Neal Stephenson, a popular sci-fi writer coined the phrase “metaverse” in his first best-selling and breakthrough 1992 novel, Snow Crash. Now that concept is becoming a reality, and what’s more, you can invest in the metaverses. In Ready Player One, The OASIS is another example of an advanced virtual reality. Numerous other sci-fi authors, such as Ian M Banks, have created and used similar concepts within their novels.
Back in September, Facebook CEO Mark Zuckerberg was clearly interested in advancing the metaverse. In a recent earnings call, Facebook made it clear that they want to unify communities, creators and eCommerce in the metaverse with Zuckerberg saying:
“Our overarching goal across all of these initiatives is to help bring the metaverse to life.”
And just last week Facebook rebranded to Meta and announced its plans to develop the “Metaverse.”
How big could metaverses become?
Already there are numerous household names making serious money in this space such as Roblox and Fortnite. These are complete virtual reality worlds where users exist through avatars. Slightly less well-known examples of virtual realities include Decentraland, Upland and Sandbox, as well as Victoria VR which is another platform that will launch soon.
From an investment perspective, we can confidently say that this explosion in virtual reality and metaverses is comparable to the dot-com boom of the late 1990s. What we are witnessing now is the next phase of the internet being created, with metaverses potentially set to overtake and replace the web as it currently exists.
Already some of the companies in this space such as Fortnite could sustain growth until they are comfortably sitting alongside Facebook, Google, Amazon and other tech giants. Epic Games, the creators of Fortnite, recently raised $1 billion with Sony pouring $200 million into that funding round. Facebook is putting a lot of resources and money behind a new workplace and proto-metaverse VR platform known as Horizon.
Brands are also betting big on virtual reality. Some brands are already selling direct to avatars (D2A), or Gucci selling a virtual bag that costs more than a real one. Nike sells virtual Jordan’s in Fortnite and Coca-Cola started selling virtual wearables in Decentraland.
Bloomberg has estimated that the size of the metaverse market is worth $800 billion. Even though this is in its formative stage, savvy crypto investors can contribute to the growth of metaverses and trade in the tokens of high-growth startups.
Hence the bet that many smart investors are making, that this boom in virtual reality is going to accelerate further. That one day — potentially in the next five years — there’s going to be a virtual reality platform that rivals the major social networks.
How can you invest in metaverses?
Cryptocurrencies are already a part of these virtual realities, with various platforms accepting crypto as a payment option for virtual goods including VR-based real estate. Gamers within Decentraland and The Sandbox can create virtual businesses such as casinos and theme parks, then monetize them.
When it comes to crypto investors benefiting from this trend, some of the hard work has already been done. Matthew Ball, futurist and founder of Roundhill Investments, alongside Jacob Navok, CEO of Genvid Technologies, have recently registered this Metaverse ETF.
Metaverse ETF is an exchange-traded fund (ETF) that operates similar to a stock market, except for crypto-based investments in Metaverse companies. It’s a collection of investments in a range of companies — known as an index — giving investors access to a broad segment of the metaverse market.
At present, the Metaverse ETF has a median market capitalization of $74 billion, with investments spread across 41 companies (holdings) in eight countries. This includes investments in infrastructure companies such as Cloudflare and Nvidia, gaming engines including Unity and Roblox, and pioneers of metaverse content from Tencent, Sea and Snap.
As this index is sold through the New York Stock Exchange (NYSE), it only includes public companies, not private ones. This means crypto and other investors need to look elsewhere to get slightly closer to the action if you are looking to invest at an earlier stage.
For early-stage investments, the best options are going to be in the crypto space. Gaming, hardware and content creation companies are going to be launching initial coin offering (ICO) and initial DEX offering (IDO) token sales, meaning that investors can get on board long before these companies go public.
When we consider the total addressable size of this market — and include the core growth segments such as creators, hardware, advertising and eCommerce — it could be worth more than $1 trillion. When we also consider how essential the internet as it currently is to everyday life, that’s what the Metaverse could become in a lot less time. As an investment opportunity, metaverse companies, especially ones at the ICO and IDO stage are unparalleled in their upward potential, provided that you pick wisely, of course.
We are witnessing and playing a part of something exciting. The internet and the way we experience reality will never be the same again with numerous upsides from the accelerated expansion of metaverses and virtual realities.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Johnny Lyu is the CEO of KuCoin, a cryptocurrency exchange launched in 2017. Before joining KuCoin, he had accumulated abundant experience in the e-commerce, auto and luxury industries.