How to Invest in the Metaverse?

Credit: Digitable

The Metaverse — a 3D version of the internet built for virtual reality—has been making headlines ever since Facebook changed its name to Meta in October of 2021. And now, from our vantage point at least, it seems like everyone wants a piece of the metaverse pie.

Besides Zuckerberg’s push towards immersive virtual worlds, Citi investment bank recently reported that the metaverse could be worth between $8 and $13 trillion by the end of 2022 — and they’re not the only ones making big predictions.

Tech companies are investing billions in software and hardware for the metaverse and every day brands, companies, celebrities, influencers, and even countries are filing non-fungible token (NFT) and metaverse-related trademarks, buying virtual real estate, launching NFT projects, and opening shops in metaverses.

The good news is that if you’re interested in investing in the metaverse, there are plenty of options. Since the metaverse is not one defined thing, but the combination of several technologies coming together to create something new, there is a myriad of ways to invest.

On the other hand, because the metaverse is still evolving and is currently as much of an idea as it is a reality, knowing where to throw your chips can be difficult.

Fortunately, we’re not here to tell you where to invest your money. In this article, we’ll review the metaverse and the technologies involved in creating it and making it run. We’ll also take a look at some of the companies that are behind these technologies and the various ways you can invest in the metaverse if you decide to do so.

What is the metaverse?

The term metaverse was coined in 1992 by Neal Stephenson in his science-fiction novel Snow Crash. In the book, a pizza boy by day would escape to a virtual world — the Metaverse — where he engaged in Katana sword fights and other action-packed adventures.

Today, the term metaverse is used to describe immersive digital worlds built for virtual and augmented reality. And in these worlds, users can shop, see concerts, attend fashion shows, play games, bank, and basically do anything they can do in real life. They can also teleport and do things that would be impossible in the real world.

Here are some other important aspects of the metaverse:

  • It’s comprised of digital spaces where users can interact with other people as 3D avatars and host and participate in events
  • It will employ a combination of VR, AR, and eye-tracking technology
  • It is rendered in real-time and cannot be “turned off”
  • Items like digital clothing and virtual real estate can be bought, sold, and traded in the form of non-fungible tokens
  • Users can earn income

As software and hardware continue to improve, the metaverse is expected to become more immersive and part of our everyday internet experience. Proponents are calling this new internet Web3 or Web 3.0. And on Web3, digital economies and virtual worlds that could revolutionize how we socialize, work, educate ourselves, and do business are being born.

Understanding Metaverse technologies

For the metaverse to function, several technologies must come together to create the 3D internet. Having a firm understanding of some of the technologies that are critical to the metaverse is a good way for investors to start figuring out where to invest their money.

Listed below are some of the important technologies behind the metaverse:

  • Cryptocurrency. Digital currencies that are stored on blockchains like Ethereum serve as the financial arm of the metaverse and enable users to buy, sell, and trade digital assets. Investing in cryptocurrencies is one way to invest in the metaverse and Web3.
  • NFTs. Non-fungible tokens are unique, verifiable digital assets that can be bought, sold, and traded on blockchains like Ethereum, Tezos, Solana, and Polygon. They also allow scarcity to be created with digital assets, and scarcity creates value. This nascent technology is the building block to the metaverse and without it, it’s unlikely the world would be in a metaverse fever like it is now.
  • Blockchain. The blockchain is the underlying technology that makes digital currencies like Bitcoin and Ether, as well as NFTs, possible. Without the blockchain, the idea of a 3rd wave of the internet that is decentralized, 3D, and allows users to buy and sell digital assets with cryptocurrency wouldn’t be possible. So far, the most important blockchain when it comes to the metaverse and NFTs has been Ethereum, but there are many more.
  • AR and VR technology. The improvement of hardware like virtual reality (VR) headsets and augmented reality (AR) glasses will play a big role in developing realistic metaverses. Companies like Meta, Microsoft, Apple, Nvidia, and Google are hard at work improving these technologies. When the iPhone burst onto the scene in 2007 it ushered in the age of the smartphone, and it’s likely that emerging hardware in AR and VR will have the same transformative effect on the metaverse.
  • Web3. This term is being used to describe the next iteration of the internet when blockchain, NFT, cryptocurrency, and AR and VR technologies combine to create a 3D internet that is more immersive and life-like than the current Web 2.0. The metaverse will exist mostly or entirely on Web3.

