Investments in Metaverse: Opportunities and Risks
[TL; DR]
The metaverse is an immersive virtual world where people interact as if they are in real life.
Virtual reality, augmented reality and mixed reality are examples of technologies that power the metaverse.
Firms and individuals can invest in metaverse opportunities like gaming, healthcare, education, virtual events, virtual goods, digital currencies and social networks.
Metaverse scams and the current limited market are the key metaverse risks.
Introduction
The expansion of decentralized technology has led to more investment opportunities than before. Probably, one area where many investors can put in their resources is the Metaverse. It is not just worthwhile for you to immerse yourself in metaverse based virtual games but also to invest in it. Basically, the metaverse is changing how people interact and do business. For example, it enhances open human communication, revenue generation and creates new investment opportunities.
This piece will cover how the metaverse is altering the way humans interact with each other and new investment avenues it presents to the entire world. Nevertheless, we will also explore the risks that are inherent in the metaverse.
What is the metaverse and how is it related to AR and VR?
The metaverse is a wide network of immersive virtual worlds that enable people to interact with each other as well as to exchange goods and services. In other words, it is a 3D environment where people can socialize, work and play.
Virtual reality (VR) and augmented reality (AR) technologies are behind the existence of these virtual worlds. Basically, AR, VR and the internet converge to create this immersive world that has no geographical, social and economic boundaries.
VR audio/visual headset - Josephmucira
Contribution of virtual reality (VR) in the metaverse
It is virtual reality and augmented reality that create the immersive environment where people behave as if they are in our real physical world. For example, if people attend a wedding within the virtual space they feel as if they are interacting physically. It feels as if you are right there with other people.
It is important to note that the people who interact in the virtual world are in the form of digital avatars. But, what does virtual reality and augmented reality contribute to the immersive digital world?
Virtual reality is a technology that creates three dimensional environments where people, represented by their avatars can touch things. Naturally, it also generates elements of sound and sight. Individuals participating in the metaverse use virtual reality (VR) technology, which include an audio/visual headset, to interact with other people within the virtual realm as if they are in our physical world.
Augmented reality (AR) technology
Augmented reality technology uses electronic devices such as tablets or mobile phones to superimpose digital characters and objects onto the real-world space to create a sense of existential reality. Combining the real and virtual spaces enables the users to interact with other characters and objects in a metaverse environment.
Anchoring concepts of the metaverse
For us to better understand how the metaverse functions, let’s look at a few key concepts. First, it is essential to think of the metaverse as an extension of the real world by digital means rather than as its replica. This is because it has its own unique setting, products and services which make its own digital economy.
The metaverse has several foundational anchors such as interoperability, virtual ownership and virtual identity.
Interoperability: The metaverse comprises many organizations, developers, businesses and creators which are connected seamlessly.
Virtual co-location: People who use the metaverse feel as if they are interacting with others within a digital space that looks as authentic as in real life.
Virtual identity: The metaverse enables people to have consistent and expressible identities in the virtual world. As such, it is very easy for the users to identify themselves with their colleagues and business associates.
Virtual ownership: The metaverse supports the exchange of goods and services thereby creating value for its users. Eventually, the people will own some digital items and physical assets they transact within the metaverse.
Read also: Top Metaverse Coins & Tokens by Market Cap
Metaverse as a space for commercial activities
The metaverse is not just a place to socialize and play immersive games. It is also a virtual center for various commercial activities. This is because it is the leading platform for progressive and technology-focused businesses to sell goods and services.
They can also use it to create their unique brand awareness as well as enhancing their reputation and reach. Let’s briefly explore how they can attain that.
Exchange of digital goods and services: Metaverse users can buy various goods and services to use in their virtual activities. These may include cars, real estates, NFTs and brand name accessories.
Virtual storefronts: Since the metaverse merges the real and virtual worlds the potential for ecommerce increases. For example, the users may purchase handbags to use in real life as well as those for their digital avatars.
Immersive entertainment: The metaverse comes with many video games which are immersive in nature. There are different types of games which people can play such as player-to-player or player-to-environment ones. At times, people earn virtual currencies which they can convert to cash.
Read also: Doing Business in the Metaverse: Opportunity or Threat?
Investing in the metaverse
There are various metaverse investments that generate high returns. Let’s discuss some of these opportunities.
Market expansion: Businesses can tap into investment opportunities that exist in web3. As an example, firms and individuals can invest in decentralized applications that are connected to the metaverse. Some of these applications create utility in different industries like healthcare, education, gaming, entertainment, retail and real estate, among others. People who invest in these metaverse opportunities in these early stages are likely to generate high returns over time.
Digital goods and services: Second, investors can put their resources into creating various digital goods and services. For instance, they can invest in digital collectibles, virtual real estate, in-game assets and avatar customization items. Since there is a growing demand for such products the companies that invest in them in this early stage are likely to generate profits in the future.
