Some experts point to the metaverse when looking at the future of technology and the next evolution of the internet. This virtual environment lets you interact with others regardless of your physical location.
Currently, the metaverse and the infrastructure meant to support it are still developing. However, even if you’re not quite ready to jump into a virtual world, you might be able to invest money into this evolving technology.
Let’s look at what the metaverse is and how you can invest in the metaverse stocks and exchange-traded funds (ETFs).
Hold up, what is the metaverse?
The metaverse is designed as a virtual world where people can interact with others using digital representations of themselves. You could interact with this digital world using a computer screen or a virtual reality headset. Such a headset allows you to “step into” this world and interact with it as if a different environment surrounds you.
In addition to virtual worlds that you could visit, augmented reality allows you to use devices to “see” digital items in the real world with the help of a screen or projection.
A good example of augmented reality is Pokemon Go. You could use your smartphone’s camera to observe the world around you in this game, but the game inserts a pokemon that you can “see” and “catch.”
Virtual worlds or metaverses such as Decentraland and the Sandbox go a step further by providing you with a way to buy digital real estate and create and trade art. These metaverses use blockchain technology to record ownerships of these digital assets.
The growing appeal of these metaverses is reflected in Facebook’s approach to the concept. The social media giant renamed its parent company Meta and is pushing the development of the metaverse infrastructure.
How did the metaverse start?
You might remember games like the Sims that allowed you to make choices and interact in a digital environment. This may have been a relatively early precursor to the metaverse.
However, the first decentralized virtual world built on blockchain technology was Decentraland. Decentraland has been in development since 2015 but was officially launched in 2017.
The native cryptocurrency of Decentraland is mana (MANA), which is used to buy land, collectibles, and other assets. You could enter Decentraland using VR headsets to explore this digital environment and interact with other avatars.
Metaverses got a boost when Meta announced it would join the growing field. In 2014, when the company was still called Facebook, Meta bought Oculus Rift, a virtual reality headset company.
More recently, the name change to Meta reiterates the interest that founder Mark Zuckerberg has in developing the infrastructure of the metaverse. The ultimate goal is to transform how humans interact with each other, regardless of physical location.
Over time, supporters of the technology believe that metaverses might allow people to enter a virtual environment, including work. People may be able to interact with their coworkers and others in these environments more seamlessly with the inclusion of augmented reality.
What can I do in the metaverse?
Decentraland offers a robust array of activities that reflect what you could do in a metaverse. From building a virtual home or scene to creating and selling artwork.
In fact, Decentraland hosted the Metaverse Fashion Week and held a big closing show and after-party. The event featured a digital performance by Canadian musician Grimes in addition to digital fashion shows such as the one by digital fashion house Auroboros.
A different metaverse space such as the Sandbox allows you to create and monetize games, interact with others, and even earn money when you play certain games. You could also monetize different digital assets, including trading digital real estate and selling digital artwork you make.
In the future, Meta expects to transform various aspects of life by transporting you into 3D digital spaces for work and social interaction. The idea is that you could work from home but enter an office environment with other coworkers and collaborate on projects. You might even be able to attend a wedding or other social event virtually, interacting with people who might be thousands of miles away.
Metaverses could also influence education, primarily through augmented reality and gamified learning. It might even be possible to attend school using a metaverse and then catch a movie with friends afterward — even if you and your classmates aren’t in the same physical location.
How can I invest in the metaverse?
Although the metaverse is still relatively new, some experts think it represents an opportunity to make money in the real world. Goldman Sachs, for example, believes that the metaverse has the potential to generate opportunities amounting to between $2 trillion and $12 trillion.
Some investment methods, such as investing in publicly traded metaverse companies and ETFs, might feel familiar. Other forms of investing in the metaverse might come with a learning curve.
Buying stocks of publicly traded companies that develop metaverse technology is one simple method of investing in the metaverse. There are several tech companies on the stock market to invest in that might provide you with returns related to emerging technology. These companies may still offer the stability of an established company.
Meta Platforms, Inc. (FB), formerly known as Facebook, is actively developing metaverse technology and has made strategic purchases such as Oculus Rift to further its efforts. Software giant Microsoft (MSFT) is also stepping into the metaverse technology and believes it could offer considerable opportunities in the future.
The video game company Roblox Corp (RBLX) has been developing gaming and metaverse technologies since it was founded in 2004. The company saw massive growth in 2021, with more metaverse users and developers joining its community.
Other companies might be closely related to metaverse developments. For example, semiconductor maker Nvidia Corporation (NVDA) designs and produces graphics cards. Graphics cards are an essential part of running simulated digital worlds and environments. Choosing to buy Nvidia stock could be a form of investing in the developments of metaverse technology.
Companies such as Autodesk (ADSK) and Unity Technologies (U) are also involved in metaverse development. Autodesk and Unity software are often used to create digital models.
You could buy these tech stocks on the New York Stock Exchange (NYSE) and the Nasdaq Exchange (NASDAQ).
Keep in mind that past performance does not guarantee future results.
Rather than choosing individual metaverse stocks to invest in, you could also invest in the metaverse through ETFs. For example, the Roundhill Investments Metaverse EFT (METV) is an ETF that includes tech companies like Roblox and Nvidia. You only have to make one investment to include these companies’ performances in your portfolio.
In general, investing in a single ETF is a form of investing in several companies rather than trying to pick one. With the help of a metaverse ETF, you get access to many companies with metaverse connections, all while trading on the exchange as you would with an individual stock.