Whether you want to invest in cryptocurrencies, NFTs, or Web3 is up to you. But there’s no doubt that having a firm grasp on these technologies and the role they play in the metaverse is a good idea before you start to invest your hard-earned money.

Of course, another way to invest in the metaverse is with your time. Spend time researching these spaces, reading NFT news, and learning more about how Web3, cryptocurrency, and blockchain work, and you’ll be able to make more informed decisions when the time comes to invest.

Gaming and the Metaverse

We’ve spent a lot of time on the technologies needed for the metaverse to exist, but what about metaverses that exist already? Many would argue that metaverses have existed for some time now in gaming, and they’re not wrong.

Games like Fortnite and World of Warcraft have created entire digital worlds where people represented by avatars can engage in battles, competitions, and experiences, as well as buy skins and collect in-game items. And recently, Fortnite has tapped into the social aspect of the metaverse by hosting live concerts that have attracted millions of viewers to tune in with their virtual avatars from around the world.

However, while there have been several games that were instrumental in forming metaverses and showing what could and couldn’t be done, before blockchain technology was invented, everything that was bought or sold within a game, like a weapon, for example, was owned by the producer of the game.

Cryptocurrencies, NFTs, and blockchain technology changed that dynamic. Now blockchain-based games allow players to have real ownership and full control over digital assets, and that’s making a huge difference in gaming metaverses.

Crypto metaverse games like Axie Infinity (AXS) and Roblox (RBLX) allow users to buy, trade, and sell in-game items on their NFT market or secondary NFT markets like OpenSea. These play-to-earn games also let users earn in native cryptocurrencies, which can then be converted to fiat money.

In fact, games like Axie Infinity have become so popular that in the Philippines there have been reports of people quitting their jobs because they are earning more in crypto from gaming than they could at their regular jobs.

Roblox is another blockchain-based play-to-earn game that has had huge success. If gaming is your passion, or you believe in the future role gaming will play in the metaverse, Axie Infinity and Roblox are two investment opportunities to get started.

Another place to look for investment opportunities is in decentralized metaverses.

Investing in virtual land

The fact that digital land has sold for millions of dollars may sound ridiculous to some. But the truth is demand for digital land in popular decentralized metaverse platforms has exploded in recent years, and many people, brands, companies, celebrities, and even banks believe it has real value — which is why they are throwing huge sums of money, time, and energy into the space.

Currently, the most popular decentralized metaverses are Decentraland and The Sandbox. Both are user-owned 3D worlds on the Ethereum blockchain that allow users to buy and sell plots of digital land as NFTs using their native cryptocurrencies — $MANA token and $SAND token respectively.

Users can also monetize their land by building houses, opening art galleries, renting out an apartment, or selling a service. This has led to all sorts of brands such as McDonald’s, Gucci, Nike, and even banks like JP Morgan Chase purchasing land in these metaverses.

Proponents of decentralized metaverses believe decentralization is a fundamental component of Web3, and that metaverse platforms should be user-controlled like Decentraland and The Sandbox.

Unfortunately for new investors, virtual real estate in these popular metaverses is expensive. The floor price for a parcel of digital land in the Sandbox is 1.8 ETH (around $5,500) and 2.85 ETH for Decentraland (around $9,000) at the time of writing.

If purchasing digital land isn’t an option, you can consider investing in the native virtual currencies of these metaverses — $MANA and $SAND. These cryptos can be bought on popular crypto exchanges like Kraken, Coinbase, and Binance, among others.

Lastly, although Decentraland and The Sandbox are currently leading the rush towards a virtual universe, they’re not the only metaverse companies out there. Other metaverse companies are springing up in niche areas all the time. For example, OneRare recently launched the first food metaverse and Lego is teaming up with Epic Games to create a metaverse for kids.

