The world we live in today is constantly advancing in technology. Every year new ideas and innovations are worked upon to improve the quality of life and existence with the help of R&D in science and tech. Consequently, investments and fundings play an essential role herein.
The year 2022 began with excitement around the term metaverse following the much surprising rebranding of Facebook to Meta by Mark Zuckerberg in October 2021. Since then, the upsurge in conversations around the growth and development prospects of the metaverse has grabbed attention flamboyantly.
However, the concept is still relatively new. Therefore, before investing in this emerging space, one should ask questions such as – What is metaverse? What things do they need to know? How will metaverse transform the future of businesses? What should one invest in the metaverse? And so on. This article will cover the six things investors need to know about the metaverse concisely and straightforwardly. Read till the end to learn more!
Understanding the Concept
The idea of a metaverse encompasses the existence of a virtual world where people would be able to move seamlessly from one activity to another, retaining the same avatar and in-game items throughout their presence on the platform. In addition, it postulates that the rising sophistication in technologies such as virtual reality (VR) and artificial intelligence (AI) would blur the lines between the real and a fantasy world in the future. Moreover, it is closely related to the trending blockchain technology and cryptocurrencies. The usage and applicability of smart contracts and non-fungible tokens make the purchase and exchange of goods secure for people across different parts of Web3. For instance, people can use cryptocurrency wallets to buy items in the metaverse, at the same time, verify their identity.
Mark Zuckerberg quoted in one of his speeches about what metaverse could potentially feel like, “In the future, instead of just doing this over a phone call, you’ll be able to sit as a hologram on my couch, or I’ll be able to sit as a hologram on your couch, and it’ll actually feel like we’re in the same place, even if we’re in different states or hundreds of miles apart.”
A Brief About The Opportunities
According to a report by Morgan Stanley Research, the metaverse would pragmatically evoke opportunities in real-world commerce. Internet Analyst Brian Nowak said in the statement that “We expect the metaverse to primarily operate as an advertising and e-commerce platform for offline products and purchases.” Furthermore, in the same report, it said that in the future, consumers in the metaverse would probably be able to test-drive new cars, layout and experience home renovation plans in 3D, attend live concerts and events anywhere in the world. It would potentially unlock $5 trillion in consumer spending on new, more immersive experiences.
Some Essential Figures
The metaverse is an evolutionary concept. As it evolves from a 3D world for gamers to a parallel online universe, futurists envisage it as a virtual space where actual financial transactions would occur. Henceforth, to enjoy the first-mover advantage, people have begun to buy digital real estate in the metaverse, brainstorm, and explore several opportunities.
The industry is currently valued at $47 billion. It is predicted to reach a valuation of $800 billion as soon as 2024. However, some market veterans believe it is already worth $500 billion, which would make achieving the $800 billion mark pretty tricky in the short run. Consequently, the parcels of land on platforms such as Decentraland and The Sandbox are already being sold for $2.4 million. Moreover, research conducted by Grayscale estimated in November 2021 that the revenue in the metaverse could go up to $1 trillion. However, this estimate might end up being too low. The income is expected to come from various sources that would entail advertising, digital events, business offices, art galleries, games and casinos, sponsored content, and e-commerce.
More About The Market
Depending on the level of disruption, the total consumer expenditure of the Total Addressable Market (TAM) in the United States has a potential valuation of $8.3 trillion. In addition, the data sourced from top companies and institutions such as PWC, Bureau of Economic Analysis, Census Bureau, National Center for Education Statistics, and Morgan Stanley Research shows that $3146 billion is estimated to be spent on other consumer goods and services. Education will see a considerably good expenditure at $252 billion, followed by spending on apparel at $594 billion, home furniture and decor at $697 billion, and motor vehicles at $702 billion valuations. Lastly, the data stated that digital real estate amounts to a massive estimated expenditure of $2516 billion.
Options to Invest
There are a couple of ways available for tech enthusiasts and investors to enter this next digital frontier and explore its opportunities. The first way is to invest in publicly traded companies actively involved in the metaverse. Metaverse stocks would be the least volatile option for retail investors as the companies whose business models or profitability are tied to the evolution of this concept make them a relatively safer gateway to the metaverse. Next is digital real estate.
Platforms such as Decentraland and The Sandbox have started selling virtual land as NFTs. The sale and transfer of ownership of the digital assets get verified through blockchain technology. After that, the owner can rent, sell, or build on their digital property, just like in real life. Thirdly, one can use cryptocurrencies to enter the metaverse. Cryptos are tokens powered by blockchain technology to purchase digital assets and can be traded for other crypto or fiat currencies. Some of the cryptocurrencies trending in the metaverse are Bitcoin, Ethereum, MANA, SAND, and more.
Keeping Realistic Expectations
Retail investors interested in the metaverse should explore the platforms and investment options available to consider the future value of the metaverse for themselves. However, since the metaverse is in its early stages of creativity and development, and the value proposition is yet to be proven, investors must note that any investment here should be considered speculative and potentially risky. In addition, certain hurdles could significantly slow down the growth of this concept as imagined. These could include the present robust digital media and e-commerce offerings that are constantly improving.
The metaverse would need to offer something better and grab consumers’ attention to replace them. The second hurdle could be discussions around privacy issues. For the metaverse to function seamlessly, millions of people will need to disclose information about their activities and preferences, which they might not be comfortable with.
According to several reports and data, the metaverse seems to offer an excellent opportunity for investors to invest and understand this new technological horizon better. Understanding what metaverse is, having a fair idea about the concept, specific figures, and the market situation before investing in the space would help the investors make better-informed decisions. Furthermore, the metaverse is in its infancy, and the investment viability here would only unfold gradually.
Author: Nitisha Lal
Nitisha Lal is a writer enthusiastic and curious to learn new things. Currently, she writes about the latest developments in technology, particularly around Web3 and the Metaverse. She enjoys nature walks, capturing the world around her on the phone, or reading books when away from work.