Making Sense of Web 3.0: Welcome to a New Era of the Internet

This is the first of a series of posts where we will be covering everything Web 3.0. From the fundamentals of blockchain technology, to the rise and design of crypto-native economies, to the power and potential impact of DeFi and DAOs.

A new era of the internet…

While “past performance may not be indicative of future results”, it’s hard to avoid the fact that history often tends to repeat itself, especially when it comes to technological innovation cycles. This is one of the many reasons why people and tech enthusiasts (such as ourselves!) are excited about the proliferation and continued adoption of blockchain, crypto, and its applications.

Here, at EQT, we believe that this wave of technological disruption and innovation will likely resemble the rise of other similar, disruptive computer paradigms witnessed during the last century. There were mainframes in the 60s, PCs in the late 70s, the internet in the early 90s, and smartphones/mobile in the late 2000s. Blockchain and crypto are next.

With that, we also believe that each new computing wave brings with it a whole new set of applications, services, and businesses that will likely create trillions in value and reshape the way we interact with the world as well as the communities we engage with. We think that by ignoring, or dismissing, such shifts (which tend to emerge every 10–15 years), we would be doing ourselves, and those around us, a disservice.

Now, whether you fully buy into the idea that blockchain and crypto will lay the foundation to the Web 3.0 era (a concept which we will dive into more detail in a later post), it’s safe to say that it has become hard to ignore the headlines and momentum being built around the blockchain and crypto ecosystem and the applications being built around it. And we expect that this will only continue to increase as mainstream adoption rises further.

But why should we care?

Because we’re “numbers’ people”…

A Deloitte 2021 survey shows that blockchain adoption has shifted, with global leaders no longer considering the technology as “groundbreaking” but rather seeing it as integral to organizational innovation. They are putting money and resources behind it, with the global blockchain services market expected to continue to grow at nearly 70% CAGR during the next 5 years, reaching at least $67bn by 2026, with corporations expected to spend around $20bn in blockchain technical services per year by the end of 2024.

These numbers (amongst many others) suggest that since the introduction of blockchain a decade ago, the promise of what the technology can offer businesses, and industries, has transformed. What was once just a cryptocurrency payment platform, is now something bigger, more mature, and robust, powering the development of enterprise-ready solutions and applications. Today, more than 80% of global leaders and organizations cite blockchain as critical or important.

Enterprise and institutional adoption are important factors as they often drive investment dollars into the space and provide social validation of the benefits and use cases of any new technology.

However, no computer paradigm shift is complete, or even possible, without mainstream adoption. That’s why the most exciting thing about the continued mainstream adoption of blockchain and crypto is that it’s fueling a large majority of the innovation in the space.

Because it’s hard to miss…

When it comes to mainstream adoption, a lot of crypto applications and use cases have now transitioned from theory to practice, with hard dollars and strategic investments being made in the space and driving the creation of new digital ecosystems and economies.

To put it into context, as of the first half of 2021, there were over $270bn in assets transacted, in more than 600 million blockchain operations, by over 200 million users globally, with the total market value of cryptocurrencies sitting at +$2 trillion. That is bigger than the market caps of Amazon, Google, and Microsoft — or larger than the GDP of prominent countries such as Italy and Canada! NFT sales alone were $3bn+ in August, up from $250mn in all of 2020, led by demand from celebrities, corporations, and individuals (with digital artwork sales such as Beeple’s $69mn Christie’s auction, or NFT sales such as CryptoPunks or Bored Ape Yacht Club acting as catalysts for this wave).

Together with that, as of mid-July 2021, approximately $18bn had been invested by VCs and Growth investors into crypto and blockchain projects, dwarfing the last year’s $5.5bn. Notable rounds such as FTX’s $900m Series B, Ledger’s $380m Series C, or BlockFi’s $350m Series D. On the M&A front, digital asset-related transactions in that same period jumped to $4.2bn, up from $940mn in 2020, showing a dynamic industry and indicating that as the industry continues to mature and the adoption of blockchain technology, its decentralized applications, and crypto derivative use cases continue to proliferate, we can expect to see the evolution and development of a whole new capital markets ecosystem around it. Ultimately, bringing a number of new, sizable, and exciting investment opportunities to light.

So, what’s next…

“The history of blockchain and crypto shows that asset prices may fluctuate, but innovation continues to increase through each cycle.” This potential next wave of computing innovation comes with strong optimism about the technology’s potential to restore trust, enable new kinds of governance — where communities collectively make important decisions about how networks evolve, what behaviors are permitted, and how economic benefits are distributed — as well as build powerful, new, digital economies designed for the internet era.

With this optimism, also comes our excitement to continue covering and investing in the space. Whether it’s by enabling developers to build the core infrastructure of Web3 and the metaverse through our EQT Ventures investment in Moralis, or by helping tokenize the future of nature by turning carbon footprints and biodiversity into digital goods through our partnership with Single Earth, or by further bridging the world of fiat and crypto by making fiat onramps frictionless — we believe this is just the start and we’re looking to partner with the next generation of companies and founders who are working on building the future of the web as we know it.

Over the next few weeks, we will be releasing a number of posts as part of our “Making Sense of Web 3.0” series, covering everything from the fundamentals of blockchain technology to the rise and design of crypto-native economies enabled by fungible and non-fungible tokens (NFTs), to the power behind the permissionless and transparent nature of DeFi, as well as the “simple” yet profound potential impact of DAOs in how communities and organizations are formed and interact with each other. Our hope is that this series will serve as an onramp (no pun intended) to others into this new and fast-moving space and help provide a sneak peek into the future of the web, which we couldn’t be more excited about!