As time goes on, we may see more metaverses revolving around specific themes, interests, or demographics. Seeking out metaverses and NFT projects that are centered around themes you’re interested in is another way to get involved and begin investing.

Investing in metaverse stocks

Besides investing in decentralized metaverses or cryptocurrencies, you can also invest in the metaverse by purchasing traditional stocks from companies that are leading the charge in developing software and hardware for metaverses.

One benefit of investing in stocks is that although it carries risk, stocks tend to be far less volatile than cryptocurrencies and NFTs.

Listed below are 8 metaverse stocks that could be worth checking out:

  1. Meta. (Nasdaq: FB). Sector: tech. In 2014, Mark Zuckerberg purchased the VR start-up Oculus and set the stage for his metaverse vision. But last year when he changed the company name to Meta, it became clear just how much he believes in the metaverse. The company has pledged to pour billions into the metaverse over the next decade and despite recent declines in its stock price, it appears to be leading the push forward.
  2. Microsoft: (Nasdaq: MSFT). Sector: tech. Microsoft has also released plans to create its own metaverse and is collaborating with a virtual giant called Mesh to achieve its goals in the metaverse space. In January 2022, the company also spent $70 billion to acquire Activision Blizzard, a game developer and publisher that can help provide Microsoft with the tools it needs to develop games and metaverse software in the coming years.
  3. Apple. (Nasdaq: AAPL). Sector: tech. Although Apple has not been as forthright about its enthusiasm for the metaverse as Meta and Microsoft, CEO Tim Cook recently said the company sees a lot of “potential in this space and is investing accordingly.” Boasting an installed base of over 1.8 billion devices, many speculate Apple will play a major role in creating hardware and software for virtual worlds to come.
  4. Shopify. (Nasdaq: SHOP) Sector: payment services. One important element of the metaverse is that creators have a robust economy within the metaverse’s virtual walls. Shopify is known as a firm that enables small business owners to launch websites and conduct business online. But this year the company made two big acquisitions to prime itself for the metaverse, acquiring AR app Primer – which gives users a powerful tool to build out stores for a shopping experience in a virtual world and launching an NFT platform, which has already been tested by the Chicago Bulls with a limited edition run of NFTs.
  5. Roblox. (NYSE: RBLX) Sector: gaming. As mentioned, Roblox is a popular blockchain-based video game metaverse platform with over 50 million daily active users. Roblox uses outside developers to build games, content, and entertainment for users. Players can also use the platform’s native cryptocurrency to access games, experiences, and items for their characters. Concerts have even been hosted on the gaming platform by performers like Lil Nas — drawing in millions of fans. The platform is also spending large amounts of money to acquire new talent and build out its version of the metaverse.
  6. Unity. (NYSE: U). Sector: video game and software development. Unity is the leader in the 3D software space and nearly half of all 3D content is created with its software. Unity Personal and Unity Student are offered free to beginning content creators, which helps attract new clients.
  7. Nvidia. (NASDAQ: NVDA) Sector: hardware and apps. This company is deep in the world of artificial intelligence (AI) and fast-processing chips. Currently, millions of content creators have already downloaded its Omniverse Enterprise product and NVDA is at the forefront of semiconductor companies shaping the metaverse. Graphics processing unit chips (GPU) will be critical for the metaverse to function, and NVDA has already proven they can deliver the goods.
  8. Cloudflare. (NYSE: NET). Sector: data, speed, cybersecurity. This company claims its network can deliver content in 50 milliseconds or less to nearly the entire world’s population — no small claim. They also offer cybersecurity solutions and have storage data products that could help with the metaverse’s data storage needs.

If you don’t want to invest in cryptocurrencies and blockchain technologies, investing in stocks can be a comfortable way to get your foot in the door. ETF metaverse stocks also can give you some exposure to the metaverse while limiting your risk.

But for fans of decentralization, blockchain technology, and cryptocurrency, there are other exciting ways to invest in the metaverse. One of them is by investing in non-fungible tokens (NFTs).

