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Money, the Metaverse, and You

The Metaverse. A buzz word blinked into existence, paradoxically ubiquitous in pop culture while also undefined, on the whole, as to what it is, where it came from, and why it became popular in the first place – like when everyone got into swing dancing in the ‘90s.

Facebook’s rebranding last year shined an even brighter light on the tech world’s latest darling- concept-with-kind-of-a-dumb-name that is going to take over how we live. As this is a financial site, we’re going to look at this from a financial angle, but to make sure we’re on the same page…

What is the Metaverse?

The Internet of Things is to a connected web of physical devices as the Metaverse is to a connected web of spaces within a virtual world. It doesn’t describe one single thing but the broad interconnection of different pieces within cyberspace. Decentraland, Roblox, Sandbox, Axie Infinity, and Illuvium are all examples of Metaverses.

If this sounds like irritating vagueness, well, it is. Listening to tech companies and reading articles about the Metaverse, it comes across as jumbled-up sci-fi jargon intentionally keeping the public at arm’s length. Is it a virtual reality? A video game? A utopian dream or dystopian nightmare?

It could be any of those things. The fictional worlds of Tron, Snow Crash, and Ready Player One come to life. It’s difficult to conceptualize because the Metaverse is, admittedly, still half-formed lumps of clay yet to be molded into a cohesive whole. The idealized version is that it’s a universe within cyberspace, complete with its own virtual economy, land, and currency.

Metaverse Money

Each Metaverse has a currency, a token, and each token has a price. Tokens can be purchased using dollars and deposited in a wallet. Conversion rates fluctuate compared to U.S. dollars, just like traditional currencies

Is buying a single token too risky? That’s okay. In the same way that buying an individual stock is riskier than buying an ETF or mutual fund, there is a tradeable Metaverse index. The Metaverse index is comprised as an assortment of Metaverse tokens within it[1].

Property in the Metaverse

Not interested in shelling out half a million dollars for the refrigerator box under a highway that Zillow calls a house? Good news! Metaverse has virtual land for sale[2]. Bad news! Property in the Metaverse is just as expensive.[3]

Calling real estate in the Metaverse “land” is like calling the guys who work at Medieval Times “knights.” It’s close enough to get the point. Buying “land” actually means the purchaser is buying a piece of the underlying blockchain, allowing them to put whatever they’d like in that space. The misnomer doesn’t take away from the fact that spaces within Metaverses like Decentraland and Sandbox have been selling for millions of dollars.

Scrolling through Metaverse land for sale is the same as scrolling through available Beverly Hills mansions. There is a map of the virtual land for sale broken up into lots where a potential buyer can click on the lot and see how much it costs in tokens. Look up the conversion rate for USD to whatever currency is listed and voila! The price of virtual land in real American dollars.

Once owners have their little slice of the blockchain, it can then be monetized. They can put experiences on it that viewers/players/visitors can interact with like games, for example. Or maybe rent that space out. Or advertise for another company a la a billboard. Just like real estate in the physical world can generate cash, so can real estate in the virtual world.

Play to Earn Games

One of the newest ways people have earned cryptocurrency in the Metaverse has been play-to-earn (P2E) games. It’s exactly what it sounds like: games hosted on the Metaverse blockchain that will pay out cryptocurrency to players as they play the game.

Currently, the most popular P2E game is Axie Infinity[4]. Developed by Vietnamese startup Sky Mavis, the game appears, on the surface, to be derivative of Pokémon. A turn-based battle game, the player can control three teams of cartoon creatures known as Axies, each with a power derived from their specific type (reptile, plant, bird, etc.).

What makes this different is that Axies themselves are unique objects that live on the blockchain. In order to create new Axies, players must “breed” them – in this case, meaning that they must spend tokens earned in game or purchased on an exchange. By winning battles or selling Axies, players can earn tokens. Those tokens can then be sold for real dollars.

That’s the makings of an entire economy living inside a platform based on cuddly monsters punching each other.

The Metaverse Going Forward

Facebook has pushed its chips in on the Metaverse to the tune of billions, not expecting to see profit anytime soon[5]. Robust economies already exist – games like Fortnite are hosting concerts within the game that attract thousands of consumers. Businesses make money by going to where the people are, selling their goods and/or services, thus making money for investors, and so on. That cycle has gone on since the Persian bazaars of a thousand years ago.

The term Metaverse may not even exist in a decade. Does anyone say “World Wide Web” anymore to describe the Internet? Did they ever? Regardless of what it’s called, the Metaverse will exist in some form or another for the foreseeable future.

Tron suit not included.

Joe Gallina

 


 

I believe working as a collective will always yield stronger results than working alone. Everyone possesses their own unique perspectives, creativity, and problem-solving abilities, making it possible for the entire team to drive towards a goal. It is this collaborative, teamwork driven mentality that attracted me to Coyle. The desire to work with great people, initiate, innovate, and ultimately help people with their own personal goals is what drives me every day.

I earned a degree in Finance from the University of Illinois at Chicago in 2017. Afterwards, I worked for Morgan Stanley and Bank of America/Merrill Lynch, obtaining both Series 7 and 66 licenses. At Merrill, I was on the self-directed side of the business, exposing me to every aspect of the financial services industry.

Outside of the office, I enjoy checking out the latest movies and TV shows, and am always looking for an offbeat suggestion. During football season you’ll find me watching the Bears and simultaneously wishing I could stop watching the Bears because of the stress it creates on my heart – but I’m a fan through and through and just can’t quit!

www.coylefinancial.com
847-441-5644 | coyle@coylefinancial.com

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All information is from sources deemed reliable, but no warranty is made to its accuracy or completeness.   This material is being provided for informational or educational purposes only, and does not take into account the investment objectives or financial situation of any client or prospective client.  The information is not intended as investment advice, and is not a recommendation to buy, sell, or invest in any particular investment or market segment.  Those seeking information regarding their particular investment needs should contact a financial professional.  Coyle, our employees, or our clients, may or may not be invested in any individual securities or market segments discussed in this material.  The opinions expressed were current as of the date of posting but are subject to change without notice due to market, political, or economic conditions. All investments involve risk, including loss of principal.  Past performance is not a guarantee of future results.

Copyright © 2022 Coyle Financial Counsel.  All rights reserved.

[1] https://www.indexcoop.com/mvi

[2] https://metaverse.properties

[3] https://fortune.com/2021/12/03/metaverse-interest-spikes-digital-real-estate-prices/

[4] https://markets.businessinsider.com/news/currencies/top-nft-collection-q3-axie-infinity-crypto-gaming-expands-2021-10?utm_source=markets&utm_medium=ingest

[5] https://www.reuters.com/technology/facebook-revenue-misses-estimates-apples-privacy-rules-bite-2021-10-25/

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