Virtual advertising and branding: There is no question that the metaverse will play a great role in the marketing industry. For instance, brands can use their virtual spaces to promote their goods and services enabling them to reach many potential customers. Investing in digital advertising platforms will most likely be profitable as many firms and consumers will use the metaverse in the near future.
Virtual Events and Experiences: Using the metaverse, people can create different interactive virtual events. As an example, companies operating in the metaverse sector can come up with platforms that provide virtual conferences, social gatherings and exhibitions, among others.
As a result, there will be many opportunities for content creators, event organizers and other virtual experience providers. Such people have the chance to monetize their skills and experiences yet provide vital services to metaverse users.
Virtual real estate: Individuals and firms can also invest in virtual real estate. This is because these virtual worlds provide investors with opportunities to buy and sell the virtual real estate as well as leasing it to other users. As the metaverse expands the value of the real estate is likely to appreciate thereby generating profit for the owners.
Virtual currencies: The metaverse economy relies on virtual currencies in the form of cryptocurrencies. Therefore, investors who put their funds in these digital assets that include platform-specific tokens may generate good returns in the future. The reason is that virtual currencies drive the different decentralized digital platforms. Some investors depend on buying and selling these digital currencies.
Virtual Education and Training: The metaverse provides room for interactive education exchanges. Therefore, firms and individuals can invest in platforms that create virtual classrooms and offer education content that cater for the diverse needs of online learners. Both educational institutions and corporate organizations are providing learning opportunities using the metaverse.
Virtual healthcare services: The metaverse is also creating new healthcare delivery services. Some investors have developed virtual healthcare platforms that enable patients to access medical care online. For instance, patients can access remote consultations with specialists.
Social networks and communities: The metaverse supports the creation and sustenance of social networks and other virtual communities. Therefore, people can invest in platforms that enable users to interact, connect and collaborate with one another. In fact, these social platforms give room for the users to engage each other on a high level. At the same time, that opens ways for monetization of certain specific activities like advertising, subions and the sale of digital goods and services.
Technological advancement: The fact that the metaverse depends on certain advanced technologies like virtual reality, augmented reality, the blockchain, artificial intelligence and mixed reality means that people can also invest in the associated hardware and infrastructure. Specifically, firms can put their resources in hardware production, technological infrastructure, software development and content creation, to name a few.
Investing in the metaverse can be risky
Investors should be aware of both benefits of metaverse and the associated risks. The following are some of the risks which the metaverse pose.
The metaverse market is limited: Currently, only a small fraction of the global population has ample knowledge of the metaverse and is willing to participate in it. Since the market is small your digital products can only appeal to people who understand the principles of the metaverse and the global digital economy.
Therefore, when making your investment decisions you have to factor in the restricted nature of the market for virtual goods and services.
High probability of losing money: The sad thing, at the moment, is that there are no government or legal documents that prove ownership of virtual land and digital products. Therefore, it is very difficult to claim restitution in case things do not go as you intend.
Basically, the property documents we have for our physical goods and services guarantee us that we are in control of them. Unfortunately, we cannot say the same about our digital assets like NFTs, cryptocurrencies and virtual real estate. The reason is that we can only see these through the metaverse platforms and computer screens.
This means that we can easily lose our metaverse investment if the platforms that host them fail or close down. Therefore, your virtual estate and products exist during the tenure or existence of the digital platforms you invest in.
Metaverse scams and risks: There are many scams in the metaverse for business which may result in loss of income and investment. Therefore, it is important for you to carry out thorough research before you invest in the metaverse. Otherwise, you may fall prey to con artists and fake metaverse opportunities leading you to lose the funds you have invested.
Read also: South Korea To invest $117 million To Kick Start The Metaverse
Conclusion
As we have noted, there are many metaverse advantages and risks. You can invest in different opportunities across various industries like real estate, entertainment, gaming, education, healthcare and advertising that operate in the metaverse. The investors who position themselves well in this emerging sector can earn good returns in the future. However, you need to be aware of existing risks such as metaverse scams and the limited market for digital goods and services.
FAQs about the metaverse
What are the risks of the metaverse market?
The metaverse market has limited participants and can have scams. The investors can also lose their money if the metaverse platforms fail or close down.
What are the investment opportunities in the metaverse?
Individuals and firms can invest in virtual real estate, virtual currencies,virtual healthcare service, virtual education and training.
Is it safe to invest in the metaverse?
Generally, it is safe to invest in the metaverse although there are risks of scams and limited markets. It is important for the investors to carry out thorough research before committing their resources to metaverse projects.
What are the benefits of investing in the metaverse?
There is likelihood of high returns for people who invest in the metaverse in its early stage. As an example, the value of virtual real estate may appreciate significantly in the near future.
