This virtual universe, often likened to a collective virtual space, is poised to revolutionise how people interact, work, and entertain themselves. Understanding the Metaverse and its potential investments requires delving into its components: virtual land, non-fungible tokens (NFTs), and the infrastructure supporting these virtual worlds.
You must first understand what the Metaverse is.
The Metaverse can be described as a collective virtual shared space, created by the convergence of virtually enhanced physical reality and physically persistent virtual spaces. It’s a concept where you can immerse yourself in a fully interactive digital environment, often through avatars, engaging in a wide range of activities from socialising to commerce, gaming, and even education.
Zina Ashour, founder of blockchain and crypto assets company Women in Crypto Arabia gave background to the definition of the Metaverse.
“Meta stands for beyond, meta verse, beyond the universe. It is a network of virtual environments that exists outside/beyond the real world. At the moment, people interact with each other online by going to websites such as social media platforms or using messaging applications.
“The idea of the Metaverse is that it will create new online spaces in which people’s interactions can be more multi-dimensional, where users are able to immerse themselves in digital content rather than simply viewing it. It's a combination of multiple elements of technology, including virtual reality, augmented reality and video where users ‘live’ within a digital universe.”
Nourhan Adel , diamond ambassador at money management company IGENIUS, explained what the Metaverse is in a very relatable way.
The Metaverse is like a massive, interconnected virtual universe where people can interact, create, and experience things in a digital space. Think of it as an extension of the internet, but with immersive 3D environments where you can walk around, meet friends, attend events, and even own property.
Imagine a universe where physical constraints dissolve, where you can navigate endless digital landscapes seamlessly.
Gen Z are people born roughly between 1997 and 2012.
Know about the investment opportunities in the Metaverse
1. Virtual Land
One of the most intriguing investment avenues within the Metaverse is virtual land. Just like physical real estate, virtual plots within these digital worlds are bought, sold, and developed. Companies like Decentraland and The Sandbox offer platforms where you can purchase parcels of virtual land using cryptocurrency. These virtual spaces are not merely digital novelties but hold tangible value, attracting real-world investments from individuals and corporations alike.
Nourhan talked about how you can make money from investing in virtual land. “These plots can appreciate in value, especially if they are in high-traffic areas or if the platform gains popularity. Some investors are already making significant profits by buying early and selling later at a higher price.”
From that you can see that even land in the virtual space is treated like physical land in our real world, meaning that it experiences price fluctuations according to demand and supply.
To invest in virtual land, you have to understand the potential for development within these digital spaces. Entrepreneurs and businesses are already setting up virtual shops, art galleries, and entertainment venues, creating demand for prime locations within these virtual realms. The value of virtual land often appreciates as the Metaverse ecosystem grows, driven by increasing user engagement and development activity.
In 2022, Gucci acquired virtual land from Sandbox and developed ‘The Gucci Vault’. This distinctive virtual and gaming experience allows users to explore Gucci’s past, present, and future. While Gucci owns the virtual land, users can access the Gucci virtual world by purchasing one of Gucci’s NFTs
“I will start by sharing an example, Tokens.com, through its subsidiary Metaverse Group, purchased a large estate in Decentraland’s Fashion Street district. They used this digital land to host fashion shows and promote ecommerce within the Metaverse,” added Ashour.
“If we think about it, not only did they create a service for brands who want to navigate this big space, but they also became digital real estate brokers because they are selling their spaces in the Metaverse. The market for transactions in the Metaverse is expected to reach $6.1 billion (Dh22.4 billion) this year and nearly $42 billion (Dh154 billion) globally by 2026.”
2. NFTs
Non-fungible tokens (NFTs) have emerged as another significant investment avenue tied to the Metaverse. These unique digital assets represent ownership or proof of authenticity of items within virtual environments. In the context of the Metaverse, NFTs can represent anything from virtual real estate and digital art to in-game items and virtual identities (avatars).
Investors are drawn to NFTs for their ability to provide verifiable ownership of scarce or unique digital assets. This ownership can be monetised through resale or by leveraging the asset within the Metaverse ecosystem. For example, digital art created within the Metaverse can be tokenised as an NFT, allowing you to sell your art directly to collectors while retaining proof of ownership and authenticity.
Valecha spoke about virtual fashion and wearables.
“In the Metaverse, avatars represent users, creating a demand for virtual fashion and wearables. Companies can sell NFTs that represent unique clothing items for avatars, promoting investment in NFTs and facilitating e-commerce. For example, Nike, in collaboration with RTFKT, sold virtual sneakers, generating about $170 million (Dh624 million) in earnings and achieving a trading volume of approximately $1.4 billion.”