Metaverse virtual land
You could buy digital real estate through metaverse platforms. Decentraland is one of the prominent examples, but other metaverses allow you to purchase digital real estate, including the Sandbox.
You could use cryptocurrencies to buy digital real estate, which gives you ownership of that plot of land. You could develop it or simply keep it. Later, as new people come into that virtual world, they might want to buy some real estate.
Because land is limited in some worlds, they have to buy it from those who already own the land. If you get in early enough, you might be able to buy land for a relatively low price and then sell it at a profit later.
However, keep in mind that you need to first convert your fiat currency into the cryptocurrencies used in the virtual world to do this. After making your sale, you may want to convert your cryptocurrencies back into fiat currency if you want to transfer the gains to your bank account. There could be fees associated with these conversions.
Metaverse assets (cryptocurrencies and NFTs)
It’s also possible to invest in the metaverse by buying virtual assets. Depending on the world involved, you might be able to create non-fungible tokens (NFTs) and trade them with others. If you create digital art or other digital goods, you could make money through their sales.
However, you don’t even have to create digital art to make money off metaverse assets. You could buy virtual luxury goods in many virtual worlds, such as clothing and cars, then sell them later. If you purchase something that has a unique characteristic or turns out to be in high demand later, you could potentially sell it to someone else for more money.
However, as with investing in virtual land, you often need to use the native cryptocurrency of the digital world to complete your transactions.
Even if you aren’t involved in a metaverse, you could find investment opportunities in its cryptocurrency. Mana, the native cryptocurrency of Dencentraland, is available on some major cryptocurrency exchanges, including Coinbase.
You could potentially make money by buying and holding cryptocurrencies used in different virtual worlds. If a virtual world becomes famous and more people need its cryptocurrency to participate, its coin price might increase.
It’s also possible to buy cryptocurrencies associated with the blockchain infrastructure that these virtual worlds are built on. For example, Decentraland and other virtual worlds are built on the ethereum blockchain.
One investing option is to buy ether (ETH), the cryptocurrency powering this blockchain, and hold it. The cryptocurrency might increase in price if more metaverse applications are built on the chain.
Is the metaverse a good investment?
Any investment comes with a degree of risk, and this is especially true for new asset classes and emerging technologies. The metaverse might be touted as the next evolution of the internet, but there’s no guarantee it will truly take off or achieve mainstream adoption.
As with blockchain technology, underlying technologies might offer opportunities to invest in the next iteration of the internet. You might want not to miss out if the metaverse and its associated technologies make progress and become widely adopted.
If you think there’s merit in some of these virtual and augmented reality companies and projects, it might make sense for your portfolio.
Before investing in the metaverse, carefully consider your financial situation and risk tolerance. Decide where metaverse stocks, ETFs, or assets might fit in your portfolio and stick with your strategy — while doing your best to mitigate some of your risks.
3 metaverse ETFs that could diversify your portfolio
Roundhill Investments Metaverse ETF (METV)
The Roundhill Investments Metaverse EFT tracks the performance of companies developing metaverse technology. Some companies listed on the index are those related to providing computing power, networking capability, virtual platforms, and payment systems, including Meta, Roblox, Autodesk, and Apple.
Fount Metaverse ETF (MTVR)
The Fount Metaverse ETF features several companies that are banking on metaverse technology. This includes Meta Platforms, Oracle Corporation, Microsoft, and Konami Holdings. The idea is to get exposure to major companies developing and working on interactive virtual environments.
Amplify Transformational Data Sharing EFT (BLOK)
Amplify Transformational Data Sharing EFT focuses on blockchain technology and the companies developing that aspect of the metaverse. This ETF provides you with indirect investment in cryptocurrency technology through investing in companies and crypto exchanges like Nvidia, CME Group, and Coinbase.
Other ways to invest money and diversify your portfolio
Learning how to invest in the metaverse could be one way to diversify your portfolio. There are other ways to add potential growth. Some examples of alternative assets include collectibles, commodities, artwork, precious metals, tax liens, and real estate.
If you’re interested in diversifying your portfolio beyond stocks and bonds, you could explore any of these asset classes. However, it’s important to note that some alternative assets are considered risky. As with any investment, you could potentially lose the money you invest.
Carefully consider how much of your portfolio you want to allocate to alternative assets and do your best to limit your risk.
How many metaverses are there?
The exact number of metaverses might be challenging to pinpoint. The metaverse is a term that encompasses various platforms and projects that allow humans to interact in a digital environment.
There are potentially thousands of different digital worlds, platforms, and ways to interact using metaverses. This includes using virtual reality to interact with digital environments or using augmented reality to add digital elements to your perception of physical environments.
How do you join the metaverse?
Joining the metaverse requires creating an account and using a platform that allows people to interact in a digital environment. This could range from using an Oculus Rift headset to enter a virtual world and interact with others to using augmented reality in the classroom or workplace.
What is Facebook metaverse?
Facebook metaverse is a set of connected digital spaces that allow users to interact with each other and their virtual environment. Facebook is developing applications and 3D environments designed to be a part of this metaverse.
It’s hard to tell whether the metaverse might be the next stage of the technological revolution. But taking a chance on emerging technologies may result in gains — or losses — that contribute to your portfolio.
You could invest in companies developing the tools and digital environments that will support the metaverse. This includes investing in individual companies and ETFs. You could also get more involved by participating in blockchain projects related to the metaverse or by investing in metaverse assets.
Learning how to buy cryptocurrency as well as how to invest money might give you the knowledge needed when you’re considering investing in the metaverse. But always make sure you stay alert to the level of risk present in your investments.
Disclosure: The author owns MANA and NVDA.
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