World rethought: The Metaverse, explains and how to invest in it

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IIf you have followed developments in the cryptocurrency space, in augmented / virtual reality or in online gaming, you have probably heard the term metaverse. The term was coined in the 1992 science fiction novel Snow crash by Neal Stephenson, in which avatars of real people and software interact with each other in a three-dimensional virtual reality based on a metaphor of the real world. If you’re buzzing around cocktails these days (we can finally do that again!) It can seem like either being super informed or trying a little bit, so try to be discreet.

Metaverse is a term used to describe a conceptual future of the internet that, through augmented reality technology, is an alternate digital reality where people can work, play, socialize, and find mind-blowing new forms of entertainment. Science fiction may sound ridiculous, but small versions of it already exist and enjoy a thriving economy with pioneers working full-time.

Today, whenever you want to find a new couch, do some research, or connect with friends on the internet, you need to use a device on which you are using an application such as a browser or app and type in some way on the keyboard. In the future of the metaverse, while standing in your living room, you could visually browse endless couch options that you could virtually place in your room, walk around and view them from different angles without touching a single keyboard or looking at a screen.

You can walk across the world with a friend, each of you in a different physical park, while enjoying the same fantastic imaginary beasts flying around and walking your virtual pet kites.

Don’t you see it completely in your mind’s eye yet? click here for a little inspiration from Adobe (ADBE) or watch the movie “Ready, player, one“, Whereby the metaverse is in many ways the creation of its participants, as cities and countries are today.

The internet and semiconductors have made it possible to hold all human knowledge in hand and give us the ability to connect and collaborate with people from all over the world in real time. In just half a century, the World Wide Web has connected around 63% of humanity and influenced the meaning of borders and national identity. This ability to network triggers levels of innovation that drive exponential technological advancement unprecedented in all of human history.

The metaverse will enable us to create entirely new realities from pure imagination. It will merge the physical world with the ever-expanding, ever-growing virtual world, completely changing the way we interact with and use information, how we solve problems, and even the way we create. It will have an enormous influence on world politics, as geographical identity does not have to have any meaning in this virtual world. This transition to a more immersive virtual world has been going on for more than a decade, but the pandemic has accelerated the pace.

History books can attribute the birth of the metaverse to online multiplayer games. There are over 2.7 billion video game players around the world, which is one in three of the world’s population. Games like Minecraft and Fortnite have amassed a massive user base and have evolved well beyond being just a game into virtual worlds where people socialize, do business, work, and even enjoy musical performances. This innovation was driven by the advent of free-to-play and microtransactions, on which almost 80% of digital game revenue in 2020.

The development of these gaming platforms into virtual worlds has resulted in mass events such as the estimated 10 million simultaneous participants in avatar form Marshmello concert in Fortnite. If you asked someone about the show, they would tell you it was them there. Not that she looked it, but they were there! And while that number sounds like a lot, Epic Games announced in May 2020 that Fortnite 350 million registered accounts with players spending 3.3 billion hours in game in April 2020. That number was greatly reduced by Epic’s battle with Apple (AAPL), but the point is that in the early versions of the metaverse there was already a massive population living at least part-time.

Even the candidate for New York City mayor, Andrew Yang, hosted a campaign event in the Metaverse.

Today there is no uniform metaverse, but a series of independent virtual spaces in which people are represented by digital avatars. Much work is being done to create a unified metaverse that connects all of these independent virtual spaces. As technology improves, people will be able to enter these worlds more easily and conveniently, and interact with the virtual and physical at the same time in a mixed reality.

What does this mean for investors? That means companies that ignore this emerging online marketplace will have to fight just as much as those that ignored the advent of the World Wide Web and all that it implies. For example, look up what happened Kodak (KODK). These virtual worlds create new marketplaces that mirror those of the physical world and cannot be ignored as both will influence each other.

Do you want to be the next hot fashion brand? Better to remember to design not just in the physical world but for your clients’ avatars as well, and consider what that means for margins. But don’t get too carried away, because scarcity will mean something in the virtual world as well. Companies need branding strategies for both the physical and the virtual world, which must complement and support each other.

Do you think that sounds too far away? Well, guess what, there’s already a Podcast Therefore.

The evolution of this metaverse, the merging of physical and virtual realities into something completely new, will usher in an enormously digitized economy. Digital currencies will completely dominate and political boundaries will become increasingly difficult to enforce in a virtual world. Current tax laws and regulations are not prepared for a virtual designer to sell virtual clothing to avatars who they can then resell to others in this metaverse – the wear and tear will be a little less than on the streets of San Francisco. What about the virtual architect designing a virtual home that can then be moved anywhere in the metaverse? Think buying a virtual home sounds crazy? Think again.

This also means that an incredible amount of data has to fly around the world at speeds that make today’s high-speed device look like a tricycle versus a tricycle Bugatti Chiron (Author pauses to sigh wistfully). Driving the digitization of almost all aspects of our lives through ubiquitous sensors and increasingly computerized transportation and the demand for data centers will increase tremendously, which is good news for companies such as: Are you Digital Realty Trust (DLR), Equinix (EQIX), QTS Realty Trust (QTS), and Super microcomputer (SMCI). All of this data needs to move quickly, creating a growing demand for products and services from companies such as Arista Networks (ANET), Extreme networks (EXTR), and Lumentum holdings (LITE).

The bottom line is that today’s world is grappling with enormous debt, challenging demographics, social unrest, and a pandemic, but a whole new world is developing. In it, the human potential to solve, collaborate, create, and meaningfully connect problems to defy geographic and social prejudice will ultimately lead to medical advances beyond what we can imagine today with compassion for one another.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.


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