The metaverse is a blockchain-based virtual simulation universe where one can play various characters and perform any tasks. To take exposure in this space, you can invest in Metaverse cryptocurrencies, Virtual lands, NFTs, and stocks related to the metaverse.
In this current digital era, I am sure you must have come across the term ‘Metaverse’ in an ad or article while browsing through the internet. It might have also intrigued you as to what is the metaverse, and how to invest in it?
The term ‘Metaverse’ signifies an alternate digital simulation world where you can experience a separate life apart from your present life. The game ‘SIMS’ is a close representation of how you can play a different character in a game and perform any action that you please. The only difference between a game and the metaverse is, you can earn cryptocurrencies in the metaverse and actually spend them in the outside world.
Inside a metaverse you can actually conduct meetings, attend concerts and visit various places from the comfort of your home. Facebook which recently changed its name to Meta, showcased a similar concept. Here you could meet and interact with your friends and family in a digital avatar through the internet.
Almost every article that you read about the metaverse online seems to be briefing you that this is the next monumental thing. But looking from the lens of an investor the question arises, how to capitalize on this?
Let's see the four ways through, which you can invest in the metaverse and capitalize on this growth story.
The most straightforward way to take exposure in the metaverse is by investing in the metaverse tokens. This means you can invest in the cryptocurrencies which are building metaverse or are responsible for the transaction conducted in the metaverse.
By purchasing cryptocurrencies that are related to a particular metaverse, you will benefit from the price increase in the tokens as the metaverse grows more popular and as more people invest in it.
Another way to invest in the metaverse is by purchasing land or other assets in the metaverse. Buying land in the metaverse is similar to the real world, but the sole difference is that you cannot touch the piece of land that you have bought in the metaverse. A popular metaverse where you can purchase land is Sandbox. Several tech giants like Tencent, Atari, and other celebrities like Snoop Dog, Eminem, etc have purchased land in the game. You can construct anything on your land, rent it out, or host parties on the land you own in the metaverse. The rent and other income that you receive from these assets will be in the form of cryptocurrencies that can be redeemed in the form of cash.
Recently, gaming giant, Atari purchased 20 units of land in Decentraland and erected a crypto casino on that. At this place, you can gamble and win in the Atari token which is completely tax-free money.
Here is a chart depicting the increase in the price of land in Sandbox from $40 in 2020 to more than $1200 in 2021.
NFTs or Non-Fungible tokens are other forms of digital assets that you can buy if you want to take exposure in the metaverse. These NFTs can be in the form of an art piece, a game relic, or any other object that has value in the metaverse. Every object exchanged on the metaverse or the blockchain is in the form of NFTs. This means even the land that you purchase, is an NFT. In the same way, you can mint (create) and sell your own NFTs on the metaverse to earn additional tokens, or also trade these NFTs later at a higher price to earn a profit.
Metaverse games like Axie Infinity, etc allow you to buy or unlock artifacts in the game in the form of NFTs which you can trade in exchange for other NFTs or tokens.
Furthermore, if you want to invest in the metaverse from an indirect method, you can do so by investing in the stocks of companies engaged in the metaverse. For example, you can purchase the stock of Meta which is a publically listed company.
Similarly, you could select companies that manufacture the software or the hardware that is used in the metaverse. As the metaverse is completely online, you can identify stocks that manufacture graphics cards or other servers and data hosting solutions that are needed for the working of the metaverse. Some stocks in the category are Nvidea, Microsoft, Roblox, etc. By investing in these companies you will be entitled to the profits in the form of dividends and also the price appreciation of the stocks that you own.
These were just four of the methods through which you can directly invest in the Metaverse. However, there are multiple other ways through which you can earn in the metaverse.
Several companies are spending millions of dollars to integrate their operations in the metaverse. The total volume of trading of NFTs has skyrocketed up to $23 billion in the year 2021.
Brands such as Gucci, Nike, Visa, and many more have entered the space by either investing in NFTs or promoting their own virtual products. This shows us that the immediate trend of the metaverse and other NFTs is still strong, and a lot of future innovations can be seen in this space. But cryptocurrencies and NFTs bear their own risks.
Hence, you should always do your due diligence before taking exposure to these risky assets.