The metaverse entered the real world in a big way in late 2021. Facebook rebranded itself as Meta Platforms, and announced it was investing $10 billion a year there, effectively staking the future of its business on the metaverse. So what is it, and how do I invest in the metaverse?
What’s the metaverse?
Trying to describe the metaverse is a little like nailing jelly to the wall. It tends to get away on you.
In fact, that’s the whole point: the metaverse is a bundle of different things, depending on who is selling.
Among other things, the metaverse includes elements of: social media, virtual and augmented reality, online gaming, possibly supported by decentralised technologies like blockchain, cryptocurrencies, and non-fungible tokens (NFTs).
What all these strands have in common is that they help create a more immersive online world, where people can interact virtually for ever-increasing portions of their lives, typically through an avatar, or online representation of themselves.
For some, the metaverse is the next generation of the internet, Web 3.0, a multi-trillion dollar opportunity which is only just beginning. For others, it’s a lot of hype about technology in search of a purpose.
What does the metaverse mean for me?
Perhaps the best way to visualise the metaverse is to consider how you might interact with it in the future. Some applications put forward include leisure activities, from virtual reality online fitness classes to gaming and socialise in virtual reality.
Here’s a recent vision from the company formerly known as Facebook of what leisure looks like in the metaverse – via their Quest (formerly known as Oculus) virtual reality headset.
Others are looking at business applications, from online meetings and remote working, to immersive experiences to sell property, or engineering and healthcare applications with the likes of Microsoft’s mixed reality Hololens smartglasses.
Here’s Microsoft’s vision of what the Hololens can help you do, from easier motorbike assembly to more accurate medical surgery.
What these videos seem to share is a promise of an exciting but vague future. That’s a key aspect of the metaverse in 2022: no-one quite knows how it will pan out. It’s a bit like trying to imagine the internet in the late 1990s, or social media at the turn of the century. Many companies will try and fail, and some will surely win big.
So if you are looking to get some exposure to the growth of the metaverse, how can you do it?
How do I invest in the metaverse in Ireland?
As you’d expect with a set of technologies that includes a huge variety of activities, there are numerous ways you can expose your money to the potential growth of the metaverse. Some seem certain to be relevant; others are more likely to be moonshots.
Here are three ideas.
1. The infrastructure of the internet
It’s clear that the metaverse will place greater demands on the infrastructure of the internet. That means cloud storage, undersea cables, and so forth – as well as all the components that go into this infrastructure, from chipmakers to pipe-layers.
A fund like WisdomTree’s Cloud Computing could fit the bill here. This fund, created in 2019, holds the likes of Block (the digital payments business formerly known as Square) and web infrastructure and security business Cloudflare.
2. Be overweight in technology
Perhaps a more sensible approach for most investors in Ireland is to get exposure to established technology players.
These businesses have the budgets and the existing web 2.0 presence to build a strong lead in the metaverse. That might be by investing organically, or by acquiring (relatively) smaller players, as Microsoft did by buying Activision Blizzard for $68.7 billion in January, in the largest gaming acquisition in history.
A simple – and historically rewarding – way to get this exposure is via the Nasdaq 100, the US’s technology-oriented index. For most Ireland-based investors, this is our preferred option. Here’s how
3. Direct investment
Lastly there’s the option of investing directly into metaverse-focused companies. Although Moneycube believes that a fund-based approach is right for most investors it’s clear that several companies are keen to take the lead in developing the metaverse.
Above all, there is Facebook – or Meta Platforms, Inc – itself. Meta is probably the business most outwardly committed to the success of the metaverse, so it’s impossible to ignore here. And with Meta shares down more than 30% since the start of the year, it’s a lot cheaper to invest using this route than at the start of the year.
But although Meta invested $10 billion into the metaverse in 2021, and will invest a reported $15 billion in 2022, the company has invested big only to reverse course in the past – for example, its Libra crypto/ stablecoin venture which ran from 2019 before being wound up at the start of this year.
It’s a salutary reminder to end on. The metaverse is at an early stage in its development. That brings major opportunities, and the chance of big rewards as the next generation of technology leaders emerges. At the same time, it’s likely there will be some expensive failures along the way – so a fund-based approach will help you capture the trend without excessive risk in single companies.