2022 — The Year WEB3 Becomes a Grown-Up
A word from TradeFighter’s co-founder
The world is in a phase of transition.
Around 4% of the global population (300M people or so) now hold cryptocurrency; at the end of 2021 the NFT market was worth $22B; and the idea of the metaverse has become so pervasive that one of the largest tech companies in the world changed their name to Meta.
WEB3 is the all-encompassing term for this evolution of the online universe, and consequently of the world.
WEB1 was an infant internet filled with static webpages where the average user only consumed content. WEB2 was internet-as-a-platform, turning users into content creators rather than just consumers through the rise of social media networks. WEB3 is the Semantic Web; loosely defined as an internet owned by its builders, not by centralised organisations and encompasses an evolution to virtual reality, tokenisation and the connection of concepts and things online.
We are in a state of change indeed, and the core idea behind the WEB3 metamorphosis is decentralisation; an idea which is quickly taking over the world.
Growing numbers of ordinary folk are now holding, trading and even paying with things using decentralised cryptocurrencies. Governments are trying their best to slow the train down and stem blockchain’s runaway growth with bans and regulations but they’re having a tough time keeping up. Some governments haven’t even bothered to try and just embraced it instead (looking at you, El Salvador, you trailblazer).
NFTs have become a key part of the WEB3 transition. They represent a solid form of digital ownership, and in a WEB2 world where the vast majority of user data and content is owned by huge, centralised tech companies, verifiably unique digital tokens are essential for individual digital-asset ownership, and therefore individual autonomy online.
This is especially important for the developing metaverse; an augmented reality sitting somewhere between the virtual and the real. The NFT market became huge in 2021 alone (remember I said it was worth $22B in 2021? Well it was worth just $100M the year before). And it’s not just crypto-enthusiasts, new-age artists and creative-eccentric types who buy and sell NFTs; we’ve reached the stage where the ears of big, legacy businesses have begun to perk up, and they’re really listening.
At the end of last year Nike acquired RTFKT, a company which creates and sells digital shoes and PFP’s who’ll now create sneaker designs and collectible exclusives for Nike digitised as NFTs. Nike is one of the earliest companies venturing into digital goods for sale in the metaverse, but they’re not the only ones making large strides for metaverse positioning.
Microsoft have been ironing out an acquisition of Activision Blizzard, the gaming giant that owns the likes of Call of Duty, Candy Crush and World of Warcraft, for an eye-watering sum of $68.7B. Microsoft is already a giant in the gaming world because of the Xbox, and many believe the Activision acquisition is to help them pioneer gaming in the metaverse.
And again, they’re not the only ones. Take-Two, the parent company of Rockstar Games want to acquire Zynga, the social gaming developer that creates and owns mobile games like Farmville and CSR Racing, for $12.7B. The willingness of the people who bring you Grand Theft Auto to invest billions into social gaming may just show how big they think the metaverse is going to be. It also could show how they want to be at the forefront when gamers ultimately move into a virtually augmented reality, a reality in which they can truly own their gaming/digital assets.
Gamers, in fact, could be the ones who decide who the metaverse race winners will be. Gamers are the ones who are early into the metaverse because they already spend the most time in virtual reality and are the first to own digital assets — not just for the purposes of flipping, but actually to use them. The Fortnite kids may not have wasted their time glued to screens like their parents thought they did.
The gaming revolution into WEB3 has already begun, though, and it can be seen through the rises of the likes of Decentraland (the 3D virtual world platform) and Axie Infinity (the largest blockchain game in the world). MANA and AXS, their respective tokens boomed in the last quarter of 2021. Individuals and companies have begun buying digital land to set up shops in the metaverse, most notably Samsung, who have not only set up their digital shop in Decentraland but also invested into Axie Infinity and the Sandbox, and have announced in future customers will be able to buy and sell NFTs via Samsung Smart TV’s.
In 2020 WEB3 was a baby, just beginning to babble as blockchain adoption began to go mainstream, when ordinary people and institutions started buying into cryptocurrency. Last year WEB3 was a toddler, running around and bumping into things as NFT’s began to boom and people started to spend real money on digital assets and metaverse land.
In 2022 WEB3 will reach adolescence, where it will find its legs and start confidently striding through the world as more and more money is pumped into WEB3-based projects.
2021 saw large venture capital investments into WEB3, NFTs and metaverse projects totalling in the region of $30B, up from $6B the year before. Over 50 crypto projects in the same year were classed as unicorns (which is a lot of projects — a crypto unicorn is a project valued at over $1B) and attracted the investment of many a VC. These numbers are only likely to rise this year as the popularity of WEB3 projects baloons.
There are likely to be less and less one page investment agreements as VC’s start to take on a more traditional investing approach with grown-up vesting periods in multiples of years, rather than 6–12 months of downward token pressure to make a quick profit. These drawn out and more classic investment timeframes show the level of growing investor confidence within the space.
Having said that, it’s becoming harder for blockchain projects themselves to gain traction in the WEB3 world. No longer will a copy and paste roadmap do — new projects need real use-cases, intelligent tokenomics and be decentralised enough to give them enough clout. Acquisitions like we’ve seen with Microsoft and Nike are only the first; we’ll see more and more as big players look to hoover up and down the the fungible and non-fungible value chains.
With the number of players entering the WEB3 space many others will begin to realise they can’t not be involved in WEB3, just like back in the WEB2 days of the early 2010’s when companies realised they had to have multiple social media channels to keep business alive and keep up with the technological advancements of the world.
WEB3 is growing up, and its growing up fast. The space is evolving at breakneck speed and myself and all the good folks at TradeFighter are here for it.
RPJ (TradeFighter co-founder)
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Disclaimer: This piece is meant for informational purposes only and does not constitute financial advice.
