- The Metaverse is one of the most important technological trends of the next 10 years. Experts predict that it will open up new possibilities not only for entertainment. It is expected to be introduced into healthcare and other key industries.
- Investing in virtual reality is now possible. One can utilize stock exchanges and digital assets for this purpose.
- However, investing in Metaview carries certain risks. The primary risk is that the expectations of rapid growth may not be met. Additionally, each type of asset has its own set of risks.
This guide offers guidance on how to invest in Metaverse, outlining the potential opportunities and risks associated with each option.
Table of Contents
What is the Metaverse?
There are several metaverse definitions. Mark Zuckerberg characterizes it as a vast internet, while Tim Sweeney views it as an online playground. Matthew Ball offers a more comprehensive explanation of the term. The central concepts underlying it are continuity and a sense of presence.
The Metaview can be described as a computerized representation of the world, which consists of virtual spaces. Its primary function is to allow users to interact in real time.
The Meta Universe is intended to serve as a comprehensive extension of the physical world, providing users with opportunities for entertainment, shopping, earning money, and much more. Its goal is to offer an immersive digital experience that allows users to access opportunities that may be limited by geography, finances, or physical constraints.
The creation of the Meta Universe comprises the following components:
- virtual reality;
- blockchain;
- artificial intelligence;
- augmented reality.
At present, there are multiple Meta Universe offerings from different companies, but there is no unified platform. This stage resembles the early days of the Web. The development of an immersive virtual world is considered the next step in the evolution of modern technology.
The primary distinction from current entertainment is the seamless three-dimensional experience, which allows users to engage in various activities without switching applications. It is expected that all the platforms currently in development will eventually converge into a single system.
Key Attributes of the Metaverse
According to Matthew Ball, there are seven key Metaverse attributes:
- Continuity There is continuity without pauses, restarts, or interruptions.
- All users are synchronized in real time.
- Users should be unlimited.
- Full-fledged internal economy. Enabling individuals to both spend and earn is important in the Meta Universe. This approach can lead to the emergence of new business opportunities and facilitate the creation of virtual assets.
- The digital world is connected to the real world through the Meta Universe, which is an organic complement to physical reality. It does not exist in isolation from it.
- Data compatibility. In the Meta Universe, users will be able to apply their entire inventory in any situation, instead of having to buy items separately for each game.
- Openness is a key characteristic of this task. It is important that anyone can create their own content.
Top Companies Investing in Virtual and Augmented reality
Investing in the Metaverse can be highly profitable in the long run. According to Grandview Research and Bloomberg Intelligence, its potential value by 2030 is $800 billion. AXA Investment Managers publications forecast a value of $5 trillion.
The Metaverse’s top companies can seize this opportunity. Businesses working in this direction can be divided into four classes:
- Metaverse Technology Platforms are companies that create virtual reality apps and headsets. For example, Meta Horizon Worlds and Meta’s Oculus, as well as Microsoft, which is developing Windows Mixed Reality and HoloLens AR.
- Metaverse gaming platforms. Roblox, for example, is a popular gaming platform that has already hosted virtual concerts. Epic Games is a game developer creating its own Metaverse.
- Metaverse chipmakers. These include Nvidia and Qualcomm.
- Metaverse software developers, including Unity, a popular environment for creating interactive 2D and 3D content, and Autodesk, a well-known software vendor.
Metaview’s growth will benefit cyber security businesses such as Crowd Strike Holdings and Palo Alto Networks.
Metaverse Exchange Traded Funds
Investment funds are also capitalizing on technological advances, not just companies creating new technologies. Metaverse exchange-traded funds (ETFs) include stocks of leading Metaverse companies in their net assets.
For beginners, investing in the Metaverse through Metaverse ETFs is the best option. The Roundhill Ball Metaverse Exchange (METV) is the first of such ETFs tracking the Ball Metaverse Index. Launched in June 2021, it currently manages $435 million in assets.
Another option is the ProShares Metaverse ETF (VERS), which was launched in March 2022. The Solactive Metaverse index is replicated by this ETF. There are other ETFs that follow different indices, but the same companies hold the leading positions in their net assets.
How to Invest in the Metaverse
To take advantage of the Meta Universe’s growth, follow these steps:
- Investing in Metaview through stocks is possible. These stocks can be securities of companies that create their own platforms, as well as manufacturers of virtual reality headsets and software.
- Invest in the Metaverse ETFs, which hold stocks of multiple technology companies simultaneously.
- Participating in actively managed funds is exemplified by the VR Vision Fund, which works with virtual and augmented reality companies in the early stages of development.
- Direct Metaverse Investment. This is the purchase of digital assets. For instance, NFTs, virtual land and Metaverse real estate.
- Trading CFDs on Metaverse related stocks and Metavessel stock futures for speculation purposes only, not as long-term investments.
A safe and conservative way to invest in the Metaverse is through the securities of publicly traded companies. By owning shares of leading issuers that are also making money in other areas it is unlikely that one will lose all the money invested.
However, there is a chance that a person will fail to correctly predict the future leader of the industry, resulting in missed profits. Investing in Metaverse ETFs eliminates the need to analyze many companies to find the best one.
Direct Metaverse investments are much riskier. Purchasing NFTs and other elements may result in a complete loss of invested capital. Trading CFDs, regardless of the underlying asset, is also risky due to the use of leverage, which increases the potential profits and losses of the trader. The market is decentralized and loosely regulated, which poses a risk of fraud.
Futures trades are generally safe due to minimal counterparty risk, but the presence of a leverage mechanism can result in a loss of deposit.
Buying Metaverse Assets Directly
Investing in the Metaverse can be done in three ways, one of which is buying Metaverse cryptocurrencies like MANA or SAND. These are the native currencies of the Metaverse platforms, and their value is likely to increase with the platform’s development.
