The Metaverse has been dominating the headlines recently, and many are speculating that it could be the next version of the internet. Though the reality is less exciting, it still offers a unique investment opportunity and there are many different centralized and decentralized options to choose from.
Ever since Facebook announced they are changing their name to Meta Platforms, in reference to their new focus on creating a digital metaverse, the excitement and hype surrounding the metaverse has reached new all-time highs, and cryptocurrencies in the metaverse sector are now worth tens of billions of dollars. But before we can start looking at these cryptocurrencies and which ones offer the best opportunity to invest into the metaverse, it is important to understand what exactly the metaverse is.
The average American spends around 7–8 hours per day on the internet. This brings us incredibly close to the tipping point where we spent more of our lives connected to the internet than disconnected. Though this may seem like a dystopian and depressing future, the reality is that this flip will likely take place within the coming years, and people will spend over 12 hours per day on the internet.
With all of this time being spent in digital environments, it only makes sense for them to be as comfortable, intuitive, and as realistic as possible. The idea of the metaverse, as quoted from Nvidia, is “a shared virtual 3D world, or worlds, that are interactive, immersive, and collaborative.” They can be thought of like the video game The Sims, where you control a digital avatar who has a job, a family, and can do anything they want in their digital world. However, in the metaverse, you are the sim, and you can interact with your digital world in any way imaginable.
The immersion of the metaverse is created through the use of VR headsets. These headsets, which are available today but are yet to be perfected, allow users to become lost in their digital worlds and forget their physical surroundings.
As one can imagine, the metaverse will have extreme social, political, and economic repercussions. An entire digital economy will be formed in the metaverse, as users will buy land, clothes, and even pets for their digital avatar. This specifically is why the metaverse is seen as such a lucrative and exciting investment opportunity.
The most obvious way to invest in a metaverse-based future is by investing in Meta Platforms, formerly Facebook. They are investing $10 billion into creating a metaverse ecosystem. However, it is widely known that Facebook has a poor reputation around the world due to concerns about privacy and bias. In fact, in a CNN poll conducted by SSRS, it was revealed that 75% of American adults believe Facebook makes society worse. With this type of negative perception surrounding the company, they would have to undergo a massive marketing campaign to have any hope of their metaverse being adopted by the masses.
Another option for investing in the metaverse comes from decentralized blockchain-based projects such as Decentraland (MANA) and the Sandbox (SAND). Both of these projects are building their own metaverses, where users can buy land and build whatever they want in the digital world. This includes clothes for avatars, casinos, or even houses, and all of these items are paid for using the native cryptocurrency of the respective metaverse.
Though these options are clearly more democratic and have less of a dystopian narrative attached to them, they also have yet to prove that they are a mainstay in the metaverse industry. For example, Decentraland has a market capitalization of around $8 billion, but only has 300 active users, which makes no sense whatsoever. These projects appear overvalued and have yet to convince users that they are worth using.
The final way to invest in the metaverse is by investing in tokens increasing the utility of the ecosystem. An example of a token that does this is Enjin Coin (ENJ), which allows users to create NFTs that can be used interoperably in different video games. This is a more risk-friendly way to invest in the metaverse, as it is not directly competing with Facebook, Decentraland, or the Sandbox, but still is attached to the metaverse industry.
Even though the metaverse is being proclaimed as the next generation of how we will interact with one another, there is a long way to go before that dream becomes a reality. Until then, the best way to invest in the idea of the metaverse is by taking a broad approach that doesn’t require the success of any individual metaverse.
By Lincoln Murr