Investing In The Metaverse: A Beginner’s Guide

The internet's future involves virtual worlds where humans may connect without being constrained by physical location. These virtual worlds are also known as digital worlds. The transactions and assets in these digital worlds use digital currencies and assets such as buildings, cities, and objects are called digital assets. Welcome to the metaverse era! Analysts believe that virtual environments might be the next major investment opportunity.

Although the metaverse is still in its early stages, the technology has the potential to transform everything from e-commerce to social networking and even real estate. As the popularity of these virtual worlds grows, so does corporate interest in capitalizing on this trend. Facebook, for example, has rebranded as "Meta" (FB) and intends to invest billions in its ambitious aim to develop the metaverse.

We hope that this helpful beginner's guide will help you better grasp what the metaverse is and how you might benefit from it.

What is the metaverse? 

Over the last two decades, internet technology has transformed how we engage with the world, providing us with unrestricted access to information and broadening our social contacts. However, the next technological progression will most likely be more immersive.

Because of increased processing power, quicker internet access, and other technical developments such as artificial intelligence and machine learning, technology businesses may create virtual worlds. These places strive to provide participants with a sensation of being present without requiring them to leave their current location. Companies like Meta claim to enable users to "perform nearly anything you can think" by employing holograms powered by virtual reality sets or other devices, as Meta CEO Mark Zuckerberg described in a recent video.

In this future society, people may transfer themselves as avatars to virtual settings to work, play, shop, exercise, study, and experience most daily activities digitally. Users may also duplicate real-life aspects such as their home or business décor while combining complex graphics representations such as a beach in Hawaii. As Meta describes, virtual reality is idealized by combining the imaginative with the actual.

"When you're at a meeting in the metaverse, it'll feel like you're in the room together, making eye contact, having a shared sense of place, and not just gazing at a grid of faces on a computer," Zuckerberg says. The same emotion pervades all virtual world encounters. A teacher, for example, may take children to ancient Rome or the depths of the Amazon Forest using augmented reality, which is an upgraded representation of the real world.

Want to learn more about the metaverse including what, why, when, and how, please read What is the Metaverse.

Investing in virtual worlds: What does the market look like?

It's worth noting that virtual worlds aren't new. For years, companies such as Nintendo, Decentraland, The Sandbox, and Roblox (RBLX) have been running virtual reality areas. These firms collectively draw millions of consumers. The stakes are enormous for huge tech corporations, who want to merge these different communities into a united metaverse. With this purpose in mind, they also intend to seize a piece of the billions of money at risk.

Grayscale, an investment group, believes that worldwide income from virtual gaming alone might exceed $400 billion by 2025, up from $180 billion now, a 122 percent rise.

"Our social lives and games are colliding, resulting in a vast, rapidly increasing virtual goods consumer market," Grayscale researchers stated in a research paper. Cryptocurrencies are used by content creators and other players in the metaverse economy to exchange virtual products. "This new paradigm enables users to own their digital assets like non-fungible tokens (NFTs), trade them with other players in the game, and carry them to other digital experiences, resulting in the creation of an entirely new free-market internet-native economy that can be monetized in the physical world."

And many large corporations are beginning to participate. Sotheby's (BID), an art gallery, stated this year that NFT sales had hit $100 million and that it had launched Sotheby's Metaverse, a new virtual gallery in Decentraland that allowed users to see accessible digital artworks. Similarly, Nike announced an extension of its digital reach in December 2021 with the acquisition of RTFKT, a virtual shoe firm. Givenchy, Gucci, Dolce & Gabbana, and Adidas, to name a few, have also hosted virtual fashion presentations in the metaverse.

Similarly, musical singers like Ariana Grande and Lil Nas X have held virtual concerts in the metaverse, garnering millions of admirers from all over the world. The metaverse economy is also allowing for new real estate ventures. Some investors have spent millions of dollars for "digital land" on metaverse platforms such as The Sandbox in the hopes of living close to superstars such as musician Snoop Dogg.

How to invest in the metaverse?

Many individual investors already have some exposure to the metaverse, since many significant U.S. public corporations are either participating or actively seeking to invest in the technology.

Microsoft (MSFT) recently announced its intention to purchase Activision Blizzard for $68.7 billion, in what is likely to be the largest gaming transaction in history — and a major bet on the metaverse's development. "Gaming is the most dynamic and interesting area in entertainment across all platforms today," Microsoft CEO Satya Nadella stated. "Gaming will play a significant role in the development of metaverse platforms."

Other publicly traded firms, like NVIDIA (NVDA), a semiconductor company that drives computer graphics, may gain from the metaverse's expansion. Similarly, Autodesk (ADSK) and Unity Software (U), software providers that enable architects and designers to build 3D models, as well as cloud-technology supplier Fastly (FSLY), are market leaders.

Roundhill Ball Metaverse ETF (META) provides an efficient and simple solution to invest in metaverse-specific equities for individuals seeking broader exposure. The fund manages around $900 million in assets and has a 0.75 percent expense ratio.

Many investors, of course, have exposure to cryptocurrencies, NFTs, and other digital assets that are part of the meta ecosystem. Nonetheless, many of these assets are riskier and more volatile than traditional investments. As a result, it's always crucial to examine your risk tolerance, conduct your homework, and be comfortable with how much you're willing to lose. Most people would benefit from a varied portfolio that includes a variety of the greatest assets.

Be careful before you invest in metaverse

Investing in metaverse is very risky. Before you invest in a metaverse projects, here is some things to look for and do your own research (DYOR). Also, it is highly recommended, invest only money that you're willing to lose. 

1. Founders/Team - Do your detailed research on the founders and the team behind a project. Not only just read about them, see if the team or at least one of the founders have launched any successful projects and/or companies. It is very important to know the people behind the project that you're going to bet on. Do not invest on a hype and in a team that is unknown. Best way to find that out is, Google their names, look for their experience, and reputation. Reputation matters.
2. Advisors - Advisors play a major role in the success of a project. Do a detailed research on the advisors and see if they have been invovled in any successful projects prior to this one. Also, don't forget to confirm the role and longetivity of advisors. Some crypto companies put advisers on their website just to look good. Its not even a bad idea to reach out to the advisor and ask them directly. No successful person will become an advisor on a bad project.
3. Community - The size of the community is an indicator of the project's success. Visit website, join company's Discord/Telegram and other channels. Look how many members they have. More members, better chances of success. You can even compare similar communities' members size.  
4. Social Media - Check out company's social media accounts and what type of activities and engagements social media accounts have. This will give you an idea how the project is being viewed on social media.
5. Partnerships - Partnerships are a major part of crypto projects. More and larger the partnerships, better chances of success. Read company's blogs, announcements, and news releases. Also don't forget to check the dates of these announcements. Are they still applicable? How different partnerships can help project growth? Does company has good relationships with a market and PR firm? If yes, what have they done or plan to do. 
6. History - If a project is older, you can get an idea from the history. History includes pricing, product releases, and delivery. You can also merge history with reading existing community channels and what community members are saying about a project. Also check out the growth of the community. Is it still growing or dying? Many older projects die over time because there isn't enough excitement from the community. History can also tell about the team's delivery and its promises vs real delivery.
7. Roadmap - You may want to check out the future roadmap of a project.

Disclaimer: This blog has opinionated information which does not make us liable for anything.