Real-life opportunities in the virtual space.
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The metaverse is a network of immersive digital “worlds” that are interconnected so users can move between them, interact with other users, exchange various goods and services, and transact items for virtual or real-world ownership.
As the metaverse approaches mainstream adoption—as many expect it will in the coming years—it could change the way we interact with money. For investors, the metaverse could present opportunities to get in at the ground floor—or near it.
Then again, the metaverse might be a passing fad that fails to achieve widespread adoption. Either way, as an investor, it’s important to view the metaverse with eyes wide open to the risks as well as the potential opportunities.
The metaverse is immersive and digital
When the word “immersive” is paired with “digital experience,” it often refers to virtual reality and augmented reality environments, often accessed through video games.
Virtual reality (VR) technology allows you to “enter” an immersive digital space by way of an audio/visual headset.
Augmented reality (AR) technology overlays virtual characters and objects onto real-world spaces through the use of a device, such as your mobile phone or tablet. In an AR environment, real and virtual spaces are combined, allowing you to interact with characters and objects in both “worlds” at once.
Although most virtual and augmented reality environments are proprietary—accessible only through channels provided by or licensed through their developers—the metaverse aims to connect these worlds, making each one interoperable so users can seamlessly enter any world of their choosing.
A peek into the metaverse economy
Why are so many businesses paying attention to the metaverse? In addition to presenting a next-evolution social technology where people can interact across multiple virtual worlds, it’s also an emerging space of commerce wherein digital and physical goods and services can be bought and sold.
Digital goods and services. Users can purchase a wide variety of digital goods and services for their avatars or their own virtual experiences. This might include anything from brand-name accessories to cars and even real estate.
Merging virtual and real-world commerce. When transactions take place in both the virtual and the real world, the potential for commerce can merge and even double (e.g., purchasing a Gucci handbag for your avatar as well as for real-world use).
This goes beyond purchasing digital goods linked to real-world value, such as digital art via non-fungible tokens (NFTs), blockchain-driven smart contracts that have applications in a real-world context, or cryptocurrency that can be converted into fiat cash. It’s about experiencing real services in a virtual space or purchasing real goods through a virtual store.
For example, the NBA’s Brooklyn Nets made sports history as the first professional sports team to broadcast a game in an immersive virtual theater, which they coined the “Netaverse.” Viewers were able to watch the game as if they were on the court.
The prospect of buying and selling physical goods from stores in the metaverse is an emerging opportunity that’s likely to attract more businesses as this hybrid economy evolves. Imagine going to an immersive virtual grocery store to purchase items that are then delivered to your front door (in the real world).
A few anchoring concepts of the metaverse
Instead of thinking of the metaverse as a “replica” of the real world, think of it as an extension of the real world by virtual means. It has an economy of its own, with products and services that may be unique to specific virtual environments. But in the end, real time and money are being spent in an environment that cultivates real-world interaction.
Although it’s difficult to summarize an emerging event that’s rapidly evolving, the metaverse holds a few foundational anchors that appear consistent:
- Interoperability. The metaverse will be created by multiple organizations, businesses, developers, and creators in a manner that will be seamlessly interconnected and interfacing.
- Virtual co-location. The metaverse should offer the sensation of interacting with real people in a virtual space.
- Virtual identity. The metaverse aims to provide a way for people to have a consistent, expressible identity across all interconnected worlds.
- Virtual ownership. The metaverse aims to support transactions of value and ownership in a virtual or real-world capacity.
The bottom line
The metaverse is arguably the next evolution in social and commercial technologies. As with the birth of the Internet and its mass adoption in the 1990s, nobody can predict what will become of the metaverse in the years ahead, what technological innovations it may bring, or how it might impact the day-to-day functioning of society and commerce. But its potential as an extension of real-world experiences could be bigger and more impactful than anyone can imagine today.
As an investor, proceed with caution if metaverse growth follows a similar trajectory to that of the Internet several decades ago. The number of potential use cases and investment opportunities quickly overwhelmed the available resources and capital. The boom turned to bust, and only a handful of those “dot-com darlings” survived the fallout and eventually thrived.
