In 1992, the concept of the Metaverse existed only in the fertile imagination of American cyberpunk author Neal Stephenson. In his book Snow Crash, Stephenson described the metaverse as a virtual reality-based Internet populated by system daemons and user-controlled avatars.
In recent decades, the development of faster Internet, higher computing power, blockchain technology and cryptocurrency has transformed Stephenson's fantastic dream into a kind of reality. In the next few years, people will be able to play, socialise, work and invest in the all-encompassing virtual environment of the Metaverse.
The potential of this virtual environment is so great that social networking giant Facebook is betting its future on it. In June 2021, Facebook CEO Mark Zuckerberg revealed the company's plans to build a maximalist, connected set of digital experiences under a new identity called Meta. The giant has even abandoned its cryptocurrency project called Diem to dive deeper into Metaverse and build an NFT market.
And to add weight to Facebook's move, Grayscale, the world's largest Bitcoin fund, estimates that the Metaverse could be worth $1 trillion in the next few years. But what new investment opportunities will there be in this emerging space? In this short article, we take a look at some of the areas potential investors in the Metaverse can put their money into.
A non-fungible token (NFT) is a unique, indivisible and immutable unit of data that can be used to log and authenticate digital content on a blockchain. They are primarily used to facilitate the ownership and trading of digital content online. NFTs, which represent works of art such as photos, music, or images of famous people, are emerging as worthwhile investment opportunities. In 2021 alone, the NFT market has grown to $44 billion, as reported by CoinIdol, a world blockchain news outlet.
As an example of the potential of NFTs, last April Sotheby's, one of the world's most prestigious auction houses, partnered with Nifty Gateway to host a three-day online event to sell the works of the mysterious digital art creator Pak, according to Gotham news outlet. The collection, called Fungible Open Editions, sold for $17 million, prompting Sotheby's to launch its NFT marketplace called Sotheby's Metaverse.
With Facebook investing heavily in technology to support virtual representations in the Metaverse, this space represents a lucrative opportunity for creators to monetize their art and for investors to acquire NFT pieces whose value can skyrocket over the long term.
The value of land in virtual worlds such as Decentraland and the Sandbox has increased by nearly 500%. Transactions for land in the metaverse follow the same principle as in the real world: location matters. That's why one individual paid $450,000 for a property near rapper Snoop Dogg's virtual mansion in the Sandbox.
Tokens.com, a Toronto-based company that invests in Metaverse real estate and NFT-related crypto assets, recently paid $2.5 million for 116 properties in Decentraland to highlight the viability of digital real estate, Crypto News reported. Republic Realm, another company developing virtual real estate, also plunked down $4.3 million for a property in Sandbox.
Industry observers believe that the metaverse will develop into a fully functioning economy in the next few years, and that buying virtual land to sell, rent or build on could become a very lucrative business.
In 2021, some of the most profitable cryptocurrencies to invest in were the meta-coins that run blockchain games and virtual universes such as Axie Infinity (AXS), Sandbox (SAND), Render (RNDR) and Decentraland (MANA). Facebook's announcement that it was reinventing itself as a meta drove the prices of some of these tokens to record highs. MANA , for example, jumped from less than 80 cents to an all-time high of $4.33 just hours after Facebook's announcement. AXS from Axie Infinity has since seen incredible gains of over 24,000%.
In a robust metaverse, more use cases for cryptocurrencies will emerge, and theoretically, as the value of virtual ecosystems increases, so will the value of their associated cryptocurrencies. In addition, metaverse platforms can burn certain percentages of their native tokens, permanently removing them from circulation and increasing the value of the remaining tokens. Therefore, Metaverse cryptocurrencies may also offer potentially profitable investment opportunities.
Finally, while the Metaverse is one of the hottest tech trends in recent times, it has yet to be monetized. As a result, investors looking for a less volatile option would be better off choosing publicly traded companies that are looking to acquire large chunks of the Metaverse without being overly dependent on success in the space.
Earlier this week, Microsoft announced the acquisition of Activision Blizzard, the developer of the popular Call of Duty video game series, for $75 billion. What makes this deal interesting to Metaverse investors is that Microsoft's technological expertise, particularly in virtual, mixed and augmented reality, and Activision's game portfolio are the perfect combination of everything needed to create an exceptional Metaverse platform.
So if a robust, existing company with solid finances and the ability to create a deep Metaverse appeals to you, there's no better ticker than Microsoft to invest in.
The metaverse is an exciting new area that promises to change the way people interact with social networks. It also offers potential investors a variety of ways to invest their money, from buying virtual land and NFTs to buying stock in companies operating in the Metaverse, such as Meta Platforms and Microsoft. It should be noted, however, that investing in certain aspects of the metaverse is still speculative. Therefore, investors should exercise caution and do thorough research before investing their money.
Written by Tanvir Zafar