The company behind Louis Vuitton purses, the brewer of your favourite coffee, and some of the biggest video game publishers in the world are all embracing Web3. Web3 is built on a foundation of ownership and value, using technology frequently associated with Bitcoin, the blockchain.
The Web, and with it the Internet, are entering a new era. Over the past three decades, we’ve moved from the “Read-only Web,” which had little more than static content, to the “Read-Write Web,” which turned internet users into content creators and offered endless opportunities to collaborate. While this new Web revolutionized the media, retail, and other industries, the profusion of cyberattacks, data hacks, and online profiling have led many to view digital life as a Faustian bargain. Intermediaries and tech giants became gatekeepers, enacting barriers, imposing tolls and stifling innovation.
Enter Web3, the “Read-Write-Own Web”—a decentralized Internet where individuals own their own identities and can securely trade assets like money, securities, intellectual property, art, and data peer to peer. Web3 allows us to reimagine cultural industries, transform money and markets, usher in new kinds of assets and organizations, and support greater global participation in our digital economy.
Investing in a new technology is fraught with risk, as anyone who witnessed the dotcom bubble burst in 2000 can attest. It’s why Alex Tapscott, author of Blockchain Revolution, and the Managing Director of the Digital Assets Group at Ninepoint Partners has structured the Web3 Innovators Fund into three categories. “Category number one is exposure to platforms,” he tells the Alt Thinking Podcast, “and that means the new digital asset class of this new web. So things like Ethereum and Bitcoin, we think that those platforms will accrue lots of value over time as the technology becomes more widely used.” The second category is what Tapscott calls “pure play businesses” that have staked their fortunes on Web3 technologies. But where you’ll find LVMH, Starbucks, Roblox and Nike is in Tapscott’s third category, “beneficiaries”.
There will come a time when Web3 technologies will fade into the background, become as ubiquitous as the electricity running through our walls and the WiFi feeding our smartphones. “We don't think about the internal combustion engine every time we start a car,” Tapscott points out. “And I think the same thing that will be true for Web3. In the early days as a new technology infrastructure, as you described it, is emerging, the technology is much more visible than it is later on.” In the not-so-distant future we’ll stop hearing about “NFTs” and “tokens”, but it won’t be because they went away.
But as investors burned by the dotcom bubble learned the hard way, “first mover advantage” isn’t always an advantage. That’s why Tapscott has segmented his fund into these three categories. He tells the Alt Thinking Podcast that Wall Street in the 1990s continued to bet on legacy leaders like Kodak, Blockbuster, and Sears, while promoting the closed internet vision of America Online. “Every single one of those companies may have been good investments in a different paradigm, but in this new paradigm, they were about to be disrupted by the Internet of information, by the first era of the web. And a lot of those companies failed to adapt.”
Watching luxury goods makers, coffee companies, and video game makers adapt to Web3 is one area where Tapscott sees tremendous opportunity – for the companies, and investors.