Is the metaverse the new frontier of technology?

A new virtual world is emerging. From Facebook to Meta and from Square to Block, major tech companies are moving into the metaverse and capitalizing on the future of digital assets. In part due to Facebook’s rebranding to Meta, there is more attention around the world for metaverse technology, such as Microsoft’s (MSFT) metaverse in Teams called Mesh, NVIDIA’s (NVDA) Omniverse platform, and graphics chips , and Unity’s three-dimensional (U) software. content platform Tencent (SEHK:700), the world’s largest game company, would also like to establish its own metaverse. While the metaverse, where virtual reality and reality converge, is still in its early stages, analysts at Bloomberg say it could become an $800 billion market, home to industries like gaming and advertising, as well as NFTs. and the world of fashion. from.[1]

The race for market leadership is also permeating the world of exchange-traded funds (ETFs). Since Facebook changed its name, the Roundhill Ball Metaverse ETF (META ETF) launched last June has seen its assets under management rise by more than 500% to $823 million.[2] “There is a lot of interest in metaverse technology from game companies like Roblox (RBLX), EPIC Games, and recently also Ubisoft (UBI), which launched a low-power NFT platform.[3] These types of companies are early adopters of this new technology, which gives them a head start on the potential migration to the metaverse,” said Dani Brinker, director of portfolio investments at trading platform eToro.

Investment opportunities are in the hands of enablers

Diversification will play a key role in investment choices, as a new market also carries risks. Investors will have to distinguish between participants (companies that target the metaverse and use its infrastructure) and so-called enablers, companies that host the metaverse and build its infrastructure.

Metaverse development is divided into three main phases: (1) hosting the metaverse, (2) entering the metaverse, and (3) living in the metaverse. You can also further divide development into different sectors such as games (Roblox, Unity Software), hardware (NVIDIA, Sony, LG Display), platforms (Meta Platforms [Facebook], Shopify), software (Adobe, Autodesk), payments (Coinbase), and crypto assets (Decentraland, Enjin, Sandbox). According to Dani Brinker, the investment opportunities are in the enablers.

“While there is a lot of talk about parties like Adidas, Dolce & Gabbana, Netflix and Disney also striving to push their products into the metaverse domain, the real value for investors lies in partnerships with companies like NVIDIA and Roblox. These types of companies contribute to the underlying DNA and infrastructure of the technology,” says Brinker. The partnership between Nike and Roblox, who launched their own virtual world Nikeland, a platform where users can interact, exercise and play using digital versions of themselves, exemplifies the critical role that the enabler plays. “Roblox, in this case, is the party that provides the infrastructure, which makes parties like Nike dependent on those services,” explains Brinker.

The future of the metaverse

The metaverse could expect a huge influx of capital and users. “While crypto assets will be an integral part of building the metaverse, with regards to non-fungible tokens (NFTs), we see a tokenization of real-world assets represented and traded on the blockchain,” said Brinker. As a result, 2022 is also expected to see a clash between the tech giants, who will continue to invest heavily in this technology, and the smaller blockchain and crypto-based initiatives that are leading the development of the infrastructure and DNA of the metaverse. .”

“We may be a long way from the futuristic vision of movies like ready player one or the brand new The Matrix Resurrectionsthe metaverse is already with us and offers exciting opportunities for investors.”

[1] https://www.bloomberg.com/professional/blog/metaverse-may-be-800-billion-market-next-tech-platform/

[2] https://markets.businessinsider.com/news/etf/metaverse-etf-aum-soars-facebook-name-change-top-ten-holdings-2021-12

[3] https://www.entertainmentbusiness.nl/games/ubisoft-introduceert-platform-voor-speelbare-en-energieeconomie-nfts/

[1] https://www.bloomberg.com/professional/blog/metaverse-may-be-800-billion-market-next-tech-platform/

[2] https://markets.businessinsider.com/news/etf/metaverse-etf-aum-soars-facebook-name-change-top-ten-holdings-2021-12

[3] https://www.entertainmentbusiness.nl/games/ubisoft-introduceert-platform-voor-speelbare-en-energieeconomie-nfts/

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