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Blockchain provides the powerful potential to reinvent our financial system and disrupt archaic systems of work and enterprise. Prompted by the pandemic, society has already begun to inspect the models and systems that underpin our daily lives with greater scrutiny. Whether it’s how we save, how we spend, how we live or how we work, Web3 technology has the means to simplify and streamline many of these processes.
Web3 is a particularly compelling technology for those who have been traditionally frozen out of financial and business opportunities. According to findings from the Federal Reserve, the median net worth of a white family in 2019 was $188,200 compared to $24,100 for a Black family. Breaking this disparity in wealth and financial opportunity should be a priority for a fairer society.
While the narrative of quitting your job to pursue a dream and self-employment saturates just about every social feed out there, it’s a bit more difficult than you might think — until now. Web3 could be the greatest tool for entrepreneurs and financial empowerment since the foundation of the internet. For those who may not be familiar with Web3, I’m here to show you why the technology could reinvent your side hustle and create a fairer financial system.
Web3 Is Inherently Entrepreneurial
Web3’s core value proposition is that community remains paramount, meaning no one person or entity should hold deterministic power over any potential outcome or event. In this structure, individuals can freely contribute, access and utilize the technology. The collaborative nature of the community means that Web3 makes it easier than ever for entrepreneurs to build successful businesses. Where technology-based businesses were traditionally built in vacuums, leading to endless redundancies and wasted innovation, the collaborative and iterative nature of Web3 means that builders can constantly recycle, modify and improve their technology use cases — leading to far better product-market fit.
Nor is this the only reason why Web3 could be a reliable launchpad for your business. Beyond being an endless junkyard of spare parts, many Web3 ecosystems have dedicated accelerators to support founders through technical advisory, non-dilutive grants and investment. These incentives ensure that the highest quality builders migrate to their ecosystems and that entrepreneurs are supported beyond solely capital.
This community-led approach to investment is a far fairer means of fundraising for founders than the traditional VC model. VC funding has been shown to disproportionately flow to white male founders, with less than 1 percent of total VC funding to startups distributed to Black founders in 2020. In contrast, raising capital from the Web3 community makes sure that entrepreneurs get the investment they truly deserve.
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So You Want To Be an Investor?
On the other side of the coin (all puns intended), unfettered access to the capital markets has allowed borrowers to more easily connect with savers, or in this case, investors. In traditional markets, yield is disproportionately accessible to society’s elite, further exacerbating class disparity. Web3, on the other hand, has the potential to break existing barriers to entry to financial markets and enable greater wealth redistribution.
Web3 projects are usually financed through token sales open to the public. This allows the average Joe to invest in private companies at early stages, whereas in traditional markets, such investments are only open to accredited investors (i.e., the financial elite). By opening the window of opportunity to invest at early stages in Web3 projects, smart investors could have the chance to realize far greater gains than permitted in traditional markets. Imagine if you were able to invest in Uber in 2010 when it had a $5.4 million valuation — the gains would be astronomical. Web3 finally allows investors to get in on the ground floor.
What’s more, the maturation of cryptocurrency markets has bred numerous financial products for the more sophisticated investor who is looking to double down or enhance certain bets. Decentralized finance (DeFi) is one clear example that gives crypto investors the same benefits and opportunities as legacy market investors through various staking, farming and lending programs. Additionally, the growing derivatives market for crypto assets also allows investors to enhance their trades.
That said, it’s imperative to keep yourself fully informed when it comes to investing. Any investor must understand the potential risks or rewards associated with any financial product, particularly when regulation is still playing catch-up. A savvy investor will conduct their own research and invest according to their risk profile.
Shaping the Future
Web3 offers powerful possibilities for reinvesting existing structures for financing, income and entrepreneurship. Blockchain could be the foundation to redefine these systems. However, it’s important to recognize that the rest of the world hasn’t quite come to that realization. We’re still pretty early in the life cycle of blockchain as a technology. In fact, comparing it to the internet, many point out that it’s at the equivalent stage of development as the internet in 1997 but growing far faster. Remember having to get off the web when your parents wanted to make a phone call?
There are multiple layers to understanding cryptocurrency, and nobody has got it all figured out. From the world’s regulators to the DeFi degens, the evolution of Web3 is a complicated process. For the average user, though, it can be quite intimidating. It’s important to remember that the path to a decentralized web is a long one and there will undoubtedly be bumps along the road. Make no mistake though, this process is already well underway and could provide groundbreaking possibilities for creating equity and empowering the disenfranchised. Take the plunge into Web3 today and see how you can redefine your future.
