Web3 Investors Urged to Take a Long-Term View Beyond Cryptocurrency Headlines

Web3 has opened up a slew of opportunities for investors who should take a long-term view of investing and consider building their portfolio across multiple verticals such as blockchain and cryptocurrency assets, Fadi Ghandour said. , managing partner of Wamda Capital.

Investors and consumers need to have a “change of mind and appreciation” that technology has changed dramatically and serious disruption is already taking place, said Mr Ghandour, who is a serial entrepreneur and founder and former chief executive. of the logistics company Aramex, in Dubai on Thursday.

Web3 is in its infancy and investors may not recognize its investment potential – in the same way investors doubted the investment potential of the Internet in the early 1990s.

“I have a very broad view of being early and being at all levels and not betting … that this start-up or start-up is going to be a winner,” Mr. Ghandour during a panel discussion at a Harvard Business School conference. in the emirate.

“What you need to do is pick five or six verticals. Is DeFi [decentralised finance] event? Yes, it’s happening. Will entertainment change? You bet that will change.

However, the bigger question for investors is whether they are ready to take these changes seriously and take a step back from the negative headlines about the so-called crypto winter and digital asset meltdown, a he declared.

The crypto winter dragged Bitcoin, the world’s first and largest digital token, below its psychological level of $20,000 in June. The plunge erased $2 trillion from the sector’s total market value.

The digital currency recovered some ground but fell again. It was trading at $20,146.13 as of 4:56 p.m. UAE time on Thursday.

The market, rocked by the collapse of the Luna cryptocurrency and its associated Terra stablecoin, was further rocked by the bankruptcies of major crypto companies, including Celsius Network, which filed for protection in July after losses. massive, and Singapore’s Zipmex, as well as job losses. .

All of this led to a decline in venture capital funding for blockchain and cryptocurrency startups, which fell 29% to $6.5 billion in the second quarter of 2022, the news platform said. the CB Insights Market in a recent report.

Critics say the sharp drop in the value of digital assets has cast further doubt on the stability of the sector and its credentials as a solid asset class.

However, Mr. Ghandour said the software upgrade to the Ethereum blockchain, known as Merge, which aims to reduce its huge power consumption, is “proof of work” and will expand the use of this technology. technology.

The merger will mark a sea change in how transactions on the Ethereum blockchain occur and how Ether tokens are created. The new system will consume 99.95% less energy.

Investors who are unsure about Web3 or the Metaverse should consider investing in funds that specialize in investing in this space, Ghandour said.

The metaverse is considered the future of business and human interactions and is expected to reach a value of $5 trillion by 2030, according to the latest report from McKinsey & Company.

E-commerce, which has grown significantly due to the coronavirus pandemic over the past two years, is poised to account for more than half of the $2.6 billion metaverse market, the consultancy said. in Creation of value in the metaverse. It will be followed by virtual learning at $270 billion, advertising at $206 billion and games at $125 billion.

In July, Dubai unveiled its Metaverse strategy, which aims to create 40,000 jobs and add $4 billion to the emirate’s economy over the next five years.

The emirate is hosting Dubai’s first Metaverse Assembly at the Museum of the Future and Emirates Towers later this month.

The assembly is expected to attract more than 300 experts, decision makers and managers, as well as 40 organizations involved in the metaverse.

“Serious investors are not in the business of hit and run. They’re in the long game and the long game is digital [assets] and metaverse,” Mr. Ghandour said.

Exponential disruption is happening and “you have to invest in it and stay for the long haul,” said the Jordanian entrepreneur.

Thousands of start-ups developing apps and solutions in the digital world need support and an open dialogue with regulators, especially in the six-member GCC economic bloc, he said.

The start-ups that are creating “the future businesses in the future economies” of this region need help beyond the sandbox and the capacity for “interoperability across the GCC”, the absence of which stifles the growth.

Without this critical element, “we create small businesses, rather than large businesses that are able to serve across the GCC,” Mr. Ghandour said.

Yasmeen Al Sharaf, director of FinTech and innovation at the Central Bank of Bahrain, said regulators were accommodating and encouraged the development of the FinTech sector.

However, they also face challenges, particularly in terms of the rate at which technology “evolves and impacts the way financial services are designed and structured”.

Regulators may not acquire the technical skills and expertise to fully understand this technology and oversee it properly due to the rapid pace of technological advancement, Ms Al Sharaf said.

Updated: September 15, 2022, 1:25 p.m.