Is it Wise to Invest in Metaverse Now Or Wait Until 2022?Mason Miller
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Is it Wise to Invest in Metaverse?
Mark Zuckerberg capitalized on the nascent metaverse industry, making his entire company focus on it. Instead of waiting for Elon Musk to announce his interest in the metaverse publicly, Mark Zuckerberg jumped right in and invested in Metaverse coins. While there are certain risks to this venture, it’s worth it to gain long-term rental income by investing in Metaverse real estate. And unlike ETH, buying land in the metaverse isn’t as risky as you might think.
Several companies are exploring the possibilities of the metaverse. Tencent, for instance, has extensive experience in developing social network experiences, games, and AI capabilities. Tencent is a dominant player in Asia and has ample resources to invest in the metaverse, including research and acquisitions. So, is it wise to invest in the metaverse now or wait until 2022? Below is a look at the potential investment opportunities.
Buying Land Generates Long-Term Rental Income
There are several benefits to purchasing land in the metaverse for rental purposes. These virtual worlds typically have low transaction fees and allow for quick purchase and sale of the property. In most cases, investors purchase their properties in cryptocurrency such as Ethereum. Ethereum users can then fund their avatars with cash or cryptocurrency. Once the avatar is fully funded, they can sell the property to generate long-term rental income.
In the real world, land values have consistently increased. However, the population of individuals interested in owning land is ever increasing. On the other hand, the supply of virtual land is virtually unlimited, and developers can create new plots of land. Some recent real estate transactions have seen the price of a plot of land next to a Snoop Dogg Sandbox home reaching $450,000. However, the velocity of transactions makes it difficult to determine if these gains will last over the long term.
Buying land in the metaverse is different from purchasing real estate in the physical world, mainly because owning a large plot of land on a single account is impossible. Most virtual worlds are divided into multiple plots, and the ownership of each plot is recorded in a non-fungible token that is coded onto a public blockchain.
Buying land in the metaverse is not tricky, but there are some distinct differences. You will buy the property based on its location, size, and actual utility in the real world. However, buyers will not have to visit the property in the metaverse. Instead, they will develop the land themselves or lease it to a third party.
Buying Land In The Metaverse Performs Better Than ETH
Despite recent price declines, Metaverse-related virtual land prices outperform the native ETH token. Prices of land plots in 30 popular virtual worlds fell 18% in March from their all-time high of USD 10,473 in February. The recent drop is consistent with a broad decline in the price of metaverse-related tokens over the last six months.
Metaverse land is also a safe bet. Transaction fees are low, so investors can easily buy and sell virtual land. Investors create a digital wallet and fund their accounts with cash or cryptocurrency to purchase virtual land in a metaverse. If they are interested in making a profit, the metaverse will pay them well. While the investment is a risky one, it’s well worth it if you can profit from the volatility.
In addition to selling real estate, traders can invest in virtual land. The company Republic Realm spent $913,000 on a plot in the famous metaverse world Decentraland. That’s one of the largest deals of its kind in the metaverse. It also bought 792 plots in Sandbox, a metaverse created by Atari. For some investors, the digital world is as vital as the real.
Although Meta was recently rechristened as “Madison,” the company has gone beyond the social networking platform to enter the metaverse. Meta’s Family of Apps segment includes Facebook, Instagram, and WhatsApp, while its Reality Labs segment encompasses the Facebook Portal and Meta Quest. These companies are building products to integrate with Meta.
While many investors were skeptical of the company’s IPO, the stock has performed well so far. Its growth is primarily due to the acquisition of Weta Digital, which develops software tools for 3D content creation. With this acquisition, the company is betting big on the 3D content creation market. Its recent IPO (April 2020) helped investors see a significant increase in its share price.
As for the company’s growth, it is hard to overlook its growth trajectory. While Roblox’s user base has shown significant growth, the company still has a lot of work before 2022. In addition, it needs to improve its games’ graphics, and it relies too much on young children for sustained engagement. Further, the company risks reducing its bookings growth if parents restrict children’s access to the platform.
If you’ve never heard of Autodesk before, it’s a 3D software company that’s widely used for design, animation, and more. With a rich history in the 3D design and animation world, Autodesk is well-suited to create metaverse products that will help designers and artists to visualize and communicate the world around them. The company’s portfolio also includes VR and AR products.
As the metaverse continues to gain momentum, investors are taking note. For example, Microsoft’s acquisition of Activision Blizzard in 2017 was explicitly linked to a metaverse entry, as did statements by the company’s executives when announcing the deal. Executives mentioned the virtual world several times while discussing the acquisition. Investing in these technologies now or waiting until 2022 will allow you to take advantage of a growing market.
Another notable example of the metaverse is Matterport, which will go public via a unique purpose acquisition company in July 2021. Although Matterport isn’t yet profitable, it represents the most significant potential for profitability of metaverse stocks. It may be worth waiting, particularly if you’re a long-term investor. You can also invest in other technology stocks, such as Nvidia, Qualcomm, and Autodesk.
The concept of a metaverse is an emerging technology that will soon be used to create online experiences. Companies are already investing in this technology, but there is still some hype surrounding the concept. However, some companies will provide tangible returns. Roblox, for example, was founded in 2004 and began trading around the same time. It’s worth keeping an eye on these companies because the metaverse could have more applications than you think.
As more people discover metaverses, massive institutions will start investing in them. Large corporations have already started building metaverses. It would make sense to invest in a large corporation like Microsoft or smaller companies like Roblox. However, there are risks involved. It would help if you considered your long-term portfolio goals and risk tolerance. If you’re only looking to make money in the short term, mega-caps will still have an advantage until growth stocks catch up.