The world’s biggest brands are flocking to invest in the metaverse. Here’s what you need to know about the metaverse, and whether you should invest your money.
A few weeks back, news broke that HSBC has acquired a plot of virtual real estate in the metaverse project The Sandbox. This move echoes similar ones made by other notable brands such as Ubioft, Gucci and Warner Music Group.
HSBC’s goal is to provide virtual communities with the opportunity to access financial services, according to the source we linked above. It sounds like you’d be able to check your bank balance, or pay off your credit card bill via the internet. So, in other words… online banking?
Okay, jokes aside, there is no doubt the metaverse is beginning to catch the attention of institutional investors, often with billions of dollars to invest.
With even the so-called ‘smart money’ jumping in, does this mean you should also pay attention and possibly make the metaverse your next big investment?
So what is the metaverse, anyway?
Well, it depends on who you ask.
Tech moguls insist it's the future of the internet, and are willing to put billions of dollars behind their conviction.
Wall Street thinks it's the next multi-trillion-dollar growth opportunity, the type that comes once in a lifetime.
Meanwhile, critics say it is nothing more than “Zoom with virtual reality”, which — not gonna lie — sounds deeply uncomfortable and invasive.
Whether the metaverse will, like smartphones, take off and become a ubiquitous part of everyday life, or, like Google Glasses, simply sputter out and be nothing more than a curious footnote in the history books, nobody knows for sure.
Here’s what we do know.
As it stands now, the metaverse exists more as a concept rather than something concrete. Certainly, we are nowhere near anything resembling the globally connected, universal virtual reality as shown in the movie Ready Player One (and we may never achieve something like that anyway).
Instead, what we currently have are several metaverse projects — many of them built on blockchains — which each exist as separate virtual worlds and platforms that provide different services and experiences.
Further blurring the line are online multiplayer games like Fortnite, Roblox, and World of Warcraft. Each of these — a persistent, virtual world, with a specific set of rules, where users come together for a shared purpose, creating a community — can all be considered metaverses in their own right.
Consider Fortnite, which was created as an online shooter game, but has evolved to include online concerts featuring the likes of Ariana Grande and Travis Scott, as well as a collaboration with high-fashion label Balenciaga.
Gee, attending an online concert and buying virtual hoodies sure sound more fun than, say, paying my (very real) credit card bill at a bank counter rendered in virtual reality. But the point is, Fortnite couldn’t have attracted these kinds of headlining deals if it didn’t have a committed, engaged community of users who would lap them up.
So, would Fortnite be considered a metaverse? Well, let’s put it this way.
Fortnite is already regularly serving up customised digital experiences to millions of online users, and raking in endless piles of cash in the process.
It is already a proven commercial success achieving many of the goals that metaverse projects — projects that are still being built — loudly declare they will one day deliver.
Is investing in the metaverse actually a thing?
If there is no fixed definition of the metaverse, then how does one go about investing in it? Is investing in the metaverse even a thing, at this point?
Well, yes and no. While there is no such thing as a singular, universal Metaverse right now, projects that are designed to act like one — albeit on a smaller, more fragmented scale — undeniably exist.
Therefore, think of it as investing in the concept of the metaverse — and the myriad forms that it can take — and to do so, you’ll need to pick between several projects, iterations and platforms.
As you can imagine, this will require effort and time to study and understand each metaverse and its potential for long-term success.
But hang on — aren’t only projects built on a blockchain and uses crypto to transact (like The Sandbox) considered as metaverse projects?
That is a popular argument taken by many cryptocurrency and blockchain enthusiasts. But it isn’t necessarily true, as we’ve shown you with the Fortnite example above.
And, as time goes on, picking winning metaverses to invest in will only get more complicated.
It is almost certain that once the existing teething problems (equipment, user interface, regulations, etc) have been sorted out, more and more metaverse projects will be launched, not unlike how there are now countless sub-Reddits and Facebook groups, Telegram groups and other online communities.
Use caution with metaverse investments
So what’s an investor to do? Buy stock in the makers of Fortnite as your metaverse investment, and laugh all the way to the bank?
Nice try, but the makers of Fortnite, Epic Games, is currently privately held and has not announced any plans of going public.
Instead, understand that while there is undeniably a flood of money from institutional investors pouring into blockchain metaverse projects like The Sandbox, this part of an overall trend of higher investment capital flowing into the cryptocurrency sector on the whole.
Now, it is a good thing that institutional investors are starting to pay attention to the cryptocurrency space, but the fact remains that offshoots like metaverse projects are still largely unproven, and therefore highly speculative as investments.
Hence, if you must invest in one of these blockchain metaverse projects, be sure to understand what you are really investing in. After all, just because HSBC wants to make it possible for you to pay real bills using your virtual self (it sounds more and more dystopian each time), that doesn’t make it a good reason to invest in The Sandbox.
To be clear, we’re not specifically saying that The Sandbox or others like it is a bad investment or anything like that. We simply don’t know. Because we’re too early in the game, all the more you need to decide what your investment thesis is, and study whether metaverse projects are a good fit for your portfolio.
These are new waters we are navigating, which may be exciting or scary, depending on your worldview. Metaverses want to give us new ways of doing things. What these are, and whether they will be loved or hated, will determine their value.
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