around the UAE that come with additional benefits. These benefits help incentivise investment in these areas. New businesses that invest in these areas can benefit from less regulation, lower taxes, and even exemptions from customs duties.

Stable Economy

The United Arab Emirates is not perfect, but it’s one of the most stable and safe economies in the world. With some of the lowest crime rates in the world, moving to Dubai from the United States or the United Kingdom is an absolute dream.

The stable economy allows you to invest with confidence knowing that your business is safe from volatile political and economical circumstances.

Opportunities

Dubai may be one of the greatest cities in the world, but it’s still growing. This growth creates opportunities for investment throughout the city and the entire country. In addition to this, Dubai offers economic opportunities for you to create an international company that’s based locally.

From world-class internet to efficient logistics solutions, Dubai has it all. This makes it the perfect environment to start and grow your own Web3 company.

Invest in Web3 Today

Web3 is the future of the internet. This technology is based on concepts such as decentralisation and the blockchain. This helps to improve security and privacy for both users and companies, hence why it’s so important to know how to invest in Web3 technologies.

If you have any questions or want to learn more about why you should start your business in Dubai, feel free to browse some of the other articles on our website. Thinking of starting a business in Dubai? Contact us today!

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