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My Top Web 3.0 Stocks to Buy and Hold in 2022

By Travis Hoium – Jan 6, 2022 at 7:41AM

Key Points

  • Twitter is already the connection point for web 3.0, and with some improvements, it could stay that way.
  • Apple is now an infrastructure layer in web 3.0.
  • Coinbase is the entry point to the cryptocurrency market and no one is challenging that position right now.

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The next generation of the internet is coming, and these companies are built to lead the way.

Web 3.0 -- or a third generation of the internet -- is a concept popularized by venture capital firm Andreessen Horowitz to encompass the next wave of internet innovations. The idea starts with a currency that's digital, transferable around the world in an instant, and smart. In other words, cryptocurrency. But it also unlocks creators who have long needed intermediaries or aggregators to reach customers. 

It's hard to argue that the current internet (web 2.0) isn't currently dominated by Alphabet (GOOG -2.83%) (GOOGL -2.83%) which owns Google and YouTube, Meta (META -1.54%) with its ownership of Facebook and Instagram, and retail and cloud giant Amazon (AMZN -0.09%). If they want to reach friends or customers on the internet or monetize your products, businesses and individual creators will probably interact with one of these companies. web 3.0's stated intention (whether you believe it or not) is to put power back into the power of creators and connect them directly with a community and users. I think of this as more of an evolution of the internet -- but a few companies are built to create the tools and infrastructure to let web 3.0 thrive. Twitter (TWTR), Apple (AAPL -1.23%), and Coinbase (COIN -7.80%) will lead the way. 

Person stepping into digital world.

Image source: Getty Images.

1. Twitter's community-building potential

The biggest challenge in an ideal web 3.0 world is reaching an audience. A podcast or song may only appeal to 1,000 people in the world, but they may value that item extremely highly. Now, how do you connect with those 1,000 people? I think Twitter is the natural answer. 

There's less friction in building communities on Twitter than on other social media networks. Twitter isn't particularly good at ads or tracking users around the internet like Meta is. It's built to allow a single user to have multiple accounts on their phone or PC. We have seen many examples of niche communities building organically on Twitter, which is now extending to web 3.0 and to the communities being built there. 

I think there are potential ways Twitter can integrate with web 3.0 tools like cryptocurrency wallets and closed social networks. An integration with cryptocurrency wallets could allow a community to quickly find its other members. An NFT could be found in a wallet, acting as a pass to enter a community. These are natural use cases for Twitter if it chooses to embrace web 3.0 and build the tools it needs to thrive. 

2. Apple as an infrastructure play

No matter what web 3.0 looks like, I think Apple will thrive. That's not because the company is making it easy for web 3.0 tools to be built or because it's going to participate itself, but rather that it's become a given for web 3.0 developers. This is now an infrastructure company. 

Tools like trading services and wallets for cryptocurrencies are being built under the assumption that users will have smartphones. Apple has the most valuable phone users in the world, so these top-shelf users will be desirable to web 3.0 developers. 

Add in the potential for web 3.0 to drive innovation in long-rumored products in virtual reality, and Apple could have a decade of growth just being an infrastructure company that innovators build on top of. 

3. Coinbase

To get into most web 3.0 concepts and applications, users need to buy cryptocurrencies. Coinbase is the biggest platform for entering cryptocurrency with 73 million users. That's how it has built a company with $3.0 billion in net income over the past year and is still growing. 

COIN Market Cap Chart

COIN Market Cap data by YCharts

But trading cryptocurrencies isn't what will make Coinbase a household name a decade from now. We know it's building an NFT (non-fungible token) marketplace, and CEO Brian Armstrong has said NFTs could be bigger than cryptocurrency trading for the company. 

I think there's a role to play for Coinbase being a centralized exchange that people can trust with their money, NFTs, and cryptocurrency. Scams and hackers are still a problem in the world of cryptocurrency, so the company that can build trust with the most users will have a big head start over the competition. I think Coinbase could play that role with cryptocurrencies, NFTs, and any other web 3.0 developments in the future. 

web 3.0 is coming

Whether you believe in the term web 3.0 or just think the internet will evolve in some ways to incorporate cryptocurrencies and other innovations, there's a new wave of innovative products and services coming. NFTs will unlock gated content, new communities will be created, and cryptocurrency will play some kind of lasting role in the world's digital economy. I think Twitter, Apple, and Coinbase are all positioned to thrive, and that's why they're my top web 3.0 stocks today. 

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. 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. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Travis Hoium owns Apple and Coinbase Global, Inc. The Motley Fool owns and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Coinbase Global, Inc., Meta Platforms, Inc., and Twitter. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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