The Web3 vision is almost easier to define by explaining what it's meant to replace. "Web 1" was the early years of the internet, with static web pages and very little interaction from the user. Content publishers published content and consumers consumed it. Any old web server could get the job done, and e-commerce was an absolute toddler at this stage.
"Web 2" is what we have today, an online landscape largely defined and controlled by social media. Content creators wrap their messages in short-form videos and a barrage of online posts, all tied to advertising services. Here, the whole system is set up to generate money from consumer views and clicks, funneling everything through giant hubs owned by Meta Platforms, Alphabet, TikTok parent ByteDance, and so on.
The "Web 3" revolution should replace that centralized top-down control with a freer and more personalized system. The next generation of online content creators can push Facebook, Google, and X aside to share their stuff across many peer-to-peer networks without a central hub.
This will include paywalls and siloed content platforms to creator-controlled content flowing freely between users. Compensation for creative works, important data, and must-read journalism will be handled automatically by cryptocurrencies with smart contracts.
The Web2 giants will stick around, but their roles are up for renegotiation. The internet of 2030 should look very different from the social media fiefdoms you see today -- just as the social media stuff replaced a simpler and less commerce-friendly architecture over the last couple of decades.
There's a sea change underway, and keen-eyed investors want to pick the best stocks for the upcoming changes. Read on to see two stocks (well, one stock and one cryptocurrency) that seem perfectly poised to take advantage of the Web3 revolution. They may not be "cheap" in a traditional sense, but both look like fantastic buys right now.
1. Polkadot
Let's start in the purely digital realm. Polkadot (DOT 0.13%) isn't just another cryptocurrency. The Web3 Foundation designed this blockchain system specifically to serve the needs of a Web3 internet. It does this by connecting many different blockchain networks and cryptocurrency systems to each other, all wrapped in a coherent data-passing framework that makes it easy to build next-generation apps and programs.
Polkadot isn't one blockchain, but a large bundle of blockchain ledgers running in parallel -- while reaching out to other systems such as the Ethereumsmart-contracts platform and the Chainlinkdata-reporting oracle coin, as needed. The result is an effortlessly scalable, flexible, and upgradeable system that can grow and change as the Web3 internet evolves.
The cryptocurrency wasn't designed to carry monetary value directly -- you can use Ethereum or Bitcoinfor that function, both supported by several of Polkadot's "parachains." Instead, it collects a small fee for every function it performs, funneling cash into the digital pockets of app developers, network validators, and other stakeholders.
Polkadot's economy is fueled by a 10% annual inflation rate, designed to encourage participation and secure the network. The rate can be adjusted as the supply-and-demand balance changes. This system aims to balance the token supply with growing demand for Polkadot's functions and services, potentially boosting Polkadot's value as the network expands.
The Polkadot ecosystem is raring to go. The project-boosting asset hubs are bristling with more cash than ever. There are nearly 600 active development projects based on Polkadot, though most of them are back-end infrastructure tools, rather than consumer-facing decentralized finance (DeFi) apps. Hang in there -- the real-world usability should only increase from here.
And of course, Polkadot's token price recently hitched a ride with the rising Bitcoin price. The current $10 price was last seen in the summer of 2022.
The token has nearly tripled in value from a deep dip last fall. It also stands a long way from the all-time high of $55 per token, notched just before the inflation panic started in 2021.
That old peak was quite speculative, but Polkadot is building a serious value out of actual real-world use cases now. The distant future is never guaranteed, especially in fast-moving and volatile markets like the crypto sector, but consider grabbing a few Polkadot tokens before they run higher. This is the simplest and most direct way to invest in a Web3 future.
2. Coinbase
It's time to move into the physical realm, one foot at a time. The experienced crypto-trading service specialist Coinbase Global (COIN -0.01%) is next on my list of promising Web3 investments.
Coinbase is more than the place you go to buy and sell Polkadot tokens or Bitcoin coins. It's also a bustling hub of blockchain-based payment services, a leading marketplace for non-fungible tokens (NFTs), a provider of digital wallet services, and a dedicated educator in all things related to cryptocurrencies.
Many of Coinbase's products and services are a perfect fit for the Web3 vision.
- People need to convert some old-school dollars (or euros, yen, and so forth) into digital coins to take part in the Web3 experience. Coinbase's crypto-trading and digital wallet services make it easy.
- Many DeFi apps will run on your phone, but some are already available to access through the Coinbase platform. Thanks to the company's robust technology and decentralized server network, you can tap into crypto-based lending and borrowing, rent out your high-value NFTs, explore DeFi-style insurance plans, and more.
- Coinbase's trading site also provides a handy list of popular Web3 apps, helping curious users connect with leading Web3 games, DeFi apps, Web3-style social networks, and more. The company also makes it simple to invest in the cryptocurrencies employed in each decentralized app.
Coinbase is more than just a gateway to Web3. It's a driving force behind the incoming Web3 shift, providing products and services that are essential to taking your first steps into the Web3 world.
As the digital and physical realms continue to merge, Coinbase's blend of technological prowess and market insight renders it an attractive investment for those aiming to be at the forefront of the Web3 evolution.
Yes, Coinbase's stock has more than tripled over the last year and has nearly recovered from the inflation-tinted crash that started in 2021. I won't call it "cheap" today, as the stock trades at 815 times earnings and 88 times free cash flow. So I get it if you'd rather wait for a price dip before taking action on this blockchain-powered financial powerhouse.
But if you wait too long, you might eventually regret leaving Coinbase's stock untouched in the spring of 2024. This company has a bright future, and a premium-quality business can deserve a premium price.
Web3: A future worth investing in
Polkadot and Coinbase are key players in the shift toward Web3. Investing in them means betting on a world where technology empowers users more directly than ever before.
Long story short, they're the gateways to the next internet era. And that makes them prime-grade investment ideas right now.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Anders Bylund has positions in Alphabet, Bitcoin, Coinbase Global, Ethereum, and Polkadot. The Motley Fool has positions in and recommends Alphabet, Bitcoin, Chainlink, Coinbase Global, Ethereum, and Meta Platforms. The Motley Fool has a disclosure policy.
