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Understanding The Metaverse
The metaverse is an umbrella term that covers a wide range of future communications, gaming, and social media technologies. In many cases, people use the metaverse broadly to describe futuristic science-fiction style technology.
Often, the metaverse is associated with augmented reality (AR) and virtual reality (VR) systems. However, there are some applications of the metaverse, such as massively multiplayer online games, which can be encompassed by the term metaverse without necessarily using AR or VR technology.
Some times, the metaverse is conflated with what’s called Web 3.0. Web 3.0 is the idea of a more open, decentralized, and privatized internet. This concept is often based around cryptocurrencies and blockchains, and where users have better access over their data and get paid for their contributions to the community. It’s not necessary to merge Web 3.0 with the metaverse, but many applications and developers link the two concepts together.
Some skeptics have accused the metaverse of being more of a buzzword than a concrete idea, in the same way cyberspace used to be a catch-all phrase for anything involving the internet.
However, it’d be a mistake to dismiss the metaverse out of hand. Big tech companies are investing tens of billions of dollars in creating their own metaverses. And in the cryptocurrency community, developers are already putting together virtual reality-based worlds that are raising money and developing their own digital economies today.
Note: The metaverse is an umbrella term that covers several emerging technologies. It remains to be determined just how the metaverse will actually play out in future years.
Metaverse Investing For Beginners
There are numerous ways to invest in the metaverse. Some of these are more established than others. For example, buying publicly-traded companies with metaverse exposure is not too different from investing in other cutting-edge industries. Something like buying virtual land in a metaverse, however, is a more novel concept with greater inherent opportunities and pitfalls.
Overall, here are the leading ways to take a financial stake in the metaverse:
Buying metaverse stocks Investing in metaverse crypto Investing directly in the metaverse
Buying Stock In Companies Who Are Investing In The Metaverse
Numerous large publicly-traded companies are either developing their own metaverse concepts, or are working on pieces of technology that could be integral to the creation of the space as a whole.
Semiconductor companies are a piece of the puzzle; to make augmented and virtual reality happen, there is a need for a ton of graphics chips for computers, AR glasses, and so on.
Software is another big piece of the puzzle. Companies that can assist photo and video editing, rendering, and graphic design will be vital to building out metaverse and augmented reality. There are also firms that operate things such as video game engines. The metaverse angle there is large.
Finally, there are smaller companies focusing on hyper-specific applications of virtual reality. For example, a company may digitize real-world buildings, creating 3D models of them so that real estate agents can sell properties more easily over the internet. The possibilities of augmented reality, the metaverse, and Web 3.0 are just now starting to come into focus. Here are a few specific large-cap companies that have a significant metaverse angle.
5 Largest Companies Invested In the Metaverse
Microsoft (MSFT) – Microsoft has announced its Mesh for Microsoft Teams offering, which seeks to create a VR-enabled collaboration space. Workers will be able to meet in VR, using avatars and other such features. Meta Platforms (FB) – Mark Zuckerberg is so on-board with the metaverse trend that he changed Facebook’s name to Meta to highlight its strategic importance. Meta currently is a leader in VR with its Oculus platform, and it is investing billions in further developing the industry. Nvidia (NVDA) – Nvidia is a type of picks and shovels play on the metaverse. Its graphics cards are integral to powering higher-end virtual reality experiences. Meanwhile, Nvidia’s heavy investment in artificial intelligence and machine learning could have all sorts of implications in the metaverse and Web 3.0. Unity Software (U) – Unity is one of the two major video game graphics engines. It allows developers to build games and then run them on all platforms spanning PCs, consoles, smartphones, and virtual reality. There’s a good chance that Unity will be the engine powering many future massively multiplayer online games with metaverse potential. Roblox (RBLX) – Roblox is an online platform and marketplace where users can play games developed by other users. The organic content iteration and social atmosphere Roblox creates has made it a leading potential metaverse, particularly for younger audiences.
Investing in Metaverse Crypto
One popular way to invest in the metaverse is by purchasing the cryptocurrencies used in online gaming platforms. A central concept of Web 3.0 is the idea that players can earn and trade cryptocurrencies in return for in-game actions. As such, leading games are developing significant in-ecosystem economies.
Even for people with no interest in playing the underlying game, an investment in a game’s token could be profitable if the game gains further popularity.
Note: It’s possible to participate in the economics of metaverse and Web 3.0 gaming platforms without actually picking up a joystick.
Arguably, Axie Infinity (AXS-USD) is the leading example of this. Axie is a game where players collect, breed, raise, and trade characters known as Axies. To get started, players must purchase some Axies, which can cost hundreds of dollars each. As people reach achievements in the game, they earn currency. Axie Infinity has become so popular that some people have quit their jobs to make Axie Infinity their full-time occupation.
Other metaverse worlds and gaming universes have similar dynamics. Decentraland (MANA-USD), discussed below, is a virtual world; its MANA token has risen to prominence in recent months.
Gala (GALA-USD) is another such example; it’s a Web 3.0 gaming platform. Developers create games on the platform, and players use the Gala currency to facilitate purchases and transactions within all these different games.
Investing Directly In The Metaverse
For investors that want the most exposure to the metaverse and Web 3.0, there are some more direct options to get involved in the space.
Buying Metaverse Land
One option is buying real estate in metaverse projects. The old adage about not making any more land might apply even in virtual reality. Projects like Decentraland have gained significant popularity. People have made multi-million dollar deals to purchase some of the 45,000 lots available in that universe. And prominent real world brands have taken part in events and advertisements in Decentraland.
The issue with virtual real estate is a lot like that of cryptocurrency more broadly. The supply of land in any one metaverse may be strictly limited, but a rival gaming company or developer can always launch a new metaverse that becomes more popular. It’s hard to judge which properties and which virtual worlds are worth investing today. Speculators that guess right may make a fortune, but a lot of folks are likely to end up owning nearly worthless virtual land as well.
Non-fungible tokens (NFTs) are another way to participate in the metaverse. To be clear, not all NFTs are linked to any particular metaverse application. Many are simply for digital art, for royalties attached to intellectual property, or other such uses.
However, some NFTs, particularly avatars, are linked to membership in virtual reality clubs or other sorts of exclusive events. As websites and social networks increasingly build NFT support into their applications, the range of services available exclusively to NFT holders may grow significantly over time.
Starting a Business That Operates In The Metaverse
Another option is creating an enterprise that operates in a metaverse world such as Decentraland or in a large online gaming universe such as Roblox. There are a variety of options such as selling customization and artwork for characters, buying and selling land or virtual currencies, setting up advertising and special events and so on.
There are a variety of ways to invest in the metaverse. Like most new emerging industries, it’s still a bit of a wild west, with great rewards and numerous risks as well. Potential investors should have a solid risk tolerance and only participate with funds that they wouldn’t mind losing. For savvy people, however, the metaverse may allow folks to both enjoy a new form of entertainment while also making some serious coin.
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