How To Profit From The Metaverse
How To Profit From The Metaverse
Facebook created a huge amount of hype last week around the concept of the Metaverse by rebranding Facebook to Meta.
(Full Keynote Video here https://www.facebook.com/watch/?v=561535698440683 )
Contrary to what Facebook (Meta) would have you believe the Metaverse already exists and is expanding rapidly. Decentralised projects, such as Sandbox and Decentraland, are already ahead of the curve. They will not be handicapped by Facebooks negative image or desire to collect your personal data.
How Big Can The Metaverse Be?
Bloomberg Intelligence recently estimated that the metaverse’s market size will reach USD 800bn by 2024, suggesting this could be a very lucrative area to invest in.
I write this as a Forty something property and renewable energy professional who has sourced and raise funding for projects in just about every corner of the world. I always thought funding the highest building in Outer Mongolia was the most extreme piece of real estate I would ever work on, is the Metaverse set to eclipse this?
What is the Metaverse?
For those that don’t know, the Metaverse was first coined in a Scifi novel by Neal Stephenson in the 1992 science fiction novel Snow Crash, where humans, as avatars, interact with each other and software agents, in a three-dimensional virtual space that uses the metaphor of the real world. Stephenson used the term to describe a virtual reality-based successor to the Internet.
So why has Facebook, one of the world’s largest corporations, identified this as the next evolutionary step for the internet?
They made their first major bet on this space back in 2014, when they purchased VR headset manufacture Oculus. I am sure most people have tried an Oculus headset at a trade show at some point, but how many people do you know that have gone out and purchased one for their home? Is this all set to change?
Smoke & Mirrors Or The Real Deal
Facebook are committing 10,000 people to this project and $10 Billion. That’s an incredible team and massive undertaking. However, is this a stroke of genius or desperation as the numbers of users of both Facebook and Instagram start to fall across the developed world as the below FT article outlines.
https://www.ft.com/content/4304f14a-1b06-46d8-a066-42bb1b3c200c
Internal documents show that the number of US Facebook users under 30 is in decline and that Instagram, which has been phenomenally popular since being bought by Facebook in 2012 for $1bn, appears to be reaching the limits of its growth among younger users in key markets, raising serious questions about the company’s future.
Will Facebook Be The Metaverse?
Personally, I don’t think Facebook will win the race to be THE Metaverse, there is too much bad blood from the mismanagement of Facebook and our data. This is reiterated by the fact they felt the need to rebrand rather than carry the world’s most recognisable social media brand into the metaverse. Also, most of our interactions in the Metaverse will be private or via Avatars so there will be less opportunity to mine our personal data and sell it to advertisers.
However, rather than provide the ecosystem itself, like they did with Facebook, they could well provide the hardware and support services, such as games, events, business communication tools, fitness tech and wearables. This could see the company stay relevant. And if you throw $10 billion at any problem you are bound to back some winners.
So the first answer to the question how to profit from the Metaverse… Buy shares in Facebook, this might not appeal to everyone given their questionable ethical practices. So we will look elsewhere for better opportunities.
Who Will Be The Metaverse Ecosystem?
The real money will be made by identifying where the Metaverse Ecosystem may come from if its not Facebook.
Research has identified two major current players, Sandbox and Decentraland. We shall discuss both their merits below.
Sandbox. https://www.sandbox.game/en/about/
With its strong emphasis on decentralisation, a key idea of cryptocurrencies, sandbox allows the use of its native token SAND in the game to implement its five functionalities: buy, trade, play, create and govern.
The Sandbox is a metaverse that offers players and creators a decentralised platform to create 3D worlds and game experiences, as well as to store, trade and monetise their creations. It is a subsidiary of Animoca Brands, which develops and publishes products in digital entertainment, blockchain and gamification.
As I write this Sandbox has just received $93 million form Softbank to continue its development. The Sandbox Crypto coin used within the Metaverse has risen 24% today alone. Sandbox Coin can be purchased on the Binance Exchange.
There are two ways to invest in Sandbox’s growth, one would be to buy SAND coin, the other is to buy land within the Metaverse itself. This, like all land speculation is highly risky but can have enormous upside. The Land parcels which can be seen here (Map of LANDs and the Game Metaverse (sandbox.game)) will be registered on the Ethereum network as an NFTs (Non Fungible Tokens). This secures your asset in the metaverse to you and you only.
Decentraland https://decentraland.org/
Like Sandbox, this platform is not controlled by any central entity or company. It is a decentralised virtual reality world that allows you to monetize the content created through tools such as the simple Builder tool and some SDKs for the more experienced. This Metaverse is already well established, they have recently thrown a number of high profile parties and a list of upcoming events can be seen here. https://events.decentraland.org/
The interesting part for investors is the land section: https://market.decentraland.org/lands
Land parcels as you can see are priced in Ethereum and are already commanding substantial amounts. Personally I think they are trading at too much of a premium for novice investors. The more sensible play would be to accumulate some to their crypto currency MANA.
MANA is the currency of Decentraland. With it, you can buy or rent parcels of virtual land, known as LAND, which work through a smart contract based on the ERC-721 standard that is approved and stored in the blockchain by Ethereum.
The Final Play
So how to profit from The Metaverse? For me, all of the above are sensible ways to access the Metaverse and back a runner in this very early race. If one of the above were to become the major player in this space the upside potential in huge. But none of this is guaranteed, we may not have even seen the Metaverses final ecosystem yet. It may yet be superseded by a new player much like Netscape was.
There is however one constant that seems to be running through all of these runners and riders, they are all using NFTs powered by Ethereum.
Willow Rivers has long been a big fan of the Ethereum network, although expensive, it is proven. For me, the simplest and most diversified way to invest in the Metaverse is to buy or mine Ethereum.
Ethereum is essentially the building blocks for the Metaverse @brendan_dharma on Twitter recently wrote:
So basically, it’s Ethereum vs. Facebook in a race to create a compelling Metaverse.
Open vs. Closed.
Transparent vs. Opaque.
Permissionless vs. Permissioned.
Community Owned vs. Zuck Owned.
My bets are placed. Let’s build a better future together.
If you have any questions or would like to discuss any of the above please get in touch via www.willowrivers.com
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