The future investment opportunities of the Internet are now within reach

Every few decades, a series of technologies converge to reconfigure the global economy and the order of human affairs. We’ve seen this with the Internet, a convergence of content networks, computers and telecommunications that has taken us everywhere, all at once. Before that, it was power generators, electrical networks and light bulbs that ensured 24/7 production.

Today, several revolutionary technologies are emerging simultaneously:

  • Generative AI and large language models like ChatGPT make people and businesses more creative and industrious, and unleash new capabilities in the economy.

  • Blockchains help individuals and businesses move and store value, automate complex business processes, and secure peer-to-peer transactions online without intermediaries.

  • The Internet of Things connects everyday objects, from doorbells and thermostats to autonomous vehicles, from road sensors to data centers, forming an intelligent network for our connected world.

  • Augmented and virtual realities take today’s two-dimensional web and transform it into a spatial network integrated with our natural environment.

  • Biotechnology harnesses living cells and biomolecular processes to improve human health through more targeted treatments and more nutritious foods.

  • Advances in energy harvesting, batteries and other storage technologies will revolutionize transportation, energy grids and public infrastructure with greener, cleaner options.

The world is entering a new era, called Web3. Let me explain: Just as the term Internet has expanded from its original definition of internetworking to describe an era encompassing many technologies, business models, and social behaviors, so too is the term Web3 evolving to characterize an era composed of the group of technologies listed above, with new models and behaviors. These will define the next era of the Internet.

How you see them influences how you appreciate them

What does this new era mean for investors? In the mid-1990s, portfolio managers could choose from high-value stocks such as America Online, Blockbuster, Borders, Compaq, Dell, JC Penny, Kodak, Nokia, Nortel, Palm, Polaroid, Sears, Sony, Tower Records and Xerox, whose leaders failed to embrace the first two eras of the Web in time.

When viewed through the lens of the Internet, investors would have valued them differently. Web3 requires a new lens and new field guidance to help investors distinguish the companies that are best led, best equipped, and most open to transforming in a new paradigm.

As in previous eras of the Web, Web3 will become an integral technology for businesses. Businesses that leverage this will adapt to this next era of digital disruption and have a chance to thrive.

The future is bright, but unclear

For those who don’t follow new technologies, innovations can sometimes seem like overnight success stories. More often, they take decades to make. Artificial intelligence is a perfect example. As early as 1965, researchers promised that artificial intelligence would perform all human tasks in the next 20 years. The first winter of AI came in the 1970s, after 10 years of investment in AI had produced precious few results. Research and development continued for decades during the mild AI summers and decades-long AI ice ages.

Harper Business

After all, investor sentiment is cyclical. Last year, the consensus was that, with the end of zero interest rate policy, a long cycle of technological innovation and investment was coming to an end. Web3 has been involved in this for a while. Some have pointed to the collapse of FTX in 2022 to justify their concerns about Web3: this new technology, while innovative and useful in the hands of central banks or large corporations, has been a net negative for society in the free market fray . For them, it gave speculators new tools to bet on and criminals new tools to evade the law. By this logic, FTX’s collapse was not due to the technology but to the arrogance or incompetence of those who wielded it.

What Web3 means for investing in technology

All industries have setbacks. Did the age of exploration end when John Cabot disappeared in the Northwest Passage? Did the Industrial Revolution develop during the Panic of 1873, when John Cooke closed his doors and investors sold their railroad stocks? Did we go out of business on the web when dot-com stocks crashed in 2001? Or, in any case, have we found ourselves at the beginning, not the end, of an era of bewildering upheaval, change and progress?

This historical framework is useful for investors. It helps investors temper whatever extreme views they may have, from exuberance or complacency to cynicism or disinterest.

As companies integrate Web3 technologies, tremendous value will be captured from enduring platforms like ethereum ETHUSD,
and bitcoin BTCUSD,
Companies that have planned the transition to these and other new technologies and can weather the current market storm will reap the rewards in the long term.

AlexTapscotti is an investor and advisor focused on the impact of emerging technologies such as blockchain and cryptocurrencies on business, society and government. He is the author of Web3: Charting the Internets Next Economic and Cultural Frontier (Harper Business, September 2023).

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