Simran Kaur founded the Girls That Invest podcast with Sonya Gupthan.
OPINION: Metaverse seems to be the hottest word in 2022, and why wouldn’t it be? We’ve all seen the millions of dollars being snapped up in this so-called virtual world; stories of a company purchasing US$4.3million of land in the metaverse, a guy purchasing a virtual yacht for US$650,000 or the person who paid US$450,000 to be snoop dogs metaverse neighbour aren’t the investing strategies you’d usually expect. But if there’s money to be made, we want to see what all the fuss is about.
The multi-triliion dollar investment
Cathie Woods told CNBC in December that the metaverse was a “mult-trillion dollar opportunity” which would impact “every sector in ways we cannot even imagine right now”. It sounds hard to believe – but no one wants to be the guy who laughed at Bill Gates in the 90s when he spoke about the Internet.
Simran Kaur and best friend Sonya Gupthan have started a financial podcast aimed at helping younger people invest in the stock market and break down some of the age old stereotypes.
So what exactly is the metaverse, how are people making money from it, and should kiwis be jumping at the opportunity, or is it just another dot com bubble waiting to happen?
What exactly is the metaverse?
The metaverse can be described as a virtual online world founded on similar technology to cryptocurrency, meaning it is decentralized and therefore not controlled by any government or organisations. It’s a digital space that is meant to mirror real life, without being restricted to the rules of the real world.
Anybody who says they know exactly what the metaverse involves, is frankly lying. But the best guess is that you and I are likely to have avatars or some form of animated character which represents us in a virtual world.
It would be an interconnected world of virtual communities so instead of looking at the Internet, you get to walk around inside it.
So how do you make money from the metaverse?
There are three main ways to make money through the metaverse.
The first is buying metaverse land and products yourself to sell. Like physical real estate, metaverse communities have a limited amount of digital land. Thus appealing to the concept that once demand overtakes supply, metaverse investors will be able to cash out their investments.
But aren’t there an infinite amount of metaverses that can be available? You’re right. Some metaverse universes are more popular than others, and therefore the demand for land will vary. You can buy the land originally from the developers for that specific metaverse, the most popular example being The Sandbox which boasts 166,000 plots, and is where Snoop Dogg virtually resides.
The second way of making money is to host events on your land, which is a highly speculative approach. Some investors believe they’ll be able to charge a fee for people to have live events on their virtual land, or lease their land. However, the real-world implications of this are yet to be seen.
The third way of making money through the metaverse is through games hosted within the technology. Axie Infinity is one of the most popular play-to-earn games. The developers create plots of land and incorporate NFTs which players can “do up” and eventually cash out their currency into real money.
In a gold rush, sell the shovels
Investing in the metaverse this early on is reserved for speculative investors who are only putting in what they can afford to lose. Due to no intrinsic underlying value, virtual land and products can only cost as much as people are prepared to pay. Instead, it may be worth looking at the companies who are taking a stake in creating this new world. In a gold rush, sell the shovels.
Meta, formerly known as Facebook, is an obvious contender. They’ve recently hired 10,000 employees in Europe to expand their meta dreams and have predicted more than 1 billion people will access the metaverse in the coming decade.
Nvidia is another US based company that’s known for producing graphic processing units. The metaverse relies heavily on Nvidia’s flagship semiconductors, and Nvidia has been actively creating software tools like Omniverse to help people create and sell content within the metaverse itself.
For the fund-lovers, there is also a new Meta ETF, a basket of companies involved in the growth of the metaverse itself, called ‘meta’. The 4 heaviest weighted companies in the fund are Nvidia, Microsoft, Roblox & Meta Inc (previously Facebook).
So where to from here?
The truth is, no one has a crystal ball and no one can predict what the effects of the metaverse may have. Many people including myself do not want it to replace the real world as some people may suggest, but can see the benefits to those who wish to immerse themselves into virtual realities. There are unlimited possibilities about how this new technology can enhance the human experience, and I definitely will be trying to keep an open mind going ahead. So should kiwis be invested in the metaverse? At this stage, the only guaranteed winners are the developers selling virtual land.
The Girls That Invest podcast aims to break down the basics of investing for a younger generation and particularly women and minorities around the world.