Before we take a look at how to invest in the Metaverse, we will first answer the question – what is Metaverse? According to XR Today, the Metaverse can be defined as a simulated digital environment that uses augmented reality (AR), virtual reality (VR), and blockchain, along with concepts from social media, to create spaces for rich user interaction mimicking the real world. So, it is a digital world where your avatar can interact with others just as you do in the real world. In the Metaverse, you can pretty much do anything that you do in real life – hang out with friends, play games, watch a concert, go for sightseeing, buy real estate, and so on. If you want to visualize what the Metaverse could look like, watch the Steven Spielberg movie called ‘Ready Player One’.
While the Metaverse has been touted to be the next big thing in tech for a while, it made an entry into the mainstream with Facebook rebranding itself as Meta Platforms. Interestingly, the term was first conceived by science fiction writer Neal Stephenson in his novel ‘Snow Crash’, published in 1992. The Metaverse provides a once-in-a-generation investment opportunity. According to Bloomberg, the global revenue opportunity from the Metaverse could approach $800 billion by 2024.
How to directly invest in Metaverse
Recently, two of the most exciting areas to invest in have been cryptocurrencies and the Metaverse. These two, however, are not mutually exclusive. You can invest in cryptocurrencies and the Metaverse at the same time through Metaverse crypto or Metaverse cryptocurrencies. These would refer to cryptocurrencies and other digital assets like NFTs in the Metaverse space. Some Metaverse tokens include Decentraland (MANA), Sandbox (SAND), and Enjin (Enj). To invest in Metaverse in India, you can buy these tokens directly from any major crypto exchange. You can trade such assets across the Metaverse, buy products and services and redeem them in the physical world to make a profit. However, directly buying NFTs and other assets come with additional risks and added volatility. Another way of investing directly in the Metaverse is to purchase virtual land or real estate in the Metaverse. It has been estimated that the real estate sales in the Metaverse could double to $2 billion in 2022 and investors are paying millions of dollars to buy real estate in the Metaverse. One of the most popular Metaverses currently is one called Axie Infinity.
How to invest in the Metaverse through stocks of publicly traded companies
You can also indirectly invest in the Metaverse by investing in stocks of publicly traded companies that operate in the Metaverse space. Currently, most of the leading companies in this space are listed in the US. (You can find out how to invest in US stocks from India here).
These could be companies that engage in activities or provide products, services, technologies, or technological capabilities that help in enabling the Metaverse. While some companies like Meta are building high-end VR glasses which will help take the Metaverse experience to the next level, others like Nvidia are behind providing the computing power that will fuel the Metaverse. Also, since the Metaverse will be hosted in the cloud, cloud service providers like Amazon and Microsoft will also play a role. Even Nike is preparing for the Metaverse through a series of patents which could make it a leader as far as virtual sneakers and sporting apparel in the Metaverse is concerned. Gaming companies such as Roblox also provide an interesting opportunity to get exposure to the Metaverse.
How to invest in the Metaverse through ETFs
Investing in different stocks may be a time-consuming process for new investors. Also, since the Metaverse is in a nascent stage, it is not easy to understand the business of the Metaverse and that of companies in this space. As a beginner, you can invest in the Metaverse through ETFs like the Roundhill Ball Metaverse ETF which provides you exposure to companies that develop infrastructure that is essential to the Metaverse (like Nvidia), gaming engines responsible for the creation of virtual worlds (like Roblox), and also leaders in content, commerce, and social for the Metaverse (like Tencent). The fund has among its top holdings Nvidia Corporation, Microsoft Corporation, Meta Platforms Inc., Roblox Corporation, Tencent Holdings Limited, and Unity Software Inc. The ETF charges an expense ratio of 0.59%.
Things to keep in mind
It is important to remember that investments in the Metaverse may not be for everyone. Also, having a high concentration of investments in stocks of companies that are in the Metaverse space can be risky. When investing in the Metaverse, you should invest based on your risk appetite and make sure that your portfolio is well diversified.