The Metaverse Explained: What Investors Need to Know in 2022

The Metaverse Explained: What Investors Need to Know in 2022

Photo by julien Tromeur on Unsplash


Still a hot topic in many tech and investing circles, “metaverse” was a close contender for word of the year in 2021 (being beaten out by NFT)

Since Facebook CEO Mark Zuckerberg gave a speech about his vision of the metaverse at the end of 2021 and even went as far as to change the company’s name to Meta, it seems everyone is trying to figure out what the metaverse actually is.


What is the metaverse?

Simply put, the metaverse is a virtual world that people can interact with, in a similar way to the physical world. This could be through digital avatars, online representations of themselves, which they control and move around the metaverse.

You can think of it as the next level of the internet, where instead of limiting yourself to browsing on a screen, you are actually immersed inside it.

The word metaverse literally means “the universe beyond” and was first coined by Neal Stephenson in his science fiction novel Snow Crash. The book is a dystopian vision of the future, where people escape from reality into an online world where they can interact with each other and live through their avatars.

Other novels, like Ready Player One, similarly depict a world on the brink of chaos, where people find salvation in an online virtual reality world.

The idea of the metaverse has been around for years, but it is only now that technology is starting to catch up with the vision.


What technology does the metaverse rely upon?

To create a convincing metaverse, we need two things:

1) Augmented reality (AR), which superimposes digital objects onto the real world, and

2) Virtual reality (VR), which allows you to be entirely immersed in a computer-generated world.

The metaverse will likely be a combination of both VR and AR, with different areas being more or less virtual or augmented.

For example, you might have a completely virtual world that you can explore, but when you want to interact with other people, your avatar would be brought into an augmented reality space where you can see and talk to them.

Both AR and VR are becoming more advanced. Social media and online gaming platforms are starting to experiment with features that would give users the more immersive experience that characterizes the metaverse.

For example, video game worlds like Fortnite and Roblox come close to what the metaverse could be. In these worlds, players can interact with each other and explore different environments together. They create their own avatars, customize them to their liking, and present themselves to the world however they want.

However, they are still limited by the fact that they are confined to a screen.


How will the metaverse develop over the next few years?

The metaverse is still in its early stages, with Mark Zuckerberg predicting that it will take around ten years to develop fully. But as the concept gains traction, it’s already opening up many potential avenues of development and investment.

It’s not just video games that are dipping their toes into the metaverse. Platforms such as Decentraland and Somnium Space are already offering users a taste of what the metaverse could be like. These platforms create virtual worlds and allow users to buy and build on virtual land and even explore these worlds with other people.

The potential for these platforms is huge, and it’s not hard to imagine a future where we spend more time in the metaverse than we do in the physical world.

The metaverse has the potential to upend many industries, including banking, entertainment, education, and more. For example, in the banking industry, the metaverse could provide a way for people to store their money in digital assets and use them to make purchases or investments without going through a bank. In the entertainment industry, the metaverse could provide a new way for people to interact with each other and create content. And in the education industry, the metaverse could offer a new way for students to learn and collaborate.


How can you invest in the metaverse today?

Today the metaverse is still just a concept in its early stages of development. And even when it does materialize, the metaverse will not just consist of one world or platform but rather many different worlds or universes that are connected to each other.

As it is still in its infancy, there is no single clear way to invest in the metaverse today. Investors will have to stay up to date with the developments in this space to identify the best opportunities moving forward.

One way to invest in the development phase of the metaverse is to buy shares in companies that are working on building the infrastructure. This would include companies like Facebook or Meta, Microsoft, Roblox, or Nvidia.

However, investors must be aware that as the future of the metaverse takes form, it is difficult to predict today what players will be the winners here. That means that any investment today would be highly risky but with tremendous upside potential if you bet on the winning horse or horses.

Another way to invest in the metaverse today is by buying real estate or NFTs in virtual worlds. These are more speculative investments, as there are no guarantees that these digital assets will take off or how they will be valued tomorrow.

But what is clear is that now is the chance to make the most of the early mover advantage and be one of the first to invest in this new and exciting space before prices potentially start to soar, as we’ve seen with cryptocurrencies.


What challenges will the metaverse need to overcome to reach its full potential?

The development of the metaverse faces a number of challenges that need to be overcome before it can reach its full potential as a transformative technology platform.

  1. Firstly, the metaverse will need to develop a robust infrastructure that can support a large number of users and a wide range of applications. This will require significant investment in research and development and the construction of physical infrastructures, such as data centers.
  2. Secondly, the metaverse will need to solve the problem of digital identity. For people to feel comfortable conducting transactions and interacting with each other in the metaverse, they will need to be confident that their identities are secure. This could require developing new technologies, such as blockchain, to create a safe and decentralized identity management system.
  3. Thirdly, the metaverse will need to establish trust between users. In order for the metaverse to function as an efficient marketplace, users will need to be able to trust that they will receive what they paid for and that their personal data will not be mishandled.
  4. Fourthly, the metaverse will need to create attractive and immersive virtual worlds that people will want to visit and spend time in. This will require significant investment in content creation and world-building.
  5. Finally, the metaverse will need to develop a business model to support its long-term development. This will be a challenge, as it will need to find ways to generate revenue that potentially do not rely on traditional advertising models, which could spoil the user experience.

Still very much in its baby stages, the metaverse faces a number of challenges that need to be overcome before it can reach its full potential as a transformative technology platform. But, if they can be successfully addressed, the metaverse has the potential to revolutionize the way we live, work, and play.

Do you think the metaverse will reach its full potential and live up to the hype? Only time will tell!

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