Good Parenting; Investment In The Metaverse For Our Kids' Future
According to Dictionary.com, the definition of Metaverse is, a shared, realistic, and immersive computer simulation of the real world or other possible worlds, in which people participate as digital avatars. Theoretically, The Metaverse, much like our universe, is the sum of all things. But the Metaverse these days, means the sum of all things...digital.
Quickly coming to cultural vocabulary, a "Metaverse" is essentially an online platform for socializing, networking, collaboration, entertainment, etcetera - anything that can be a simulation. It’s, in essence, the world, re-made digitally. Think The Matrix, where the protagonist learns his body is controlled by machines, and his life is all a simulation. Metaverses today are the budding simulations of tomorrow. And Facebook's "Metaverse" is the most famous.
At first, this new concept is nerve-racking to get your head around, but to go even further - it could be a fantastic way to invest for the future.
How can one tangibly get into the 'Metaverse'?
When referring to "The Metaverse," many people think of a futuristic society in which people will have virtual reality headsets, and they'll be able to create whatever they want. It’s digital universe, just like we build things in the real world like cars and hotels, and fashion-lines, we’ll build things in the digital world. And while we break down what the Metaverse is and isn’t in our article, “NFTs, Crypto, Metaverse and more - What Digital Investments To Watch in 2022”, we ask ourselves, can we make money in the Metaverse? Or more importantly, can we make strong, stable, and fruitful investments for our families in the Metaverse?
Big Tech’s engineers created an online browser capable of navigating and building a digital universe which can be accessed on your desktop or mobile phone. Similar to logging in through Chrome or Safari or Firefox, you search online for a Metaverse you would like to connect to. Here are three:
Once on the website, you first click to Get Started or Download the browser of choice. Once logged in, you'll have a homepage, or platform. Here, you can create your Avatar, or character. You can often create multiple characters. It should feel like you're out-of-your-element and playing a video game. But in Metaverses, there are real stakes.
Once you’ve downloaded the platform and login, you’re in the Metaverse.
Once you’re in, it’s a replication of the tangible world, only all digital. And just like 100 years ago, you could invest in real estate, and then you could invest in real estate and the S&P 500, now you can invest in real estate, the S&P 500, and the Metaverse. Today, you can invest in three classes of assets in the Metaverse:
- Virtual Real Estate: As its name suggests, virtual real estate is a real-world property that exists virtually through programs known as "virtual world engines."
- Shares: There are many Metaverses, and you can invest in each one at-large. So, say you used one of the examples above and downloaded, "decentraland.org". The creators of Decentraland are a formed company. You can buy shares in the company itself. Similar to investing in a game.
- Other Digital Assets: You can purchase “tangible items” in the Metaverse. For example, instead of buying real Nike shoes, you can buy digital Nike shoes. Over time, you haven’t stored, cleaned, or moved those Nikes, but they could increase in value. These Metaverse “tangible items” are just like owning real products from an investor’s stand-point.
So, Why is this hypothetically a good investment?
General growth: Because there is no natural way to get into the Metaverse, it takes awhile to get your head around investing in it. However, if one hypothesizes that the Metaverse will only grow in use over time, i.e., more people use it every day or more companies begin integrating their services online with tech trends and technologies built on top of Decentraland - its economy will only grow.
Established Company Investments: Brands, Venture Capitalists, and other commercial investors will invest in the Metaverses being created. Inorder to justify those formal, corporate investments, the creators have to showcase an audience, and the audience must be large enough to justify their costs. Those Brands (Nike, Gucci, Porche, etc.), VCs and other commercial investors have vetted the audience-size and profitability of the Metaverse. So if they are pouring time and resources into the Metaverse, the likelihood of the technology growing is high. They want more users to enter the market, interact with their products, and keep the community growing.Timing: Publicly known Metaverses, are very very young. The closest analogy is if this was 1792 and the New York Stock Exchange was being founded. There are all sorts of unknowns, but the fact that we're at the very beginnings of the creations of Metaverses and their asset class creations, means the likelihood of growth and expansion is strong.
Just like gold, real estate, or stocks in P&G, as long as the fictional world has value and people believe it will continue to have value, its economy can be just as wealthy as other countries, e.g., South Korea’s GDP (gross domestic product) today.
But, Why is this hypothetically a bad investment?
Value: Investing in anything that exists in virtual reality can be risky as there is no way for you to gauge how much value something has until there's actual demand for it. For example, a person can't predict if a new App. will be popular until after it’s released.
Regulation: There’s also a huge lack of regulation (especially in virtual securities). So it it goes belly-up, that’s it - professionals can’t be held liable. Also, there are no laws or rules protecting users from companies who could potentially act against their interests. For example, companies could deny users access to their accounts or deleting all of their investments while they're out of the Metaverse. This could be close to impossible to prove happened and/or of what USD value?
The good news is; because of this risk involved with investing in virtual securities/companies, many corporations have started developing Virtual Liability Insurance (VLI) policies that can protect you, should you ever invest money into something and then suffer losses as a result.
How does this affect my kids' future?
As a parent, you want to protect your kids. You want to make sure their future is secure. Will you be able to fund their college? Will they have enough resources to start their own family? Metaverses are just starting to become publicly known and generally accepted. We're at a tipping point right now. But your kids will likely grow up to know Metaverses as just a way of life. They won't be uncommon, confusing, or off-putting. The fact that Metaverses are wide-open for investment could mean this is the moment Mom or Dad had the fortitude to see the substantial financial opportunities in a new, but fruitful way-of-life.
I'm not a financial advisor. But I am here to hi-light a potential opportunity. For thousands of years, people have invested in gold and silver, real estate, and other tangible assets to grow their wealth. The stock market came along and investors - individuals as well as companies, could invest in the non-tangible stocks, mutual funds, trusts, bonds, and many many other non-tanigble assets. Metaverses are a new way to invest. You can invest in digital real estate, stock in a Metaverse game itself, and “tangible products” in these new digital worlds.
This technology opens up a whole new class of financial opportunity, and a whole new need for regulations. While the Metaverse concept is so young and new to the public, assets are theoretically low-cost, only to exponentially amplify as more people invest in Metaverses. Though it’s uncomfortable, and the value is unknown, investing in a Metaverse could be just the ticket to substantial wealth later.