Not so long ago, the internet consisted of a bunch of read-only websites, and it was difficult for the everyday user to create content on it. Soon, social media came into the picture, and anyone with an internet connection could now create their own content for public consumption. Now, the future of the internet promises to be more immersive, where users can interact virtually in 3D regardless of geographical restrictions. Enter the metaverse.
The metaverse explained
The metaverse is not a new concept. It was first introduced by novelist Neal Stephenson, who wrote about an inhabitable digital world in his 1992 book, Snow Crash. Much like he described it, the metaverse is a virtual realm in which users can interact by way of 3D avatars that represent them. This aims to give people the feeling of being physically present without leaving where they are. Using virtual reality devices, they are teleported into these virtual environments where they can shop, play, exercise, work or do literally anything they can imagine. With augmented reality, they can even blend aspects of their physical world with the imaginary.
The metaverse market in focus
As aforementioned, the concept of virtual realms is not new. Over the years, most game developers have embraced this concept in their productions. Notable names like Nintendo, Roblox, and Decentraland have been producing virtual reality games for years now. Grayscale, a renowned investment firm, estimates that the revenue from virtual gaming could reach highs of $400 billion by 2025, from its current $180 billion.
The metaverse movement has also brought into focus new asset classes, in a manner of speaking. Cryptocurrencies and non-fungible tokens have gained widespread adoption, thanks to their use in the metaverse. In 2021, Sotheby’s reported a sales revenue of $100 million from NFTs alone.
Fashion brands have also embraced this movement, as several virtual fashion shows have been held by the likes of Gucci, Adidas, and Givenchy. Pop artists have also held virtual concerts in the metaverse, which has seen them attract millions of fans from all over the world.
Investing in the metaverse
The biggest perk about investing in the metaverse is the low barriers to entry. Anyone from any region in the world can easily buy into the financial instruments that power this movement. During the gold rush, most people expected to get rich by selling gold, but the biggest fortunes were made by those who sold pans, clothing, and other supplies to the miners. Applying this concept to the metaverse movement, here are some of the ways to buy into this trend.
Investing in metaverse cryptocurrency
For the most part, the metaverse is powered by blockchain technology. As such, most of its applications will have a native cryptocurrency that is used to facilitate transactions in the virtual world. The process of buying these tokens is largely unregulated in most countries, but in some, you may be required to satisfy KYC and AML requirements. Nevertheless, these processes are usually pretty straightforward and hardly consume any time. Most metaverse tokens can be found on popular exchanges. They include Decentraland’s MANA, the Sandbox’s SAND, and Axie Infinity’s AXS, just to mention a few. The more popularity their platforms gather, the higher their values tend to be.
Purchasing virtual land
Most metaverse platforms will sell land plots as NFTs, which means their ownership is verifiable. These plots can be used to host a variety of content that one can earn from, or they could be resold for profit. In 2021, a plot of land in The Sandbox sold for a whopping $4.3 million. This value depends on a variety of factors, such as the pace of developing adjacent parcels. Analysts estimate the market could gross upwards of $1 billion by year’s end.
Purchasing metaverse stocks
Alternatively, one could choose to invest in a company committed to the metaverse movement. There is no shortage of these companies, including social media giant Facebook (now Meta), Microsoft, semiconductor company Nvidia, Roblox, and Electronic Arts. Stocks of these companies could be bought from regulated brokers, just like traditional stocks.
Investing in metaverse ETFs
For the risk-averse investor, ETFs can provide a wider exposure to the metaverse market without the risk of investing in a single company’s stock. These funds are usually actively managed by a seasoned professional whose sole aim is to maintain the fund’s optimum value. They also contain various stocks, which ensures instant portfolio diversification once you invest in them. However, it is not uncommon for such funds to have a cap on minimum investments, which could deter the less affluent investor. Some examples include ProShares Metaverse ETF and Roundhill Ball Metaverse ETF.
Minting and trading NFTs
Most in-game items and collectibles are represented as NFTs to aid in tracing their ownership. One can mint NFTs and sell them in the numerous marketplaces in the metaverse. Alternatively, they could buy existing NFTs, then sell them later for a profit, just like with traditional art.
Renting or buying metaverse buildings
Rather than buy land, one could choose to invest in a building on the metaverse, in which they could host virtual stores for selling their merchandise. They could also use them as movie theaters, shopping malls, or concert venues. However, one would have to purchase a fairly large space to accommodate some of these applications.
The metaverse has been a long time coming, and now with blockchain technology, what seemed like a pipe dream is slowly coming to fruition. There are several ways to invest in this movement before it gets too late. You could buy into the cryptocurrencies that power the various platforms or buy and sell NFT items and land plots. Alternatively, you could buy stocks of metaverse companies and ETFs.