3. Investing in companies that build Metaverse infrastructure.
Beyond virtual assets, investing in companies that build and support Metaverse infrastructure presents a compelling opportunity. These include firms specialising in virtual reality (VR) technologies, blockchain solutions for digital asset management, and platforms facilitating Metaverse experiences.
Tech giants and startups alike are investing heavily in developing the underlying technologies that power the Metaverse. This includes VR hardware manufacturers, blockchain developers integrating NFT standards, and software companies creating immersive virtual environments. These companies are crucial to the expansion and scalability of the Metaverse, making them attractive investment targets for you if you are betting on the long-term viability of virtual worlds.
Do Gen Z and millennials accept Metaverse?
The appeal of the Metaverse extends beyond its investment potential to its cultural resonance with younger generations. Gen Z and millennials, digital natives accustomed to socialising and consuming content online, are particularly drawn to the concept of a digital universe where they can express creativity, socialise, and conduct business in novel ways.
For these demographics, the Metaverse represents a natural extension of their online identities and interests. It offers a blend of social interaction, entertainment, and economic opportunities that resonate with their digital lifestyles. From attending virtual concerts to purchasing virtual fashion items for their avatars, the Metaverse offers a customisable and immersive experience that traditional forms of media and entertainment struggle to match.
Sasha Ivanov, founder of blockchain company Waves and Units Network said that the line between the real world and the virtual world for the digital native generations will more likely fade and eventually disapper.
Young generations of Gen Z and millennials would not really see a difference between the ‘real world’ and Metaverse assets; the new generations will be dealing with Metaverse NFTs just as easily as they deal with traditional finance stocks and shares.
“The lines between the real world and Metaverse experience will blur over time, creating one digitally interconnected world.”
Rasa Karapandza, visiting professor of economics at New York University Abu Dhabi spoke about our rising screen usage time with global averages exceeding five hours per day and how the Metaverse is becoming an increasingly integral part of our lives.
He spoke of the effects of Covid-19 on our digital engagement. “The Covid-19 pandemic accelerated this trend, forcing many to spend significant time online for schooling and socialisation due to lockdowns and remote learning. This experience has only deepened their connection to digital spaces, making the Metaverse a natural extension of their daily lives.”
What is the growth potential of the metaverse?
The growth potential of the Metaverse appears robust. As technological advancements in virtual reality (VR), augmented reality (AR), and blockchain continue to evolve, the infrastructure supporting the Metaverse will become more sophisticated and accessible. This evolution will likely drive increased adoption across industries, from gaming and entertainment to education, healthcare, and beyond.
As regulatory frameworks catch up to the realities of digital ownership and virtual economies, the legitimacy and security of investing in the Metaverse are expected to improve. This regulatory clarity will likely attract institutional investors and further propel the growth of Metaverse-related investments.
The Metaverse offers a wide array of monetisation opportunities. You can be interested in a certain investment strategy but not the other. This is what Valecha said.
“The concept of the Metaverse varies for different people; some see it as a videogame with heightened social interaction, while others view it as a potential commercial space for businesses and investment opportunities.”
Gen Z plays a key role in the virtual world
Valecha added insights about how Gen Z play a role in the establishment and future enhancement of the virtual world.
“For Gen-Z, who are digital natives, there is little distinction between online life and real life. They seek to integrate both experiences seamlessly. The behaviours and preferences of these younger generations are likely to influence the development and refinement of the Metaverse. “As the necessary technology and infrastructure for the Metaverse come together, these consumers are expected to lead its adoption and growth.
“As technology continues to advance and more sophisticated virtual experiences become available, the Metaverse is set to become a central hub for entertainment, commerce, and social interaction, driving significant growth and innovation in the digital economy,” said Karapandza.
Investing in the Metaverse represents a forward-thinking approach to capitalising on the intersection of virtual and physical realities. Whether through virtual land, NFTs, or companies building Metaverse infrastructure, you can have a range of opportunities to participate in this burgeoning digital economy. As the Metaverse continues to evolve, its appeal to younger demographics and its potential for widespread adoption underscore its significance as a transformative force in the digital age.
If you are looking to diversify your portfolio and embrace innovation, the Metaverse offers a compelling frontier ripe with opportunities for growth and exploration. The Metaverse is not just a concept but a tangible investment landscape reshaping how we perceive and engage with digital spaces. As virtual worlds become increasingly intertwined with our daily lives, the opportunities within the Metaverse are poised to redefine traditional notions of investment and value creation in this century.
