For crypto investors, The Metaverse hit several milestones in 2021, as tokens like MANA and SAND hit all-time highs of $5.85 and $8.44, respectively. In addition, the “minimum price” (or minimum investment) of virtual land in Decentraland and The Sandbox reached $10,000.
However, the 2022 cryptocurrency bear market has erased the gains, which could affect the growth potential of the ecosystem. Currently, MANA and SAND are trading around $0.65 and $0.78. The minimum price of Decentraland packages is now about $2,300, and about $1,800 for the sandbox.
Do these Metaverse projects still promise growth and a revolutionary change in the way humans interact with each other: a “parallel plane of existence“? This post delves into the current state of the ecosystem and the investment potential.
What is the Metaverse?
First used in the 1992 science fiction novel. snow crash by Neal Stephenson, the Metaverse was a digital world that provided a realistic 3D experience for users. In the book, you could meet your friends and colleagues in virtual worlds; buy using virtual currencies or tokens; buy, build and develop virtual real estate.
You could enter and explore this digital environment using virtual reality headsets and augmented reality goggles, using this “background of existence” for everything from business meetings to entertainment.
More recently, Metaverse expert Matthew Ball defined it as a “parallel plane of existence,” explaining that “The Metaverse is a new era unfolding before our eyes.”
In his bestselling book The metaverse: and how it will revolutionize everything (also available free on your websiteor in short form in this video), describes it as “an interoperable network of 3D worlds with a massive scale rendered in real time”.
(Clarifies the difference between the Metaverse and VR, adding that the latter is only a minor component of the former.)
The Metaverse is not a new concept. It is the product of years of continuous technological revolution, from the invention of computers to the growth of personal computing and the advances of the Internet and mobile computing.
Instead of swiping and looking at tiny screens, the Metaverse will allow us to enter these worlds, in a variety of ways. But to do that, a number of key technologies still need to be developed and matured.
For crypto investors, here are some of the trends to watch and explore:
Emerging Trends in the Metaverse
Investors will do well to watch these trends, looking for future winners in each category.
The digital earth is one of the driving forces behind the adoption of the Metaverse. Just like in the physical world, you can buy and trade virtual property in the digital world using NFTs and cryptocurrencies. The two leading Metaverse platforms where you can buy, sell and develop virtual properties are Decentraland Y the sandbox.
“Twin” Stores of the Metaverse
The Metaverse Twin stores are a replica of the stores found in the physical world. They sell products that look like real life objects. Brands like DKNY, Gucci and Vans are creating these Metaverse Twin stores to offer a new shopping experience through VR and AR. Like real estate development in physical stores, major brands are developing virtual land in Metaverse stores.
The need to own virtual goods, a mirror of their real-life counterparts, is becoming an emerging trend in the Metaverse. As a result, designer digital products such as sneakers and bags are gaining in popularity, which explains the motivation for many fashion brands to join the Metaverse.
However, virtual goods don’t have to have a real-life counterpart: many game franchises have successful businesses selling in-game items such as custom weapons, skins, and emotes. Why would you buy these virtual things with real money? For the same reason you pay money to go to the movies: the experience.
Trademark and copyright holders are finding new ways to extend their intellectual property in the Metaverse, either on their own or through partnerships.
Recently, the clothing brand Balenciaga developed a game called Beyond: the age of tomorrow, a game where the characters dress the brand’s products. In addition, Authentic Brand Group, a brand development and marketing company that oversees the intellectual property of Marilyn Monroe and Elvis Presley, collaborated with Binance and NFkings to create Marilyn Monroe NFT.
Major Metaverse Players
Decentraland is a Metaverse real estate platform created in February 2020. It is a virtual world that provides a realistic and immersive experience where players can interact with other users, purchase properties, and explore environments.
For crypto investors, Decentraland is the most valuable Metaverse project, with a market cap of over $1.5 billion. You can invest in both LAND (tokens that represent virtual real estate), and MANA (its utility and payment token), both of which are available on most crypto exchanges.
