The next generation of the internet is here. Investors know it as “Web3,” and while it’s still in its formative stages, it’s a frontier with expansive investment implications.
While there are scores of internet exchange traded funds on the market today, the ARK Next Generation Internet ETF (NYSEArca: ARKW) is arguably one of the best-suited for investors looking to access the potency of the Web3 investment thesis.
As an actively managed ETF, the $3.79 billion ARKW can be more responsive to Web3 trends, and that’s a critical attribute when considering the growth that Web3 is forecast to deliver in the years ahead.
“By 2030, we expect Web3 to depress annual offline consumption by $7.3 trillion, boosting direct online expenditures at an annual rate of 28%, from $1.4 trillion today to $12.5 trillion per year,” according to ARK Investment Management research.
A primary driver of the Web3 investment opportunity set is the fact that consumers are spending more time and money online. With that, the credibility of digital assets, such as non-fungible tokens (NFTs), is rising, as is the relevance of the metaverse.
The blockchain — a concept that ARKW features robust exposure to — is a foundational piece in the expansion of Web3 because it provides a platform for ownership of digital assets.
“We believe Web3 virtual ecosystems will thrive if online human participants can own—as opposed to use or rent—digital assets,” notes ARK. “In traditional Web 2.0 business models, end users typically face restrictions on products or services. They cannot port in-game assets from one game to another, for example, and they risk censorship on the social media platforms that profit from their content. In contrast, public and decentralized blockchains allow users to store and trade their assets in a legitimate secondary market.”
Several ARKW holdings are already levered to the themes of blockchain and digital asset ownership, including Coinbase (NASDAQ:COIN), Block (NYSE:SQ), and DraftKings (NASDAQ:DKNG), among others.
That NFT exposure is notable for ARKW investors because that market is booming, and some experts believe it could eventually shift from art and collectibles to other forms of consumption, entertainment, and investment.
“Non-fungible tokens (NFTs) serve as smart contracts that verify the ownership of digital assets on public blockchains. They usurp the power of centralized platforms to house, control, and verify assets. In 2021, NFTs generated $21 billion in sales as the number of monthly unique buyers soared nearly eight-fold to more than 700,000,” concludes ARK.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
