In the future, people will be able to interact in virtual worlds, overcoming the confines of physical space. This is the age of the metaverse, which could be the biggest investment opportunity according to analysts.
This space is still evolving, but the innovative technology can revolutionize social media, e-commerce, finance, real estate, and more. More and more companies are trying to capitalize on this trend as audiences for these virtual environments grow. Meta, formerly Facebook, is investing billions in metaverse development.
This short guide will help paint a comprehensible picture of the metaverse and how you might profit from the technology.
Studying the market for virtual worlds
Digital worlds are not new by any means. Companies like Roblox, Nintendo, Gala Games, and Decentraland have been running virtual reality spaces for a very long time. The number of collective users is tens of millions. However, stakes are high for big tech companies because they want to bring together these different communities. Of course, billions are at stake.
According to digital investment firm Grayscale, global revenue from just virtual gaming might exceed $400 billion by 2025. In a recent report, analysts at Grayscale wrote:
Our social lives and gaming are converging and creating a large, fast-growing virtual goods consumer economy. Content creators and other participants use cryptocurrencies to trade virtual goods in the metaverse economy. This new paradigm allows users to own their digital assets as non-fungible tokens (NFTs), trade them with others in the game, and carry them to other digital experiences, creating an entirely new free-market internet-native economy that can be monetized in the physical world.
In 2021, art gallery Sotheby’s announced that NFT sales had reached $100 million. It launched a new virtual gallery in Decentraland called Sotheby’s Metaverse, where visitors can see available digital art.
Also last year, Nike announced it had acquired RTFKT (artefact), a virtual trainer company, to grow its digital footprint. Couture brands like Gucci, Givenchy, Adidas, and Dolce & Gabbana have organized virtual fashion shows in the metaverse.
Artists like Justin Bieber and Ariana Grande have performed virtual concerts in the metaverse, which millions of people from all over the world watched.
Investments in metaverse property
People have bought “digital land” on Sandbox and other metaverse platforms for millions, hoping to live next to celebrities or sell it for a profit.
Individuals who want to invest in the metaverse will find investing in publicly traded companies the least volatile option. Their profitability or business models are connected to the metaverse. These companies include Roblox, Microsoft, Meta, and Boeing. Here are some details about each.
Roblox lets gamers build and share virtual worlds with other users of the platform, which has grown rapidly since its founding 14 years ago. The company has 24 million unique digital experiences, 9.5 million independent developers, and 49.4 million daily active users, up more than a third year over year. It is not operating at a profit at the moment, though.
Microsoft is exploring the metaverse for a niche. They plan to release Mesh for their popular video conferencing platform Microsoft Teams this year. Mesh will let users generate personalized avatars and interact in a holographic 3D environment beyond the limitations of physical space.
Holoportation, a tool that allows users to access the previously mentioned digital environment with a VR headset, will be a key feature. Users appear as a digital, but lifelike image of themselves. They can collaborate with team members like they would in person.
A few days ago, Business Insider reported that Microsoft had given up its AR headset project due to “a lack of a unified strategy.”
Meta Platforms Inc
After Mark Zuckerberg announced the rebranding, Meta released Horizon Worlds, a virtual reality metaverse platform. Over the holidays, Meta’s Oculus Quest 2 VR headset was a popular present. Increased headset sales won’t necessarily translate to more users of Horizon Worlds.
Boeing is using the metaverse to grow and improve production capabilities. The company’s chief engineer told Reuters in an interview that they had plans to create a proprietary digital world, where robot, computer, and human employees could interact seamlessly.
If you’re looking for wider exposure, Roundhill Ball Metaverse ETF can help you invest in metaverse-specific stocks efficiently. The fund has an expense ratio of 0.75 percent and about $900 million in assets under management.
Buying land in the metaverse
To buy land in the metaverse, you must first choose a platform. Enjin, The Sandbox, and Decentraland are popular options, but not the only ones.
The next step is to create a digital cryptocurrency wallet. This connects to a blockchain network and stores crypto. Your choice will depend on the platform. Some wallets are compatible with certain platforms and not others. Metamask is a solid option across the board.
Then, you connect the wallet to the platform’s marketplace. You’ll find marketplaces on metaverse platform websites.
Buying digital land is not unlike buying land in the real world from here. You must take the location, price, and potential future value of the digital land into account.
When you find a piece of land you like, you must acquire the crypto to pay for it. It is stored in your digital wallet. The crypto depends on the metaverse platform. You would need SAND to buy land in The Sandbox or MANA to purchase land in Decentraland.
All that’s left to do is make the actual purchase or bid on the land when you’ve connected your digital wallet to the metaverse marketplace and funded it. The price will be deducted from your balance and the NFT representing the property is transferred to the seller’s wallet.
You can buy avatar clothes and other metaverse NFT items the same way.
On blockchain networks, metaverse projects are powered by divisible, mutually exchangeable tokens. You use those to buy assets or exchange them for fiat or other crypto. Some tokens give holders the right to vote on decisions, such as new features to release or where money should be invested in the platform.
In theory, digital asset value is directly proportional to token value. Platforms like Decentraland eliminate the risk of inflation by burning tokens used to buy digital assets. This removes them from circulation permanently.
The last section of this article lists metaverse tokens by market cap in descending order.
Decentraland’s MANA token powers the Decentraland metaverse and is used as a medium of exchange on the platform’s marketplace.
Axie Infinity (AXS)
Unlike MANA, the AXS token is a governance token. Holders of AXS can vote on decisions related to the Axie Infinity ecosystem, including spending community treasury funds. In the future, it might be possible to use the AXS token to buy digital goods and services on Axie Infinity.
The Sandbox (SAND)
Like Roblox, The Sandbox focuses on user-generated content. The platform uses the SAND token, which users receive as a reward for taking part in The Sandbox’s alpha user testing. You can buy SAND tokens on crypto exchanges, like MANA and AXS.
Enjin Coin (ENJ)
While Axie and The Sandbox feature just one metaverse product, Enjin offers a wide variety of play-to-earn gaming experiences. Enjin is based on the unique premise that ENJ, its native token, is integrated into all of the NFTs created within the ecosystem. This gives digital assets real-world value.
Many of the investments discussed in this article come with very high risks and volatility compared to more traditional assets. Do research, consider your risk tolerance, and be prepared for wild price swings in either direction. It’s most reasonable to have a diversified portfolio, of which crypto shouldn’t comprise more than 5%.