Unless you have been hiding under a rock, you’ve probably noticed the global markets are taking a beating at the moment. After a few years of riding high, it seems as though high inflation levels and Covid-induced sanctions are finally taking their toll. In fact, the recent market plunge has sparked concerns of a possible recession, especially after the
The US Federal Reserve revealed its intentions to raise interest rates by 0.75 percent, which would be the greatest single increase in borrowing costs in over 30 years.
Aside from the traditional markets, the crypto market is also in a state of freefall. At the time of writing, Bitcoin is trading at around $19,000, which signifies a whopping 30 percent loss over the last seven days. This is Bitcoin’s lowest price in the previous 18 months, which seems a distant cry from its all-time high of around $70,000 back in November 2021.
Despite this pessimistic outlook, it appears that VC funds continue to have a high degree of faith in Web3 tech start-ups, according to NFT news publisher NFTgators. Rather than recoiling their investments, many of the world’s leading VC funds are doubling down on this new and exciting industry in anticipation of its widespread adoption in the coming years.
What is Web 3.0?
To develop a true understanding of Web 3.0, it’s important to take a look back at previous evolutions of the internet to see how we have changed the way we interact with online services.
Web 1.0, which was around between 1989 and 2005, consisted mainly of “read-only” pages. This meant that the information flow between the user and the web was singular, in that users couldn’t interact with websites in any meaningful way. In fact, the internet was very passive throughout these years. There was no logging in, no interacting with posts, and there wasn’t even any real way for website owners to monetize through ads.
Then came Web 2.0 (2005 – present), the second generation of internet technology. Thanks to the invention of software/code such as Javascript and Flash, the internet became an interactive environment. Thus, not only would users be able to collect information from websites, but websites would be able to collect information from users.
This enabled centralized companies to use data to serve better content to their users, which would encourage them to spend more time on their sites. Before long, targeted ads were born, and then we eventually ended up with our current state of affairs, a centralized internet where user data is sold to the highest bidder, sparking widespread privacy concerns.
Enter Web 3.0, which looks set to combat these privacy issues since it will have a strong emphasis on decentralization. Through the utilization of blockchain technology, users will have full control of their data and, in many cases, can be rewarded for sharing it with companies and applications. For example, Odysee is a Web 3.0 alternative to YouTube that rewards users for watching content on their site with a cryptocurrency called LBRY Credits.
Moreover, many Web 3.0 enthusiasts suggest that it will bring about much-needed changes to the internet, such as improved data security, scalability, and privacy for all users. However, the one obvious caveat being that a lack of centralization means a potential for low moderation and regulation, which could lead to the proliferation of harmful/unverified content.
The VC funds are bullish on Web 3.0
The NFTgators report discusses how several of the world’s leading VC funds continue to invest in the Web 3.0 start-ups in defiance of the current market conditions, which only gives credence to the potential of this new tech.
Andreessen Horowitz (a16z), a Silicon Valley-based VC firm, recently stated that its most recent fund would target Web 3.0 start-ups across multiple verticals. The fund, which was announced with a valuation of $4.5 billion, brings a16z’s total Web 3.0 portfolio to a staggering $7.6 billion. According to the firm, they believe that the golden age of Web 3.0 is right around the corner, and by the looks of things, it’s hard to argue against them.
Many of the leading crypto companies are beginning to headhunt top talent from big tech companies (Web 2.0) in order to build the new infrastructure that will overhaul the internet in a way that would shift online services to decentralized technologies such as blockchain. Lured by lucrative compensation packages and the potential for rapid growth, this migration of leading tech execs could mark the beginning of a shift in the tech space.
Interestingly, one of the “hottest” categories of Web 3.0 belongs to blockchain-based games and metaverse projects. For those unfamiliar, blockchain games typically offer a play-to-earn system, where players are rewarded financially for spending their time on the game and completing tasks. Some of these games offer players rewards in the form of NFTs (non-fungible tokens), which can be traded on the secondary market.
As a matter of fact, blockchain games are now so popular that they account for more than a third of all game start-up funding after $1.2 billion was raised to develop 128 blockchain games in Q1 alone, according to Drake Star.
Final word
Regardless of the current market activity, it still looks as though Web 3.0 is ready to knock down doors and challenge the conceptions that many of us have around the internet and how we interact with online services. If the confidence of these VC funds is anything to go by, then it would be wise to keep one eye on the up-and-coming Web 3.0 companies, especially those operating in the gaming sector, since this is where most of the investment capital seems to be heading.
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