how to invest in metaverse

On Oct. 28, 2021, the CEO of Facebook Mark Zuckerberg spoke at a live-streamed virtual and augmented reality conference to let users and stakeholders of Facebook know that the company was about to rebrand itself under the name Meta. This choice of the name stems from the company’s intention to dive deep into the paradigm of the metaverse by, among other measures, dedicating tens of millions of dollars to the development of Meta’s version of the metaverse. This announcement generated a never-seen-before hype all around the world and put the idea of metaverse under the spotlight. For example, the average real-estate parcel in The Sandbox metaverse was worth around $2,620 in mid-October, according to nonfungible.com. A month later, after the announcement made by Zuckerberg, the average price skyrocketed to $11,042! There are many successful metaverse projects such as Decentraland, Sandbox, and Nakamoto and they have already attracted millions of users and residents over the past years.

What is metaverse?

Metaverse is a first-person simulated world with an immersive experience that incorporates different layers of digital reality such as virtual reality or VR and augmented reality or AR and tries to mimic the real-world experience using advanced software and hardware gadgets. Metaverse is not just an elaborate computer game and encompasses so many aspects of the real world, including human interaction, money, real estate and property, and ownership of property and possessions. This indicates a huge potential for investment hidden within this new 3D parallel universe. Many companies are eying the metaverse economy and are willing to participate in its marketplace, but there are also risks to be cautious about before entering this new territory.

Ownership in the Metaverse

But how can you actually own anything in the metaverse, if it is only ones and zeroes on a piece of hardware? Metaverse projects take advantage of blockchain technology to give real value to their currencies, assets, and items. Take Decentraland as an example, one of the most successful and popular metaverse projects which heavily relies on blockchain technology. It is a metaverse that uses the Ethereum blockchain network to define its own official cryptocurrency called MANA which enables the residents of Decentraland to make in-game payments, buy virtual real estate, and trade items such as wearables and collectibles in Decentraland’s marketplace. The MANA that you might make in Decentraland can then be exchanged in the crypto market for real-world currencies such as USD or other cryptocurrencies.

The Ethereum blockchain also enables Decentraland to tokenize the in-game items, assets, and real-estates into non-fungible tokens or NFTs called LAND that can be bought or sold via MANA.

Many other successful metaverse projects have also integrated blockchain technology into their platform to enhance the level of security in the metaverse economy and also facilitate the execution of transactions by adopting blockchain-based technologies like smart contracts.

How to invest in the metaverse and its market?

Metaverse suffers from far fewer limitations compared to the real world. Unlike the real world, geography is not a barrier to buying real estate and anyone can buy any parcel of land regardless of its location. There are also no centralized governing authorities to supervise in-game activities and decisions are usually up to the public vote. The blockchain technology and the decentralization that’s embraced by many metaverse projects provide great opportunities for investments in the metaverse, 4 of which are briefly discussed here.

Buying Metaverse Cryptocurrencies

The fusion of metaverse with blockchain technology has opened the door to so many investment opportunities for people who want to participate in both the crypto market and the metaverse experience. Trading cryptocurrencies is the easiest most straightforward way of investing in a metaverse ecosystem. Simply find a metaverse with a strong native token and make a purchase. There are metaverse projects with very strong native tokens that not only function as the in-game currency but show outstanding performances in the crypto market. MANA (Decentraland), AXS (Axie Infinity), and ENJ (Enjin) hold some of the highest positions in the cryptocurrency market in terms of market cap and have exponentially growing communities backing them up.

Buying Metaverse virtual land parcels

Real estate is one of the most straightforward and popular methods of investment in the metaverse. After you purchase a piece of land, you can either hold onto it or wait for the surrounding neighborhood to develop and grow in value which in turn contributes to the value of your property, or you can improve upon your land parcel and sell it for a profit. According to Jackson Franks, an analyst at MGIM, a land parcel was bought for a whopping $450,000 in the Snoopverse district of The Sandbox metaverse by an unknown buyer to become Snoop Dogg’s neighbor.

Metaverse NFTs

Creating and trading NFTs is one of the most popular methods of generating revenue in the metaverse. Wearables, accessories, avatars, artworks, and music tracks are among the many digital entities that can be created and traded in the form of non-fungible tokens or NFTs in a metaverse marketplace. In the Axie Infinity metaverse, players can build cute little pet-like monsters called Axies which they can collect, grow and even breed and fight other Axies. These Axies are NFTs that can be bought or sold in the Axie Infinity marketplace for AXS, the official cryptocurrency of this metaverse which has a market cap of over $1.2 billion and is one of the top prospects among metaverse cryptocurrencies in the market.

Metaverse stocks

If you want to invest in the metaverse but not directly engage with its ecosystem, buying and trading the stocks of a metaverse company is a viable option for you. The value of a metaverse stock share depends on factors such as the performance of the company in the market, the size and enthusiasm of its metaverse community, and the value of its cryptocurrency in the crypto market. Meta Platforms Inc. (FB), Electronic Arts (EA), Roblox Corp. (RBLX), and Nvidia (NVDA) are among the leading metaverse stocks.

Recap

Metaverse and its digital ecosystem enable people to invest in virtual real estate, buy and develop virtual lands and construct buildings and mansions, design and host events such as concerts and fashion shows, and create and trade items such as clothes and accessories in the form of NFTs and exchange their in-game earnings with fiat currencies such as USD and Euro in the market. With companies like Meta pursuing their own version of the metaverse and the ones like Apple and Microsoft investing millions of dollars into metaverse projects and integrating the idea into their own platforms, metaverse has huge untapped potential for individual and corporate investors.