As 2022 began, many investors had an optimistic outlook on the financial markets, which seemed to be rebounding nicely post-pandemic. Now halfway through the year, a different picture has emerged, with soaring inflation, interest rate hikes, and geopolitical conflict leading to market uncertainty.
Nevertheless, smart investors know that markets are dynamic, economics are cyclical, declines are inevitable (and temporary), and opportunities can always be found when you know how to look for them.
The world of Web3 and all of the exciting innovations on the horizon have the potential to quite literally rock our world – and our portfolios. Here are some of the top trends we are looking at right now, and what every investor needs to know about them!
Web 3.0: the megatrend
What it’s about: The Internet has long since become a fixture of modern life, and that isn’t going to change anytime soon. What is changing is the technology, which allows the way we interact on the web to evolve as well. Unless you’ve been living under a rock, you’ve probably heard someone talk about the latest evolution of the internet – Web 3.0.
Web 2.0 is the way we experience the internet today. Whether we are checking our emails, the news, or our investment accounts, these services and their content are stored and accessed via servers owned by centralized powers such as giant tech corporations or governments. Web 2.0 and its user-friendly services, often offered for free, have turned billions of people into internet users – some might even say addicts.
One of the greatest criticisms against the Web 2.0 system is that those behind it have complete control of its content, including users’ personal data, giving them outsized power and influence. A core principle of Web 3.0 is to decentralize networks and the infrastructure around ownership, with a vision for an internet where services and content are built and stored on public blockchains.
Since blockchains are not controlled by individual companies, but rather public networks where data is validated by multiple stakeholders in order to keep the system secure, this creates a paradigm shift for the internet as we know it. With Web 3.0, email, social, and finance applications will run on blockchains, peer-to-peer networks, or other decentralized platforms, handing control over data back to its creators and users.
What investors need to know: Since Web 3.0 is based on blockchain technology and uses token-based transactions, cryptocurrencies are likely to become the main way to pay for most everything you will be able to do online. Read more about investing in Web 3.0 here.
Cryptoassets are highly volatile and unregulated in the UK. No consumer protection. Tax on profits may apply.
The metaverse: new user experiences
What it’s about: While Web 3.0 is the next evolution for the internet’s infrastructure, the metaverse trend addresses the user experience for accessing the next generation of internet. The metaverse refers to digital universes and worlds through which people can connect, work and play in ways which are much more interactive and immersive than how we experience the internet today.
Although virtual worlds are not new – online games already have their own immersive virtual spaces, cultures, and economies – the metaverse built on Web 3.0 will greatly expand on this concept, creating a virtual universe complete with housing, offices, entertainment, and everyday products and services. By combining virtual reality, artificial intelligence, digital collectibles, cryptocurrencies, hardware advances, and other technology innovations, the metaverse will take our internet experience to a whole new level.
What investors need to know: In addition to the platforms such as Decentraland and Roblox that support these virtual realms, there are many investment opportunities being created by the metaverse. Tech companies creating hardware and software as well as big-name brands such as Nike, Adidas, Disney and many more are already eager to leverage the space.
Read more about investing in the metaverse here.
Cryptoassets are highly volatile and unregulated in the UK. No consumer protection. Tax on profits may apply.
NFTs: one of a kind digital creations
What it’s about: Non-fungible tokens, or NFTs, are one of the first applications of Web 3.0 networks and have crossed into public consciousness and popular culture over the past year. “Non-fungible” means one of a kind, so each non-fungible token is a unique verified representation of a specific digital item and can have its own value (as opposed to fiat coins or cryptocurrencies, where each unit’s value is exactly the same). NFTs have been rapidly adopted and are especially useful for collectibles in the digital art space, as each digital piece can be valued as unique and authentic.
One of the reasons that NFTs are exploding in popularity has to do with the anticipation of Web 3.0 and the metaverse, where NFTs will be widely used as proof of ownership. Since NFTs can be bought, sold and traded, they may be used as a type of currency in their own right. Some of the most in-demand NFTs right now are avatars that people will use in the metaverse.
What investors need to know: NFTs are built and managed on a blockchain – usually the Ethereum network, but others as well, such as Solana and Polkadot. Buying NFTs on eToro is simple. Read more about investing in NFTs here.
The regulatory treatment of non-fungible tokens (“NFTs”) may differ in different jurisdictions, and NFTs may – depending on their specific features – be unregulated or be subject to regulation in a number of jurisdictions. The services and activities which eToro intends to conduct in relation to NFTs are limited to aggregating information and referral to third-party platforms, and eToro does not intend to provide services in relation to any NFTs which constitute regulated products in any jurisdiction.
No NFTs may be purchased through eToro by use of the services provided by eToro, and eToro is not responsible for any trading activity in NFTs which may occur on any third-party platforms to which eToro may direct its customers. NFTs may be highly volatile, and individuals transacting in NFTs may benefit from little or no consumer protection, and may be subject to taxes on profits. The services which eToro provides may be limited to customers in certain jurisdictions at eToro’s absolute discretion including on legal, regulatory or commercial grounds.
Users need apps that do it all
What it’s about: With so many investment avenues and even new asset types, most retail investors today are juggling multiple financial apps, making it cumbersome to stay on top of their investments. Multi-asset apps that are user-friendly and enable users to “have it all” all in one place, with anytime/anywhere access and excellent customer support are, by far, the preferable option.
On eToro’s online trading platform, you can easily manage all of your financial assets, long and short term, in a single portfolio. eToro was one of the first to offer crypto alongside more traditional assets including stocks, commodities, currencies and ETFs – and as a company whose eye is constantly on ‘what’s next’, eToro is now bringing the huge potential which the metaverse and the new digital assets offer to its users.
Your eToro account also links seamlessly with an advanced crypto wallet as well as the Delta Investment Tracker. With Delta, you can view and track all your investments in one place, as well as access the tools to stay on top of your finances and make better investment decisions. Delta recently expanded its app to allow users to connect Web3 native, non-custodial wallets, and explore NFTs alongside their stock, crypto and fund holdings – so now eToro’s customers can really have the best of all worlds!
What investors need to know: eToro is more than just a trading app – it’s a dynamic, interactive and supportive investing community. You’ll be joining millions of other traders and investors to connect, share, and learn together on the world’s leading social investing network. And since each new account on eToro is credited with $100,000 in a virtual portfolio, you can even practise trading all of the financial markets in demo mode, in real time.
Looking into the future
Pulling back on investments can be tempting during uncertain times. And, of course, the future of any asset is never guaranteed. However, investors might want to consider a long-term strategy with an eye on developing trends, particularly if prices on related assets are relatively lower now, before mass adoption could drive them higher again.
This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.