Sandbox is the second most valuable Metaverse platform, with a market capitalization of $1.2 billion. It is a realistic 3D environment where you can purchase virtual parcels of land for real money and then develop them to improve their value.
SAND is the utility token that powers the Metaverse project. You can buy it on major exchanges like Huobi and Binance.
Meta (Facebook’s former name) is taking a different approach to developing Metaverse. According to CEO Mark Zuckerberg, Meta is creating a Metaverse experience focused on “social presence”, or the human-to-human connection that Facebook made possible.
Unity Software is a cross-platform game engine that enables developers to create video games and computer simulations. Founded in 2004 by Unity Technologies, Unity software is one of the world’s most famous versatile game engines that enables the real-time rendering that makes the Metaverse possible.
Epic Games (creators of Fortnite) is one of the best examples of the Metaverse in action. In Fortnite, players enjoy a social gaming experience in a beautiful, rich and constantly changing environment, where they can also buy and earn digital assets. If you want to try Metaverse today, play Fortnite.
Roblox Corporation is the game company behind the popular Roblox, another excellent example of the Metaverse in action. Roblox is an online multiplayer platform that allows users to socialize, create, and play various games. Some gamers have even made a living developing and selling their digital properties. If you find Fortnite too violent, try Roblox instead.
Minecraft is a 3D game created by Markus Persson and developed by Mojang Studios in 2009 (acquired by Microsoft for $2.5 billion in 2014). It is the best-selling computer game of all time, with more than 250 million copies sold.
This game is based on creativity and survival, where players build worlds and try to survive various dangers. Minecraft allows you to explore and express yourself without limiting your creative imagination. Minecoins is the in-game currency that you can use to buy skins and items in the in-game market.
Blockchain’s role in the metaverse
The examples above show that transactions are key to the Metaverse: building successful businesses requires some form of e-commerce.
Enter blockchain technology.
While traditional payment rails like Visa or Alipay may work for some Metaverse apps, they are generally limited to specific countries or jurisdictions. The decentralized nature of blockchain technology can make it more suitable for payments in the Metaverse, transcending physical borders and national economies.
Blockchain in the Metaverse can also be used to guarantee digital proof of ownership, ensuring that your assets are not only unique but also authentic. If you are buying a property on The Sandbox, you are sure that it belongs to you, just like Bitcoin or other crypto assets. As items are bought and sold, you also have a transparent record of the asset’s ownership history.
Blockchain can also increase the portability of your assets. Today, an item purchased in Fortnite can only be used in that game – this lack of interoperability makes it difficult to move between different experiences within the Metaverse (i.e. maintaining a persistent user avatar or digital wallet). Blockchain can facilitate cross-platform assets that remain persistent as they travel from world to world.
Metaverse tokens can be considered similar to stocks: our thesis is that buying Metaverse tokens is like investing in the companies themselves. The key is to find the projects and the platforms, the “companies”, that will become the long-term leaders in the Metaverse.
Just like in the early days of the Internet, think about the different use cases of the Metaverse and the “killer apps” that are likely to emerge. With the Internet, some of the big winners were search engines, e-commerce, and hardware vendors. Who will be the big winners of the Metaverse revolution?
Matthew Ball lists seven key technologies that will thrive as the Metaverse grows: hardware, computing power, networks, virtual platforms, interoperability standards, payment rails, and content providers. Smart investors look for the long-term winners in each.
It is still too early to say who the long-term winners will be. But with its huge commitment to technology, its global user base, and its deep pool of technical talent, one thing is for sure: don’t discard Meta. (The quote board is GOAL.)
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Ball lists seven key technologies that will thrive as the Metaverse grows, including hardware, networks, virtual platforms, and interoperability standards. Smart investors look for the long-term winners in each.
investor takeout: Blockchain technology also plays an important role in the payment infrastructure of the Metaverse. (Click here for the longer-form essay on cryptography and blockchain). Think about which crypto projects and platforms will become the dominant players in the metaverse.