NFTs and crypto for the metaverse investor

Non-fungible tokens burst onto the scene on the Ethereum blockchain in 2017 with the launch of two generative NFT collections — CryptoKitties and CryptoPunks — and before long the question of whether digital assets could have value was answered with a resounding YES.

NFTs are verifiable digital assets stored on blockchains that prove ownership and can be bought, sold, and traded. They also let creators and artists earn from secondary sales of their work.

These days, popular generative NFT projects like Bored Ape Yacht Club (BAYC), Cool Cats, and World of Women, to name only a few, are digital assets that regularly sell for hundreds of thousands and even millions of dollars. The digital land parcels sold as virtual real estate on The Sandbox and Decentraland are also NFTs.

However, although people have made millions investing in NFTs, it’s still a nascent technology with many unknowns. That’s why if you’re interested in purchasing NFTs, you should understand the core tenets of NFT collections and what gives them value. Not all NFTs are created equal, and though some are worth large sums of money, many more NFT collections have little or no value.

Listed below are some of the core pillars of an NFT collection to look for if you’re considering investing in NFTs:

  • Rarity. Generative NFT collections are comprised of different traits and characteristics that vary in terms of how frequently they appear in a collection. This creates NFTs that are rarer than others, and therefore more valuable. When collecting or investing in NFTs, learning how to use a rarity ranking tool like Rarity Sniper is critical.
  • Community. NFTs with strong communities have been the most successful over time. BAYC isn’t just a generative PFP NFT avatar, it’s a ticket into an exclusive club with an active, supportive, and increasingly celebrity-based community. To find out if an NFT collection has a strong community, follow them on Twitter and Discord to see their level of engagement.
  • Utility. Some NFTs can be staked to earn passive income. Others can be used as in-game items like armor, clothing, or weapons. Brands like Nike and Adidas are using NFTs to create virtual footwear and virtual real estate is being minted as NFTs in decentralized metaverses. All of these NFTs have one thing in common — utility. Looking at an NFT project’s Roadmap is one way to learn if the NFT has delivered utility to its holders or how it plans to do so in the future. Learning about NFT utility and how to identify it early on is key to investing in metaverse NFTs.
  • The team. Researching an NFT collection’s developing team is crucial before purchasing an NFT. What is their experience with NFTs? Have they created and delivered on projects before? Are they actively engaged in the community? Are they transparent in their operation? You can also message the developers to see how responsive they are to their community.
  • The Roadmap. This is basically a document that maps out the goals and strategies of an NFT project. Look for roadmaps that have a clear vision and plausible goals. If the roadmap or project whitepaper doesn’t make sense or seems too good to be true, it probably is.

There are several ways to invest in NFT projects and part of the fun is had through trial and error. That said, some things you can look for to find a solid project include 10k+ Twitter and Discord followers, an engaged online community, celebrity endorsements, and multiple sales within recent days with a rising floor price.

To get started, you can research new NFT projects before they launch on Rarity Sniper’s upcoming Drop Calendar. Or you can snipe NFTs on secondary NFT markets like OpenSea and Rarible.

Other ways to invest in the Metaverse

It’s still unclear what exactly the metaverse will become, which makes it difficult to guess which companies, technologies, decentralized autonomous organizations (DAOs), and NFT projects will come out on top. This makes investing in the metaverse risky — as is almost always the case with investing in new ideas and technologies.

However, the sheer volume of investments that are being made in the metaverse, Web3, NFTs, and AR and VR technology makes it look like virtual worlds are going to play a major role in the future of the internet. And if the metaverse enjoys mass adoption in the coming years, as many predict, it may completely upend our current digital experience and reshape our social interactions, education, gaming experiences, and many other areas of our lives.

As an investor, this could be an exciting investment opportunity worth taking advantage of. However, we highly recommend you do as much research as possible before adding metaverse investments to your portfolio.

For daily NFT, metaverse, and cryptocurrency news, you can follow us at Rarity Sniper news.

[The information on Rarity Sniper is for informational purposes only. It should not be taken for investment or financial advice.]