In a relatively short period of time, the so-called “metaverse” has evolved from a catchy buzzword fueled by futuristic speculation, into a fully-fledged potentially one trillion dollar worth industry.
To be fair, much of what the metaverse promises to be (i.e. the future of society and commerce according to some) has yet to be realized in a meaningful sense. Not everyone owns a $300 Oculus headset, and in Mark Zuckerberg’s version of an alternate reality, your avatar can fly but somehow doesn’t have a pair of legs.
But, it’s hard to ignore the huge dollar investments being made in the space. Between Microsoft’s pending $70 billion acquisition of gaming giant Activision Blizzard, and Meta, formerly Facebook’s $10 billion investment in the further development of its virtual reality tech, it looks as though we are witnessing the start of an institutional spending spree that we haven’t seen since the dawn of the internet.
Perhaps the most interesting question, however, is not which large corporation will be next to fund the great virtual migration, but rather how consumers, and individual investors, will decide to spend their own money once the migration is complete. Here’s how the metaverse might shape consumer spending habits, and even investor’s risk appetite for risk. Here’s what to expect:
Virtual products could bite a chunk out of traditional retail’s revenue
It might sound strange—okay, it will sound strange—but deciding whether to spend $100 on a jacket in the real world or a jacket for your digital avatar could be a very real dilemma in the near future.
The evidence for this is the fact that it’s actually already happening at a limited, yet considerable capacity. As one analyst recently pointed out to the Wall Street Journal, $80 billion is already being spent every year on virtual products within video games. This could be anything from players swapping cash for interactive gaming tokens, or splurging on a new hairstyle for their avatar.
But many believe virtual spending to be on track to extend far beyond the traditional gaming community. According to Gartner, a tech research and consulting firm out of Stamford, CT, 25% of people around the world will spend at least one hour every day inside the metaverse by 2026, and by that same time around 30% of corporations will have products and services available for purchase in the virtual marketplace.
If predictions prove even remotely accurate, retail organizations will need to devise their own metaverse strategies, whether that means transitioning to hybrid shopping experiences, or creating real world incentives to compete with an increasingly virtual economy of products and services.
The virtual real estate market could explode
Is it time to refinance the mortgage on your virtual condo? Believe it or not, that could become a fairly ordinary question in the age of the metaverse.
Not convinced? Just consider that one of the most reputable financial firms, JPMorgan Chase, recently purchased a digital lounge in Decentraland, one of the first and most popular virtual reality platforms. The move comes alongside a broader bet by the institution in the future of the metaverse, after noting publicly that opportunities in the burgeoning space could be “limitless.”
Importantly, this is not an isolated example, as similar purchases have been made by other large corporations and high profile individuals (including none other than Snoop Dogg), whether on the Decentraland platform or its top competitor, The Sandbox.
In short, by all appearances, the virtual real estate market is already booming, with digital land prices rising by 700% in 2021, according to Forbes.
The metaverse may boost cryptocurrencies’ appeal
Beyond Bitcoin’s market cap of close to USD 1 trillion, or the financial success of Yuga Lab’s Bored Ape Yacht Club NFTs, the crypto and non-fungible token market is still relatively niche. The broader public’s hesitancy to dive into the world of crypto is due, at least in part, to the notion that digital currencies and NFTs lack any real utility outside of high-risk exchange trading and serving as indicators of status on social media platforms.
The metaverse, however, which appears all but certain to adopt digital currencies as a primary medium of exchange, could offer crypto advocates the utility they’ve been looking for. At the very least, if metaverse platforms become as popular as many suggest, their utilization of digital tokens could lead to a considerable increase in adoption.
Similarly, the integration of cryptocurrency into a widely utilized metaverse could quell an additional barrier to adoption: the perception of unjustifiable risk. Understandably, many who have observed the wild swings of digital asset prices, in addition to the countless scams perpetrated by anonymous hackers and swindlers, still don’t want anything to do with the crypto space. But the metaverse could add a new level of normalcy to crypto transactions, which will no doubt further benefit from pending regulations and the fact that scammers are increasingly being held accountable for their crimes, with potential appeal for investors who are still on the fence.
As an alternative investment platform, Yieldstreet aims to offer access to crypto assets through third-party funds with deep knowledge of the space.
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