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How to Invest in Web3 | 6 Ways to Benefit [2024] 

how to invest in web3
Nemanja Curcic

Summary: Web3 strives to become the next phase of the Internet by democratizing how we deal with data and transactions. Disrupting Big Tech’s grip on the World Wide Web could transform our online space, and early investors could massively benefit from the successful implementation of the newest version of the Internet. This guide will explain how to invest in Web3 and explore several viable ways to do this using an online brokerage like eToro.

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What is Web3?

From Web1 to Web2

To properly understand what Web3 is, we should briefly touch upon the development of the Internet in general.

In its earliest stage, today referred to as Web1, the Internet was relatively simple. Pages hosted static content, like news, and users mainly acted as consumers, with little to no user content generation. Put simply, Web1 was the read-only version.

After the dot-com boom, new tech players introduced interactivity and socialization to the Internet. Users were encouraged to contribute and create their own content through personal websites and social media platforms. The platforms that enabled these innovations, like Facebook and Google, have grown to become today’s tech giants. This stage of the Internet is known as Web2, and the consensus is that we are still in that phase, although many claim it will soon give way to the next iteration.

About Web3

Web3 is a term that includes different innovations within the domain of the Internet, including blockchain, decentralized autonomous organizations (DAOs), the metaverse, artificial intelligence, and virtual reality (VR). 

This upgrade of the Internet aims to disrupt the centralization of data currently in the hands of a few data giants (like Meta and Google). As a solution, Web3 proposes blockchain technology, which refers to peer-to-peer digital ledgers that will disperse the flow of data across the web.

By storing information on secure blockchains, users would retain control of their data. Centralized companies could no longer gather your data and sell it to the highest bidder, which is a common practice on Web2. Furthermore, the Web2 labor-intensive processes of running the Internet would be streamlined and optimized by the use of smart contracts. Finally, all blockchain participants are its effective owners, with an equal say on how things will run. As Web3 would operate democratically, the Internet would run according to the will of the majority of online users. 

Web2 vs. Web3

The main differences between the Internet as we know it and Web3 boil down to the following:

Pros

Web3

  • Decentralized;
  • Private data secure;
  • Democratic decision-making;
  • Run directly by users.
Cons

Web2

  • Centralized;
  • Private data exposed;
  • Decisions made by tech giants;
  • Platforms operated by corporate entities.

How to invest in Web3

You cannot buy shares or invest in Web3 directly, as it is just an umbrella term for various innovations like blockchain, DAO, the metaverse, etc. However, there are several ways to receive exposure and benefit from the adoption of Web3 features.

To invest in Web3, you need to use a third-party investing service to access the stock market and buy shares in these companies. We recommend eToro, with a robust community of over 30 million registered accounts and outstanding features, including:

  • Commission-free stock and ETF trading; 
  • 2,000+ stocks from 17 exchanges;
  • Fractional shares available;
  • Charting tools;
  • User-friendly platform.

Highly Rated Stock Trading & Investing Platform

  • Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.

  • 0% commission on buying stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

1. Buy Web3 stocks

One of the most straightforward ways to invest in Web3 is to buy shares in companies heavily involved with its development.

Some of the companies closely associated with Web3 include:

Coinbase (COIN)

Coinbase (Nasdaq: COIN) is a popular cryptocurrency exchange closely tied to the rise of Web3 technologies. It is the first commercially successful exchange to earn legitimacy with the mainstream community. Through its active investment in Web3-related technologies and features like Prime division Web3 crypto wallet, Coinbase is a vital contributor to the transition towards the next version of the Internet.

Meta (META)

Meta Platforms (Nasdaq: META), formerly known as Facebook, is a tech and social media giant. It has devoted significant effort to developing a metaverse – one of the vital aspects of Web3. If successful, Meta could attain a dominant position in the future of the new Internet.

AMD (AMD)

Advanced Micro Devices, Inc. (Nasdaq: AMD), commonly known as AMD, is a major semiconductor company. The company’s graphics processing units (GPUs) are integral to blockchain networks by ensuring support in cryptocurrency mining.

For additional information on investing in Web3 stocks, consider our guides: “3 Web3 Companies to Invest in 2024” and “5 Web3 Stocks to Buy in 2024“.

Investing in Web3 stocks does not differ from buying any other shares. All individual stock investing carries a certain level of risk. Do your own research before investing, diversify your portfolio, and never invest what you cannot afford to lose. 


2. Trade cryptocurrencies

Cryptocurrencies are tightly connected with blockchain and Web3, being native currencies and supporting their respective blockchain networks, like Ethereum and its decentralized apps. If Web3 succeeds, crypto could entirely overtake fiat currencies’ role in today’s Internet. You can invest in the crypto market directly by purchasing crypto coins and tokens.

As Bitcoin lacks support for smart contracts, it has a limited influence on Web3. On the other hand, Ethereum processes and stores most of the data and transactions that happen in Web3.

Some of the currently trending crypto coins include:

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  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

3. Invest in DeFi

DeFi, or decentralized finance, is another feature that helps Web3 attain its decentralization goals. It utilizes cryptocurrencies and blockchain technology to conduct financial operations without the involvement of third parties. The system operates in a peer-to-peer environment and is powered by smart contracts.

