Why have you decided to invest in this space? Answer this honestly.
If someone asked you what the top reasons are, could you tell them?
Use this as a resource for explaining to your friends and family, why exactly this matters, and why they should pay attention.
Let us start with WEB3.
We have gone through a couple of versions of the Internet thus far.
Web1. Non-interactive, brochure/pamphlet style webpages. Very little user generated content - mostly just blogs and static pages.
Web2. The rise of social networks and user generated content. The most successful businesses of our gen have been network companies. Connecting humans to each other, letting us produce content for each other, and oh yeah, gathering as much data as possible to target ads to the highest bidder. Creating supremely addictive software with no regard for our mental health. Creating individual profiles and passwords for each platform. We Own Nothing.
Web3. A return back to Open-Source. Community owned and driven platforms, using tokens to align incentives of communities. NFT's allow true ownership in digital space. Interoperability means everything talks to each other. Composability means we can build new things using each others code as lego-blocks. Decentralised means that the servers can't go down for 6hrs - as there is no single point of failure.
The most exciting part of Web 3 I think is the potential for new platforms and protocols that are designed with the User in mind. We've become accustomed to using 'free' products that actually make money from harvesting our data and grabbing our attention in whatever way they can. The key to this is perhaps online NFT Identities - we won't be tied in to one big platform like FB - we'll be able to plug in our NFT identity into any protocol, without hundreds of passwords.
If the product has features we dislike, we can move our identity and friend list to another almost identical (but better) platform. We will be able to own a share of the products we use - and thereby benefit from the revenue generated. Creators will be able to get paid directly from their fans, not through the middleman of youtube and ad revenue. They can issue tokens that can form an online community with shared values and interests, and give their audience a way to invest in them directly! Imagine buying a piece of a band you love, as they succeed, your token becomes worth more. Imagine a music-lover investing market.
It's very exciting, and the big boys at FB should be scared.
Payments
This should be the most easily understood part. Without going into the mechanics of blockchain - the rise of Internet-native money is well overdue. We now have the means to send VALUE through the Internet, anywhere in the world, without needing to go through a big institution (who takes hefty fees - and is fkn slow!). This will open up so much that we are already seeing. Decentralised financial products. (DeFi) Borrowing, Lending, Interest Savings to name but a few.
This will open up the ability for protocols and creators to monetise in new and inventive ways. Maybe one day we will all have an Internet wallet, and every site or video you watch just automatically deducts 1c from your account. You can pay your favourite creator instantly and directly, without having to sit through ads in order for them to get paid. Who knows honestly, we can guess at some of the things we are seeing come to life - but 5 years down the track it could be a totally different picture.
Gaming and Metaverse
NFT's, NFT's, and more NFT's. The Internet and computers are incredible because information can be duplicated an infinite number of times for no cost. Remember when people had to sell books? or Videotapes? or Cassettes?
I don't. lol
When things are digital, you record one video, one piece of music - and you can copy and distribute it millions of times with no cost! This is why there is so much Leverage available to creatives through the Internet. No marginal cost of replication.
Fungible means that it is the same as another, indistinguishable. Money/currency has to be Fungible so that we can all accept it, it all has to look the same and have the same value.
So Non-Fungible means that we can own unique items in the digital world. Copy/Paste made it so anything that went on the Internet was basically owned by everyone. Now we can verify TRUE ownership of digital items. Only with Non-Fungible Tokens are we able to OWN things in the digital world. And these NFT's can be linked to real world assets. Maybe in the future, you wont sign a lease, or a mortgage or own a physical piece of art. Ownership of the NFT may be sufficient.
They aren't just JPGs. They are programmable building blocks for a new way of interacting and living on the web.
INVESTING or SPECULATING???
If you're like me. You definitely do a bit of both...
An underappreciated aspect of crypto is the ability for anyone to be a VC (venture capitalist). Previously only those with 1m or 10m+ net worths were allowed to participate in investing in early stage - high risk high reward - startups. With tokens and crypto, this has opened up the retail world to investing. 2021 is the year of the Investor. (or year of the gambler lol)
So I want to clarify some things and give some insight into my approach.
Investing is when you park money in something that has a reasonably good chance of sticking around and paying you for years to come. Real estate, an Index of the top 200 Companies stocks. Solid bets that are unlikely to go to 0.
Gambling is when you throw 500 on red. or shiba. or cumrocket lol
Speculating I think is somewhere in between. The odds are nowhere near BTC levels of relative-safety, but not a straight up moonshot on babyflokidogecumcoin. It's a sweet spot that has higher risk higher rewards. There's no free lunch.
If you have responsibilities, don't have a large risk appetite, or really hate losing any money. Buy BTC for long term hodling over the next 10yrs + and you'll get incredible returns on your money. And maybe ETH. They are established. Have huge developer ecosystems, they're the current 'blue-chip' picks. Now this may well change, but at the moment they are sure-bets in crazy volatile crypto land.
Now I'm very young. I don't have that much money to play with, and therefore that much to lose. If I was to lose all my money I would be very disappointed and annoyed to say the least - but I wouldn't be in any hot water. I don't have any debts. Nor any responsibilities. If this isn't you, then you probably want to go for a safer approach like the one I mentioned above.
So my split is something like 30%ETH as I don't like losing money, ETH will make good gains and is probably a good hold for the years to come. 20%SOL, DOT - Hedge with these other layer 1's. And the remainder 50% is spread among a handful of more speculative coins outside of the top 100. We are in a bull market and all signs say moon. When my target of X-amount in USD is reached, I will cash that amount out and put it in a fiat savings account as some nice safety money - don't want to get caught having not taken profits. Definitely keep the rest invested for the long haul. I'll continue to DCA small amounts over the years into BTC, and baskets of coins.
I have conviction that this space will continue to grow in the coming decade. We are at the beginning.
Legendary Investor Stan Druckenmiller said,
Never ever think in the present - try to envisage what the world will look like 12-18 months ahead.
What creates price movement? Change. Big change. With all the disruption happening in the world economy, if you look at the macro picture, this presents the most fruitful set of opportunities I've ever seen, in terms of the magnitude of change. "
I believe this is the single biggest shift in multiple areas of our world.
We have the US creating crazy economic conditions with printing huge amounts of debt. Payments systems, online economies, Internet access, cheaper tech - there is so much happening, can't focus on it all, but it certainly seems like the brightest minds and the Venture Capital is flowing into crypto primarily.
The mainstream and the normies are slow to get into things. Too busy watching Netflix. Everything will get innovated and built while they sleep, then it will get adopted as the easier option. The Internet has levelled the playing field enormously and I am so grateful for the access we have to people we would never have been able to talk to previously. Podcasts, youtube vids and interviews. Seriously insane goldmines of digging into the most clever people in their fields. Utilise this.