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Have you heard about the next big thing in the internet world? It’s called Web3, and it’s all about using blockchain technology and decentralization to power the next generation of the Web. This stuff is getting a lot of attention lately, and smart investors should keep an eye on the best Web3 stocks.
Web3 is focused on creating a smarter, more connected Web using machine learning, blockchain ledgers, and decentralized processing. As the industry around Web3 grows and more money flows into it, it’s a good idea for investors to keep an eye on the infrastructure being built to support this growth. This includes things like cryptocurrency, NFTs, and decentralized finance projects. Web3 is going to be huge and you don’t want to miss out as it gets going.
So I’ll show you three key stocks that should be in your portfolio, if you expect big things from the Web3 revolution. You’ll even see the most important cryptocurrency in the world of Web3 apps.
Let’s go!
The digital currency exchange Coinbase Global (COIN 15.06%) allows users to buy, sell, and store cryptocurrencies. As a centralized platform with 108 million users, Coinbase is not directly related to Web3, which is focused on decentralized technologies. However, Coinbase supports owning and trading several cryptocurrencies that are built on decentralized platforms and are considered to be actively involved in the Web3 ecosystem, such as Ethereum (ETH 1.28%) and Polkadot (DOT -0.28%).
Furthermore, Coinbase has expressed interest in exploring the use of decentralized technologies and has made some acquisitions in this space, so the company will almost inevitably become more involved in the Web3 ecosystem in the future. Coinbase’s mobile app already supports decentralized applications and Web3 content.
So far, the company sees itself as a bridge from the online content and financial systems you know to the Web3 alternatives. I expect that ambition to evolve over time. You should see Coinbase pop up often as the Web3 system grows up.
This shouldn’t come as a surprise, but IBM (IBM -0.10%) has offered blockchain-based services since 2017. Big Blue has been helping start-ups, enterprises, and everything in between take advantage of decentralized data ledgers for years. Right now, the company is hiring sales representatives, data scientists, and consultants with specific experience in Web3.
This tech giant won’t be left behind by the next sea change in internet technologies. IBM is more likely to lead from the frontline. Management doesn’t mention this opportunity very often, but that will change as the Web3 world starts to come into focus.
You know Unity Technologies (U 7.27%) as the maker of development platforms for immersive video games and digital movies. The company is expanding its target market on the fly, including development tools for Web3 applications.
In last February’s fourth-quarter earnings call, Unity CEO John Riccitello said that his company is “making the tools for creation, for operation, and we will bring them around to support, firstly, every Metaverse or Web3 application type you can imagine.”
That’s right; a new generation of online applications will require an updated user interface. Some of the Unity-powered Web3 apps might be souped-up menu systems with better graphics. In others, you’ll use your virtual reality headset or your smartphone to walk around in digital worlds, giving a hands-on feel to your online experience.
App developers should line up around the block for a toolkit that makes users engage more deeply with their product. That’s precisely what Unity does best, and I can’t wait to see how the Web3 experience takes advantage of immersive virtual worlds.
This discussion can’t be complete without a quick nod to Polkadot.
Sure, many Web3 apps will tap into the Ethereum network’s smart contracts. But other blockchain networks can execute certain functions better, faster, and more securely — and some of them can do things that Ethereum isn’t equipped to do at all. For example, you might want your Ethereum smart contracts to react to data published by external sources such as AccuWeather or the Associated Press. Polkadot makes it easy to take advantage of those external data feeds, providing digital connections from the data-publishing Chainlink (LINK -0.92%) blockchain system to your Ethereum contracts.
Polkadot’s main idea is to let each blockchain network or cryptocurrency do what it does best, giving app developers a simple and unified platform that makes the most out of many separate crypto assets. If that sounds like a hand-in-glove fit for the ideas behind Web3, you’re on the right track. You see, Polkadot is the “flagship protocol” of the Web3 Foundation, founded by the same people to support the same vision.
So if you believe in Web3 at all, you should at least be familiar with Polkadot’s place in the next-generation ecosystem. You may want to own some Polkadot as well, since this utility token should gain in value as the Web3 vision moves into the mainstream.
Anders Bylund has positions in ChainLink, Coinbase Global, Ethereum, International Business Machines, and Polkadot. The Motley Fool has positions in and recommends ChainLink, Coinbase Global, Ethereum, and Unity Software. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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