Metaverse aka the network of 3D virtual worlds or as some some people call it true virtual reality. The whole idea is to allow people to live virtual lives and not hold themselves back in trying out what they might miss out on in the real world.
Looking at some of the trends of how excited this gets people, a search across Google Trends tells the story. If you carefully look, the search term Cryptocurrency and Metaverse are trending really close, given the latter has really picked up in the recent months.
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| Source: Google Trends - Comparison of Metaverse, Cryptocurrency, Bitcoin & Stocks |
Virtual Reality definitely is an incredible way of doing what you wanted to do in real life and also run a social experiment around it. Oculus, Sony and Microsoft got us excited about virtual reality (VR) by allowing us to play games using VR headsets, but even if you take a step back I feel gaming is virtual reality. Let us take any game, for example Call of Duty that I am a big fan of, it is a form of virtual reality and they just keep getting better. Now you can choose your avatars and be what you want in this small virtual world of yours at a price.
This has morphed into a whole new world of what you can buy "virtually" and a great example of this is the 3D virtual platform Decentraland. In this game you have the ability to buy avatars, costumes, property and a lot of different things in a virtual world. The users all interact and buy these virtual things through a certain type of Crypto assets called non-fungible tokens or NFTs. You end up paying for these assets using a MANA cryptocurrency that is dependent on the Ethereum Blockchain.
A NFT is really a one of its kind unit of data example a picture, art that can be stored as data on the blockchain and be bought by users using their Crypto wallets. One of the NFTs that is currently big in the news is the Bored Ape Yacht Club which are unique digital collectibles stored on the Ethereum Blockchain.
Hence the point I want to bring up is that virtual reality and transaction of virtual assets is the new thing on the block. Grayscale published a very interesting report on Metaverse that talks about how the virtual gaming world revenue could grow from roughly $180 Billion in 2020 to $400 Billion in 2025 and opens up an opportunity of $1 Trillion in revenue. This is huge!
There definitely are some winners popping up like Microsoft, Facebook, Roblox, Unity, Nvidia which are making strides in the Metaverse space along with Roundhill Investments releasing an ETF (META) focused specifically on companies working on Metaverse. I believe this is going to create a new line of investments in the NASDAQ stream of companies and provide another growth opportunity to go long. I can clearly see the path given the increase of investments that will go into chip making, gaming, infrastructure and platform support. That all sounds like technology to me, hence the future is bright and I will continue to invest more and more in growth stocks. There are some obvious risks when you get into collectibles on how can you define the true net value of things in a more sustainable way, lets say is picture X really worth 2 Bitcoins vs 0.005 Ethereum. Hence values can get inflated for some time and then really come down to rock bottom in the next moment. I think this fact is still going to hold true for these digital assets but we can hope a little more stable stock market as compared to the Cryptocurrency industry.
(Disclosure: I own stocks of Microsoft, Nvidia, Facebook in my portfolio. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it from any of the companies mentioned above. Please review the Disclaimer section prior to any investments.)