BY Harshit Puri
Whether it is Microsoft’s $ 68.7 billion deal with Activision Blizzard or it is Facebook renaming itself as Meta. The term METAVERSE is all around the place.
Let’s start by understanding what Metaverse is – The prefix “Meta” comes from Greek and means beyond. Therefore, the portmanteau of “Meta” and “Universe”, that is, Metaverse, would signify a place that is beyond the world or universe as we know it, one that has digital existence but feels just as real.
In Meta’s Founder’s Letter, 2021, Mark Zuckerberg mentioned “In the Metaverse, you’ll be able to do almost anything you can imagine — teleport instantly as a hologram to be at the office without a commute, at a concert with friends, or in your parent’s living room to catch up through your virtual avatar. This will open up more opportunities no matter where you live.”
To get a better understanding of the Metaverse, it is also important to understand the concept of WEB 3.0 in the evolution of the World Wide Web –
WEB 3.0 is an idea for a new iteration of the World Wide Web which is based on blockchain technology and incorporates concepts like token-based economies. It is based on decentralized ownership (as opposed to WEB 2.0 which centralized the digital network in the hands of a few major players) i.e., the creators will own the content they create, not the website they are hosted on. It serves as a building block of the Metaverse and much of the connectivity within the Metaverse can be provided by WEB 3.0.
Now having a hang over the idea of Metaverse, let’s explore the investment or money-making opportunities that Metaverse presents before us –
Metaverse Stocks –
The least volatile option for retail investors to buy into the idea of Metaverse is to invest in publicly traded companies whose business models or profitability are tied to the Metaverse i.e., stocks of organizations actively involved in the development of the Metaverse. The organizations could be engaged in virtual reality (VR) goggles production, 3D rendering applications, etc. The most popular stocks include Apple, Facebook (Meta), NVIDIA, and Microsoft.
Metaverse Real Estate –
NFT’s or Non-Fungible Tokens are unique digital assets – including virtual real estate. When an individual purchases a piece of real estate in Metaverse, the blockchain network backing the Metaverse platform verifies the sale and transfer of ownership. Last year in June, digital property investment fund Republic Realm bought a parcel of land in Decentraland (a major player in Metaverse real estate) for more than US $ 900,000. To ensure digital real estate has value, supply is limited – a concept in economics called “scarcity value”. For example, Decentraland is made up of 90,000 pieces or “parcels” to keep the supply limited. Apart from all these numbers and finance, let’s take a look at what are people going to do with their virtual piece of land? There are a lot of utilities that can be derived from virtual real estate. For example, hosting digital events and setting up shops to sell virtual items for avatars or building your house on that land. You can make it your own with various (digital) objects to decorate your digital house. You can invite visitors, and visit other’s virtual homes too. It won’t be long before real estate investment trusts (REIT’s) begin searching out for opportunities in the Metaverse. Property values move in line with economic activity, which, for instance, is also booming in Decentraland.
Metaverse Cryptocurrencies –
Cryptocurrencies are the primary method for monetizing and exchanging value within the Metaverse. They are used to purchase digital assets or NFTs and can also be exchanged for other crypto or fiat currencies. Theoretically, as the value of digital assets rises, so will the value of their associated cryptocurrencies. This concept is very similar to, for example, the Indian economy performing well and the resultant increase in the value of the Indian Rupee in relation to other currencies. Some of the tokens(cryptocurrencies) with the highest market capitalization are – MANA (Decentraland), AXS (Axie Infinity), and SAND (The Sandbox).
Non-Fungible Tokens –
Specifically, the creation of NFT’s (Non-Fungible Tokens), which introduces scarcity and uniqueness, is to turn your content into digital assets. NFTs cannot be copied, only transferred, so there is a real notion of ownership, manifested in technology. Almost overnight, NFTs have created a rush in the gaming, arts, sports, and entertainment industry. For Example, We have seen NFT’s of funky generative avatars, trendy virtual sneakers or even the first tweet in 2006. Since the Metaverse is a virtual 3D world, demand for 3D content is bound to pick up momentum.
There are many NFT marketplaces for the monetization of NFT’s. Open Sea is the largest marketplace for digital goods accounting for more than 97% of the market, and open to all creators. Fashion is one of the earliest sectors to grasp the economic potential of NFT’s and the Metaverse. For Example, luxury house Burberry created NFT accessories for the Blankos Block Party video game and Louis Vuitton launched its own NFT-studded video game, LOUIS THE GAME.
Play to Earn Games –
Play2Earn (play-to-earn) games refer to the concept of gaming in which a platform provides its players with a chance to earn any form of in-game digital assets that can be transferred to the real world as a valuable resource. These digital assets can be in the form of coins or accessories that have been tokenized on the blockchain. Play-to-earn games, based on blockchain technology, are already helping people around the world earn a good amount of money. According to an estimate, people in the Philippines are earning $ 1,500 – $ 2,000 a month just by playing Axie Infinity (a major Play2Earn game) as a hobby.
Some of the other popular Play2Earn games include Lost Relics, Crypto Blades, and DogemonGo.
Many of the above-mentioned Investment avenues, though offer a huge upside, carry significantly high risk and volatility when compared to traditional investments. The problem with Metaverse becoming this massive and lucrative is that it’s based on convincing millions of people that it’s not just some new gaming platform, and that adopting VR as their preferred existence is desirable. Even Elon Musk, CEO of Tesla and SpaceX, has mentioned that he is not fully convinced that people will abandon the real world and replace it with a virtual one. On the other hand , Crypto giant Grayscale said the Metaverse is a $1 trillion market opportunity. Now, how far will Metaverse go in achieving this feat, only time will tell.
ABOUT THE AUTHOR
Harshit Puri is currently a first year student pursuing Bcom Programme at Kirori Mal College, University of Delhi. He is extremely passionate about Finance and it’s interaction with other disciplines. He loves to travel and has a thing for sports.
Disclaimer: The views expressed in this article are the author’s own and do not necessarily reflect the views of the organization.
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