Investing in the Metaverse – Opportunity of a Lifetime?

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Despite the geopolitical issues in Europe, which, as a result, has led to hikes in oil prices globally, sparked fear in food supply/demand and increased market volatility, the cryptocurrency industry is still growing steadily. This has had a spillover effect as many are getting excited about Web3 and of course, the Metaverse. Since the announcement of Meta by Mark Zuckerberg, the Metaverse has been growing daily, with new projects and currencies joining the ecosystem.

Unsure what the Metaverse is? Check our introduction to Metaverse here. We have also thoroughly analysed whether it is possible to die in Metaverse, and prepared a list of TOP 10 Metaverse projects to follow in 2022. Next up, we’re now exploring the investment potential of the Metaverse. So is the Metaverse actually an investment opportunity of a lifetime?

Without a doubt, the potential of Metaverse is huge. Many even consider it to be as important as the internet itself. While this might be a bit far-fetched, it still shows how investors, big conglomerates or huge tech companies view the Metaverse. For instance, Grayscale Investments, one of the biggest crypto asset managers in the world, has stated that Metaverse is potentially a trillion-dollar market.

With companies such as Microsoft, Samsung, Apple, Amazon, Paypal and Google dipping their fingers deeper into Metaverse, it seems like a no brainer to  invest in this area. While this should of course be an individual judgment call of everyone and this article can not be viewed as financial advice, one might wonder, what opportunities are there for investors to join the Metaverse craze and start investing in this sector?

Please note that this article does not talk about how to actually buy any land in Metaverse. Rather it shows different investment opportunities of why to do it. If you are interested to see the whole process of buying the land in different Metaverses, read more here or here.

Different investment opportunities in Metaverse

Before seeing the opportunities of how one can invest in the Metaverse, everyone needs to understand that there are different ways investors can put their capital into work. First of all, it is important to note that the Metaverse is made up of either land or any other assets, such as game characters, avatars, tools etc in the form of NFTs.

Thus, basically almost everything that you buy in the Metaverse is some form of an NFT. Whether that is land, character, art, chair or something else. Why would anyone then decide to buy land in the Metaverse and not just any other random NFT?

Investing in land in the Metaverse

Well, the biggest reason is that while NFTs have potential value when it comes to scarcity or rarity, most of the time they do not have any use case. This is very different from buying land in the Metaverse, which can actually be considered an opportunity to build a passive income.

You can do numerous things with the land that you own in Metaverse. For example, you can use this land to charge fees to anyone who would consider hosting events on your virtual property. In the same way, you can also host events, concerts, museum collections or anything else and earn money either from your visitors or from the fact that the more your land is used, the higher value it has.

Alternatively, there is a possibility of leasing or renting the land to any party interested. Although this is still a bit more complicated as there are not many Metaverses that offer this option. This involves a higher risk as it is approached mostly on an individual level.However, it is expected that, in the future, the ability to rent your land in Metaverse will be very common.

Map of the land in The Sandbox

As of now, the two most popular Metaverse spaces in the cryptocurrency world are The Sandbox and Decentraland. While The Sandbox has 166,000 plots of land, Decentraland offers around 90,601 plots. Currently the price of a plot in Decentraland is significantly higher than the price of land in The Sandbox. This is not only due to lower supply of plots in Decentraland, but also due to Decentraland being the biggest and most popular Metaverse currently.

Owning avatars, characters or tools

Another investing opportunity in Metaverse, which is a bit riskier than buying land, is buying different in-game characters. These would be for instance Axies in the game/Metaverse Axie Infinity. This hugely successful game is providing a solid opportunity for many people across the world to earn money. In some countries such as Ghana or Philippines, the money earned by playing these games can even exceed the average monthly wage, which is a main reason why Axie Infinity is especially popular in these locations.

Different Evolution Level of Axies

However, this investment opportunity comes with probably the biggest associated risk. Since you are buying a very specific NFT in a specific Metaverse, you are not only betting on the probability that that particular Metaverse will be popular, you are also betting that your particular item will increase in value over time. This can be very tricky and while it can lead to significant returns, the risks associated with this type of investment cannot be overlooked.

Investing into Metaverse tokens

If you do not feel like investing in a land or a specific NFT of a tool, avatar, character etc., but you still want to have your capital invested in Metaverse, there are two more options you can look at. First one is investing into the coins or tokens of the given Metaverse.

This means that, for example, if you are a fan of Decentraland, but you do not want to own any asset in its Metaverse, you can still buy MANA, the native token of Decentraland, and wait for it to increase in value. The same can be done with The Sandbox and its token SAND, Axie Infinity and its Smooth Love Potion and many others.

The map of the land in Decentraland

If for any reason you do not have a chance to do your own research (DYOR) and decide which Metaverse token is “the best”, you can simply own Ethereum. A vast majority of Metaverses are already built on top of the Ethereum network, which means that the demand for the biggest altcoin should only rise with the popularity of Metaverse tokens. Ethereum is thus the ‘safest’ bet out of all the above-mentioned options if anyone wants to have an exposure to Metaverse. On the other hand, it is also the least direct option.

It is also important to note that investors can get exposure to Metaverse also through investing into stocks of companies that have switched their focus on Metaverse. Most notably these are companies such as Facebook/Meta, Samsung, Microsoft and many others. However, it needs to be mentioned that their Metaverses will most likely be very centralized as opposed to Metaverses built in the cryptocurrency world. This is definitely something that the investors need to take into account as well in their decision-making process.

Disadvantages and risks

Speaking of what the investors need to consider, we have mostly mentioned how and why investors should invest in particular assets, tokens, coins or NFTs. While these have many advantages, to even things out and to provide a well-balanced analysis, it is also important to mention a few disadvantages with Metaverse investments.

First of all, there are many Metaverses already. We have already mentioned three different Metaverses alone in this article and there are dozens more, with major companies developing their own. This simply means that unless you have enough money to invest into all of them and see which ones are doing better than the others, the outcome of your investment might be based solely on sheer luck. And while it is very probable that there will be many Metaverses existing independent of each other, it is very unlikely that all of them would be successful.

Another risk of putting capital into the Metaverse project is the fact that it is still too early. While some investors might see this as an advantage, because the sooner you invest in some project the higher the probability of extraordinary returns, for others this simply means higher level of risk. Most of these projects need to prove themselves in reality and show their real value, which might take time. Without any doubt some projects will definitely be able to prove their worth, but others will fail.

Last but not least, no one has any idea of what the Metaverses will be like 10 years from now. This simply means that no one can be sure that this piece of land or that avatar can have any value. Having this in mind is tremendously important when deciding whether you should invest in Metaverse projects or assets. While it is almost certain that the Metaverse will be here in ten years’ time, no one can know how exactly it will work and what it will look like.

Conclusion

There are numerous different opportunities how one can approach investing into the Metaverse. Buying a piece of land or an avatar might be an interesting option, yet, these are a bit riskier. Nevertheless, these opportunities are here to stay and will probably evolve to be much more interesting, useful and less risky. These are  also key reasons why everyone should pay close attention to the Metaverse and also, if possible, get some form of exposure to it if appropriate.