You need a self-custody wallet to participate in DeFi activities that allow you to earn money. Once you obtain it, you can engage in some of the following:

Crypto staking

Staking in crypto means lending your crypto assets to support the blockchain’s operations. In return, you receive rewards in the form of interest, which is a way to earn passive income. Staking is available with coins such as Ethereum and Cardano, which use the proof-of-stake model to process transactions. Make sure you know how crypto staking works before engaging it.

Crypto lending

Some DeFi protocols, like Aave, Compound, and MakerDAO, allow investors to lend their tokens to other participants in pools. Interest rates on these platforms are much higher than in traditional banking, which significantly benefits lenders, but the feature is still in development, and digital breaches are not uncommon.

Becoming a market maker

Anyone can become a market maker in DeFi. You simply have to deposit two or more cryptocurrencies into a liquidity pool and make it available to traders. Whenever traders buy or sell from your designated pool, you receive a portion in fees.

DeFi stocks

You can also buy shares in public companies working on developing DeFi. Read our “How to Invest in DeFi Stocks” article for a comprehensive guide.

4. Trade NFTs

Non-fungible tokens (NFTs) represent records of unique digital or physical assets hosted on the blockchain network that cannot be copied, e.g., a digital image. A common purpose of an NFT is for an artist to represent their piece, proving ownership.

The difference between fungible and non-fungible tokens is in interchangeability. For example, Bitcoin is a fungible token, meaning every BTC is worth precisely as much as any other BTC, so you can freely exchange them. Conversely, NFTs are one-of-a-kind, meaning that the value of each NFT is different. 

You can trade NFTs by connecting your wallet to an NFT marketplace like OpenSea, LooksRare, or Axie Infinity. 


5. Invest in AI companies

Since its boom in recent years, artificial intelligence has represented a key driving factor in the evolution of Web3. Investing in these companies could benefit investors if Web3 successfully launches:

For additional investing opportunities in the AI sector, take a look at our “Top 3 AI Stocks under $10” guide. 

6. Engage in the metaverse and play to earn

As user activity sustains the metaverse, many platforms incentivize people to engage by harnessing the new play-to-earn model.

Various parties reward users for playing games. Some of these include:

  • Axie Infinity;
  • The Sandbox;
  • Splinterlands;
  • My Neighbour Alice;
  • Plant vs. Undead.

Pros and cons of investing in Web3

Pros

Pros

  • Data ownership: On Web3, users would be the sole owners of their data. Unlike in today’s Internet, no corporation could amass private data and sell it to the highest bidder;
  • Content ownership: Web3 would provide content creators with full compensation for their work, unlike on today’s social media where these creative efforts remain largely uncompensated;
  • Financial decentralization: The financial innovations of Web3 would allow transactions without centralized regulatory bodies and third-party services that charge fees for their services, leading to greater efficiency and lower costs;
  • Democratization, free speech, and improved privacy: Since no one would control users’ data, as it remains securely stored on the blockchain, user privacy would become greater in Web3 than in today’s digital space. Furthermore, since ownership of the Internet would be shared equally among its users, it would foster a more democratic use.
Cons

Cons

  • “Vaporwave”: Many, including Elon Musk, have stated that Web3 is just a vaporwave or buzzword, with little to offer beyond the existing cryptocurrency capacities;
  • Technological issues and high entry barriers: The early stages of Web3 have shown issues like complex interfaces, high transaction costs on Ethereum, and technical issues in blockchain software. Furthermore, convoluted access to dApps and expensive hardware sets high entry barriers that go contrary to Web3’s democratic tendencies;
  • Haven for clandestine activities: Since Web3 stresses user privacy and fiscal freedom, critics claim that such a decentralized place would facilitate illegal pornography, money laundering, and other crimes;
  • Fears of advanced AI: Critics argue that advanced artificial intelligence in Web3 could disrupt the economy by making jobs obsolete and causing mass unemployment. Furthermore, they state that AI could pose as humans online, manipulate digital assets, and compromise the global blockchain operation. 

Common mistakes to avoid when investing

Make sure to avoid these common investing mistakes:

  • Lack of research: Research Web3 in detail, along with each individual investing method, before spending any money;
  • Lack of strategy: Set your goals before you invest;
  • Staking everything on one asset: Always diversify your portfolio;
  • Falling prey to scams: Avoid illegal platforms and suspicious deals.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

FAQs about investing in Web3

How to invest in Web3?

To invest in Web3, consider buying cryptocurrencies like Bitcoin and Ethereum, which underpin blockchain technology, or invest in DeFi and DAO tokens. Alternatively, invest in stocks of companies actively developing Web3, such as Coinbase, Meta, and AMD, through a regulated brokerage like eToro.

What are Web3 companies?

Web3 companies represent businesses involved in developing features that would make the new Internet version possible, e.g., Coinbase with its crypto innovations, Meta with its metaverse advances, and AMD with GPUs used in crypto mining.

How to buy Web3 crypto?

Some cryptocurrencies are tightly related to the development of Web3. Since Ethereum hosts most of the work on Web3, buying Ether with an online exchange like eToro could support the ongoing Web3 development.

Can I make money from Web3?

Yes, there are multiple ways to earn money from Web3, including investing in cryptocurrency and NFTs, DeFi activities, and engaging in the metaverse by playing games.

Who controls Web3?

Since it relies on blockchain technology and decentralized ledgers, the ownership of Web3 is shared equally between each user.

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