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The invention of blockchains and cryptocurrency has already shaken up the world of finance, and likely still has more in store. But this technology can disrupt multiple industries, and could pave the way for innovation in music, art, and even the internet itself. Fortunately for investors, this future upheaval can be a lucrative opportunity.
A new age of the internet known as Web3 is only in its infancy, but it made considerable strides in 2022 and is leveraging the perks that come with blockchains and cryptocurrency to create a more open, decentralized, and secure internet.
The next iteration of the internet aims to be the antithesis of the current Web2 we find ourselves in, where user data is anything but private, large tech companies call the shots, and protocols remain behind closed doors. With Web3, the internet will return power to its users and allow them to rewrite the rules of the game.
This revolution will also be a profitable one. By 2030, it’s estimated the collective value of Web3 could be more than $33 billion and have a compound annual growth rate (CAGR) of nearly 45%. If we have learned anything about how lucrative the internet is, this number might actually be underestimating Web3’s potential.
Because the backbone of Web3 uses blockchains, investors can turn a profit by investing in the cryptocurrencies that run on them. But out of the thousands of cryptocurrencies, there is one in particular that looks to be outdoing competitors and laying a solid foundation to become a leader in the industry.
Known as Polygon (MATIC 1.02%), this blockchain has already established itself as a Web3 powerhouse with its unique functionality. Polygon is technically a Layer 2 blockchain, which means it processes transactions on its own blockchain and then adds them to the Ethereum blockchain at a later date.
Its compatibility with Ethereum is highly sought-after by developers due to its popularity but also because it is extremely decentralized and secure. But this popularity at times bogs down Ethereum and slows speeds to a trickle. With Polygon, this becomes a thing of the past.
Polygon’s potential is only starting to be realized. And despite a crypto winter gripping the asset class for much of 2022, the Layer 2 blockchain made serious strides in developing its vision to become a leader of Web3.
Like any endeavor, hiring the right people is half the battle, and Polygon has filled crucial roles over the course of the last year. It has attracted employees from other industry leaders such as Amazon, Airbnb, and Alphabet‘s YouTube.
Polygon is in the process of launching its most recent innovation, known as ZK rollups. Set to come out this spring, ZK rollups will help Polygon scale up to support more use cases without sacrificing speed or increasing transaction fees.
And based on new partnerships made in 2022, it looks like the blockchain will have more and more users. More so than any other blockchain, Polygon became the clear-cut leader for helping companies take their first dive into Web3.
It’s a lengthy list of partnerships, but some of the most notable include Starbucks, Meta Platforms, Coca-Cola, Walt Disney, and JPMorgan Chase.
Despite having one of the best years, Polygon still fell victim to the crypto winter that gripped the market for much of 2022 as its price fell over 70%. However, while that might sound alarming to potential investors, there is a silver lining. Unlike other blockchains that lost market share during this bear market, Polygon’s share increased, and it moved into the top 10 most valuable cryptocurrencies.
Even with the recent spike in prices, Polygon is still down more than 60% from its all-time high, but this should be viewed as an opportunity. As Web3 grows in popularity and more companies begin to look for opportunities that the technology presents, Polygon is in position to become the premier blockchain of the new age of the internet.
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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. RJ Fulton has positions in Ethereum and Polygon. The Motley Fool has positions in and recommends Airbnb, Alphabet, Amazon.com, Ethereum, JPMorgan Chase, Meta Platforms, Polygon, Starbucks, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney, long January 2024 $47.50 calls on Coca-Cola, short April 2023 $100 calls on Starbucks, and short January 2024 $155 calls on Walt Disney. 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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