While you’re yet to visit and experience it yourself, it’s likely that you have already heard or read about the metaverse and how it is seen by many in the tech industry as the future of the internet.
Stemming from role-play gaming, the metaverse is packed with various applications and commercial activities that could catch the interest of investors.
To find out more, let’s dive into the metaverse, how it works, and some ways for investors like you to start investing in this virtual environment.
The Metaverse Explained
The internet has become essential for entertainment, socializing, and work. It also supports services such as health, security, finance, commerce, and transport.
With the evolution of the internet, Web 1.0 provided people access to information, while Web 2.0 introduced them to social media.
Meanwhile, Web 3.0 connects you to the metaverse, where you interact with other people and things in a digital environment.
You can access the internet in 2D via your PC or smartphone screen, but the metaverse lets you reside in a virtual reality (VR) or augmented reality (AR) world and connect with other users in a shared three-dimensional (3D) space online.
The combination of the digital and physical world originated from the Greek word ‘meta’, which means beyond or after, and ‘verse’, an abbreviated version of the word universe.
The metaverse can be used for various reasons, including business, shopping, and recreation.
From a commercial standpoint, the metaverse is a combination of worlds where companies and content creators can reach their target audiences in a completely new way and step up the development of digital value.
The metaverse offers an immersive experience, with your avatar being able to walk around digital worlds and places to socialize, shop, discover, and team up through work.
Applications of Metaverse
Some industries have started using the metaverse as part of their businesses. For example, several companies conduct meetings in virtual boardrooms, with avatars representing each human employee.
The metaverse has also been applied to promote and sell products such as non-fungible digital assets and host virtual events, live concerts, and fashion shows. Furthermore, experts in the medical, aviation and security sectors are learning about the advancements provided by VR and AR.
There’s also potential in the metaverse transforming education, as the virtual learning market is expected to be worth about $270 billion by 2030.
In addition, technology giants such as Microsoft Corp. and Meta Platforms Inc. are working on developing tech in relation to interacting with virtual worlds, although they are other firms looking into the same prospect.
Companies such as Nvidia Corp., Roblox Corp., Unity, and smaller groups and startups are creating the infrastructure to build better digital worlds that closely simulate our physical life.
Investing in the Metaverse
If you aim to invest long-term, there are four sectors of the metaverse you can consider betting on:
- Gaming:Makes up the first foundation of the metaverse, where the number of VR and AR headsets is estimated to climb to 42 million by 2025.
- Social:Creating a crucial part of the metaverse as people find more ways to connect.
- Work:Employees working from home, connecting, and coordinating online.
- Enabling:Comprises semiconductor providers, network infrastructure, and technologies that keep the metaverse operating, plus digital payment firms and cybersecurity companies.
Reasons to Consider Investing in the Metaverse
One reason investors put money into the metaverse is that there seem to be significant real-world business opportunities for investment in the said place.
With decentralization, smart contracts, cryptocurrencies, and digital marketplaces, the metaverse could be the next iteration of the internet, which is 3D, decentralized, and highly interactive.
Moreover, the investing space tends to follow the top trend, which is currently metaverse. Fund firms are fond of such trends since it allows them to release new funds, invite profit, and drive some interest.
Still, you need to approach metaverse investing with caution. Before jumping in, determine and examine the investment themes being supported.
That’s because different technology, software, video gaming groups, and payment services providing online services can claim they are involved in the metaverse or prospective beneficiaries of the space.
Ways to Invest in the Metaverse
Retail investors can invest in the metaverse in two ways.
The first way is by investing directly in businesses facilitating the metaverse development, which can be done by providing the software or hardware that helps VR or AR worlds function.
The second way is through investment funds focusing on metaverse-related stocks.
For example, you can invest in funds that can expose you to various companies, ranging from game developers such as Activision Blizzard to social media platforms like Snap and tech giants such as Alphabet Inc.
You can also invest in the space via metaverse exchange-traded funds (ETFs). These particular funds are designed to provide you access to the metaverse. They invest in publicly-traded securities that offer products and services that support the infrastructure and applications of the metaverse.
Additionally, you can put money into big video gaming firms directly or through a niche instrument.
The Future of Metaverse
A US investment management firm said there are three reasons the metaverse could be mass adopted. One is its cutting-edge hardware and advanced computing power.
Second, the pandemic made it quicker for people to experience digital living, which made many now used to working, socializing, and shopping in the comforts of their own homes.
Third, there is a potential for transactions involving cryptocurrencies to be performed seamlessly and globally in the metaverse.
If you’re also optimistic about the metaverse, it’s possible that digital space can make a significant impact across industries and business sectors. That then would support the case for investments associated with the metaverse.
Still, remember that not every company is leading the new iteration of technology sticks to the path.
That is why investors like you should remain as wary when considering the outlook of a business engaging in innovative projects as you do when assessing the pros and cons of putting money into what an old economy stock.
