Web 3.0, or the next generation of the internet that's defined by blockchains and decentralized ownership of assets, has become a hot topic over the last year as money flows into the industry. Not only have cryptocurrencies been gaining attention, NFTs and decentralized finance projects have grown like crazy and billions of dollars of venture capital has been raised to advance the cause.
As the industry grows, investors looking to benefit from the growth of Web 3.0 should keep an eye on the infrastructure being built to power decentralized growth. That's where I think Coinbase (COIN 1.83%), Block (SQ 2.21%), and Apple (AAPL 0.36%) have a leg up on the competition.
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Coinbase
The cryptocurrency market still needs an entry point and Coinbase is just that for 89 million verified users. As of the fourth quarter of 2021, $547 billion was traded in the quarter and there were $278 billion of assets on the platform.
While the exchange business has been valuable, what Coinbase would really like to do is be a full-service solution to the crypto market. It's worked on integrating the Coinbase Wallet more with the Coinbase app and recently introduced an NFT marketplace. For developers, it has cloud solutions that will be the infrastructure of Web 3.0, providing easy ways for projects to mint NFTs, build token-gated communities, and even sign into sites with Coinbase.
Coinbase stock isn't without risks. The company may need to lower fees to compete with other marketplaces and its NFT marketplace is off to a very slow start. But this is one of the biggest names in cryptocurrency, and with a price-to-earnings multiple of under eight, there's a lot of potential upside if the company continues to grow.
Block
When you think of Web 3.0, a company like Block may not seem like a natural fit, but I believe it will be long-term. Block has a seller solution in Square that could enable NFT-gated commerce and its Cash App already has a large Bitcoin trading platform. The "TBD" project under Block may also be working on a crypto infrastructure.
What's likely more immediate though is using cryptocurrency as the "rails" that payments will run on. Using a crypto wallet or even Cash App, Block could enable sellers using Square to accept payments that would settle immediately in U.S. dollar stablecoins using a crypto payment infrastructure rather than credit card networks (more details on how that would work here and here).
Block's position in Web 3.0 may be as simple as bolting on token-gated commerce, which allows users who hold a digital asset like an NFT to access a site, to Square or as in-depth as using cryptocurrency as its payment "rails" and eventually being a crypto wallet company. This is a company with a lot of optionality in Web 3.0.
Apple
Web 3.0 will still require devices to access products being built, and Apple will play a key role in providing device infrastructure. The company's Macs and iPhones are an essential tool for both developers and users, and Apple could integrate products like the Wallet into Web 3.0 apps as well (think Apple crypto wallet).
While Apple isn't directly a Web 3.0 company, it's the kind of company that makes Web 3.0 possible. It's simply assumed that people will have access to PCs and smartphones when Web 3.0 utility is being built, and that means Apple is like a utility company with hardware like smartphones, tablets, and PCs that will be used to build and access Web 3.0.
While this may not be where explosive growth exists in Web 3.0, Apple is a steady performer and can thrive even if adoption of Web 3.0 is slow.
Web 3.0 is coming
This is a new generation of the internet in development and it's so young and new that we don't know exactly how it will disrupt incumbents. But I think we're in for some serious disruption over the next decade as Web 3.0 grows and Coinbase, Block, and Apple could play a big role in this next phase of the internet.
