Since social media giant Facebook rebranded itself as Meta Platforms (FB) at the end of October, the metaverse has become pretty much the topic of conversation in business circles.
Every CEO has the impression that they are being judged by the yardstick of this new buzzword which promises a virtual world in which we will interact socially with others through avatars. We could go to a concert, to a restaurant, to an art exhibition, all while using virtual reality headsets and other technological tools.
If every company that wants to be at the forefront of technology throws the word metaverse all over the place, rare are often those who manage to give us a vision of their metaverse and even less how they intend to make money from it. Most often, they talk about creating their non-fungible tokens (NFTs) and taking a close look at cryptocurrencies.
If we can see the benefits that NFTs abound for artists and athletes for example, the question that often comes up is to know what are the economic opportunities for companies.
But the real question is probably: Who benefits from the metaverse buzz?
To answer this Dr. Owen Vaughan, the director of research at nChain, Europe’s leading data integrity and blockchain development company, observes that there is a specific vocabulary that has been created around this concept. He refers in particular to the fact that the proponents of the metaverse speak of "investing" in this new space.
"The word investment is an emotive word. It makes me think that if I mind my savings in this then over a long period of time then I will expect to make a profit. Whereas what is really happening is speculation in a technical sense, where it's people putting in money, expecting a short term profit and trading at a much higher frequency," Vaughan says. "So the language used is designed to create an emotional response that is not necessarily based on fundamental principles."
The fans of the metaverse have known in particular how to create the sense of scarcity. And like, if you don't sign up now, then you might miss out. This fear of missing out (FOMO) is at its peak in virtual real estate in particular. FOMO on getting that piece of real estate near rap legend Snoop Dogg and it might be too late in the future. So why couldn't everyone have a house next to Snoop Dogg? That's technically possible.
"They're creating artificial scarcity. And it's always risky when either the control of monetary supply in the cryptocurrency industry or the scarcity of real estate in the metaverse is controlled by a single organization. That's always a very worrying place to be because what's stopping them from whenever they feel like just inflating the supply of the money or the real estate?" Vaughan warns.
"They're trying very hard to create demand and to create this idea of scarcity and not wanting people to be late to the party. So they want people to put their money in quickly. So again, this isn't a sign of investment. It's a sign of speculation," Vaughan said.
Virtual real estate is made up of designated pieces of code in an interactive web experience. Pieces of code are partitioned to create individual “plots” within certain metaverse platforms and are made available to purchase as NFTs on the blockchain.
Sandbox, Decentraland, Cryptovoxels and Somnium are the top players in this market and real estate sales on these platforms reached $501 million in 2021, according to MetaMetric Solutions. Sales in January topped $85 million and could reach nearly $1 billion in 2022, the firm said.
"At the moment the metaverse is just an idea and it's years if not decades away from coming to reality. So for companies to make statements about the metaverse, it doesn't really cost them anything. So it's quite easy for them to say that," Vaughan argues. "So that also is something to bear in mind whenever you're researching a company that is interested in the metaverse. But what are they? What are they practically doing about that? It might not be that much."
However, he sees opportunities for sectors such as art and education. You could sign up, for example, to a course in Harvard University from wherever you are in the world. You can attend engineering laboratory, and get a practical experience that you couldn't have got outside the metaverse.
