It is not an exaggeration to state that with Blockchain technology the world is at the beginning of a new digital revolution, Philipp Cottier writes in his essay for finews.first.
This article has been published on finews.first, a forum for authors specializing in economic and financial topics.
Blockchain technology is an undeniably ingenious invention that carries potential at a level that is difficult to comprehensively assess. Initially developed for digital currencies, a series of additional uses and applications have now come to the market such as smart contract platforms, decentralized finance (DeFi), decentralized storage, music streaming and social media.
Furthermore, non-fungible tokens (NFTs) are used for the tokenization of assets, intellectual property rights, the metaverse, gaming, digital art and collectibles.
«Blockchain technology enables the new Internet of Value»
The emergence of decentralized business models will fundamentally change all digital sectors and impact our daily lives in many ways. It is not an exaggeration to state that the world is thus at the beginning of a new digital revolution: Blockchain technology enables the new «Internet of Value», also known as Web 3.0. Assets can be transferred directly over the internet for the first time. It has also made decentralized business models and decentralized autonomous organizations (DAOs) possible, which will lead to significant efficiency gains and the upheaval of entire sectors.
One catalyst for application developers is to reduce the so-called platform risk. Instead of having to hand over 30 percent of the topline to Apple and Android while facing significant restrictions and the possibility of termination, developers will be able to create their applications on one of the many permissionless smart contract platforms of Web 3.0 – at relatively low transaction costs and without restrictions or risks of termination.
«Smart contract platforms are in fact the foundation of Web 3.0»
It should be noted that Web 3.0 consists of different layers. It is based on Layer 1 protocols, which either offer store-of-value functions like Bitcoin, or smart contract functions such as Ethereum, Solana, Near or Flow.
Smart contract platforms are the very foundation of Web 3.0. They are essentially decentralized, shared operating systems on which computer programs execute clearly defined tasks (called smart contracts) that are open to all users of the platform.
In the U.S., foundations and pension funds have been active in this sector since 2017. While Switzerland is a global leader in the field of blockchain regulation and blockchain foundations, institutional investors from Switzerland remain cautious. Still, they have started to form an educated opinion about the space and some have already invested.
«What is certain is that Web 3.0 will grow exponentially and keep investors busy throughout the next decade»
The aim of a smart and forward-looking investment approach is to invest in a diversified way in the decentralized «Googles» and «Facebooks» of tomorrow – with a long-term horizon and a venture capital approach. While a global focus is appropriate, there are very interesting projects in Switzerland as well. One of them particularly worth mentioning is Molecule, which allows the financing of biotech research projects through smart contracts. The company is also one of the key drivers in the DeSci space (Decentralized Science).
Generally, it can be said that blockchain and therefore Web 3.0 represent one of the most interesting opportunities in the current global investment landscape. It is all about investing in the most successful decentralized protocols, networks and applications of the future. Of course, there are several key challenges to overcome such as scalability, security, effective governance, decentralization and efficient regulation. On the other hand, those challenges simultaneously offer numerous investment opportunities. What is certain is that Web 3.0 will grow exponentially and keep investors busy throughout the next decade.
Philipp Cottier is a co-founder and managing partner at L1 Digital. The Finma-regulated asset manager L1 Digital is focused on blockchain and crypto investments, with over $400 million of assets under management. Cottier is a board member of Bellegarde Capital, Crypto Finance and Persistent Energy. Previously, he was at responsAbility, CEO of Harcourt Investment Consulting and on Vontobel’s Board of Directors. Cottier graduated from the University of St. Gallen and holds master's degrees in Finance and Political Science as well as a Ph.D. in Finance.
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