A second option is the purchase of Metaverse NFTs. These tokens confirm ownership of virtual land, digital items, and music. Real world luxury brands like Adidas and Gucci offer their NFTs.
To buy Metaverse virtual real estate is a third option. The most common platforms for this type of purchase are Sandbox and Decentraland (virtual land). Each house and plot is unique, like an NFT, and the number of virtual land is theoretically infinite.
Investing in Public Metaverse Companies
Buying Metaverse stocks and ETFs is the most conservative way to make money from technology development. This approach offers the opportunity to benefit not only from the growth of stock prices but also from dividends paid by companies such as Microsoft and Apple.
However, it is important to consider that these companies are involved in other industries beyond the Meta-Universe. The profitability of their stocks depends not only on their success in creating virtual lands. To choose the best investment option, it is necessary to study many factors.
Investing in the Metaverse through ETFs eliminates the need to select individual representatives of the sector. This allows investors to bet on many companies at once. However, it is important to note that this approach may result in a low degree of diversification, as the 7-10 largest issuers will account for more than 50% of the fund’s assets. Additionally, there is an added counterparty risk.
Trading Metaverse Assets Using CFDs
CFD Metaverse trading allows individuals to profit from short-term price movements. The trader only bets on the direction of change of the asset’s quotes, without becoming the owner of the asset. This is speculation, not a long-term investment strategy for Metaview.
The advantage of CFDs is the ability to earn income even when asset values fall. Additionally, CFDs involve leverage, allowing for trading with a small deposit.
However, it is important to note that CFDs come with high counterparty risks. For a safer option, consider exchange-traded futures on stocks of leading Metaverse companies.
Metaverse Trading Tools and Resources
To make money trading Metaview stocks, it is important to have a good understanding of their prospects. It is also important to understand investing and trading fundamentals. This knowledge can be gained through the use of various Metaverse trading tools.
Some useful sources of information include:
- BeatStart offers free courses for beginners to learn the basics of investing;
- The BeatMarket Score rating is a strategy for identifying the most promising companies;
- Many brokers and stock exchanges offer educational materials;
- Books by authors who study the Meta Universe include works by Matthew Ball, Stephen Corwin, and others.
Trading on a demo account allows you to consolidate the knowledge you have gained. This is especially important when the choice is made in favor of CFDs and futures.
Risks of Investing in the Metaverse
Investing always involves risk. Investing solely in emerging industries is particularly unreliable. There are three key dangers associated with investing in the Metaverse through cryptocurrencies, NFTs, and virtual real estate.
The first danger is incorrect valuation. It can be challenging for novice investors to estimate the true value of a particular digital object or virtual land.
Additionally, cryptocurrency and NFT prices are heavily influenced by market fluctuations. Periods of excitement can cause their value to rise without any fundamental grounds, and some projects may initially increase in price due to effective PR, only to later lose value.
Despite being considered a reliable asset, cryptocurrencies remain highly volatile. Investors should not expect quotes to consistently increase. They must be prepared for phases of value drawdowns.
Traders who use leverage when trading cryptocurrencies should always remember to practice risk management, as quotes can fluctuate by 10-20% per day or more.
Buying shares of publicly traded companies also involves Metaverse investment risks. The profitability of this area may be overstated, and profits from virtual reality may grow slower than expected, which could affect stock prices.
It is premature to claim that the Metaverse market is generating revenue for its creators. Currently, only negative examples exist. Horizon Worlds was launched by Meta in December 2021, and in 2022, the company’s capitalization decreased by four times.
Lower revenues and disproportionate expenses for creating virtual reality resources are the reasons for the financial struggles. The recovery of quotations was due to the financial success of the core business.
All leading companies in the Meta universe earn significantly more in other areas. For instance, Meta generates revenue from advertising on social networks, while cryptocurrency platforms earn income as digital payment companies. The development of the virtual world is an investment in the future, not a source of profit today.
Conclusion
This is a brief Metaverse investment summary to remind you that the field is still in its infancy. The Metaverse is a new and developing field, and investing in it comes with many risks.
One common risk is that the potential of the Metaverse may be overvalued, as seen in the dot-com crash.
Investing in the Metaverse can be done in several ways, including direct investments in NFTs, virtual Metaverse real estate, virtual land and tokens of various platforms. Another option is to purchase Metaverse stocks, which are securities of companies that develop their own platform or create the components necessary for this technology. These stocks can be bought directly or through ETFs.
Investing in Metaverse is safer through the second method because stock valuation methodologies are well established. Cryptocurrency and NFT quotes are highly volatile, making it difficult to determine the true value of a project, even for experienced investors.
FAQs
Can I buy stock in metaverse?
Investing in the Metaverse can be done through publicly traded companies such as Meta, Apple, and Roblox, which create their own platforms. Another option is investing in chip and software manufacturers, as they are essential for the development of the Metaverse and will also benefit from its expansion.
Is metaverse a good investment?
Profits from the metaverse are a matter of the future. Experts believe it to be one of the most lucrative areas in the next decade. However, companies’ investments in this sphere currently exceed the profit it generates. It is worthwhile to invest in the Metaverse if you have a long-term horizon. Speculating with cryptocurrencies or NFTs is also a way to make money today.
What’s the best way to invest in the metaverse?
When investing in the Metaverse, it can be difficult to determine the best option based on your knowledge and risk tolerance. While buying virtual valuables and cryptocurrency may theoretically be more profitable than investing in Metaverse stocks, it is almost impossible for a novice to determine their fair value and prospects. Therefore, it is recommended to start with an ETF that owns securities of the largest Metaverse companies, as this is the safest option.
