In April 2020, rapper Travis Scott brought over 27.7 million Fortnite players together to watch him perform a concert within a Fortnite game. Nearly a year later, a digital collage by artist Beeple sold for $69.3 million in NFT form. Now, Facebook’s new chief technology officer Andrew Bosworth is helping the social media platform emerge into a full-blown “metaverse” company.
If you hear the word “metaverse,” that just means a virtual world. It sounds futuristic, but if you think about it, much of our lives are already lived online via communities and platforms. The rise of gaming, digital experiences, digital collectibles, and more, are bringing more and more IRL experiences into the virtual world. This shift has implications on the way businesses think about building their companies in the future.
More than just virtual reality or an online platform, the larger metaverse is major. Even more, it could pose an opportunity for modern investors.
- Though the term “metaverse” doesn’t have one specific definition, it often refers to a complex web of virtual worlds and platforms.
- The blockchain is important to the metaverse, as it powers things such as NFT marketplaces and cryptocurrencies.
- A metaverse is not just one virtual world platform, video game, or tool, but rather an interconnected network of experiences, devices, tools, and infrastructure.
- The term was coined by author Neal Stephenson in the novel Snow Crash, in which avatars of actual people exist within a 3D virtual world.
- Some worry that the metaverse is a ruse for tech companies to sidestep regulations since authorities are still behind on monitoring Facebook and other social media giants.
What does metaverse really mean?
There isn’t a singular definition for metaverse as it encompasses a wide array of virtual and digital experiences.
Look to the book Snow Crash by Neal Stephenson for the first official record of the term “metaverse.” Multiple other science-fiction media creations also mention it, including 2011’s Ready Player One.
“The Metaverse is an expansive network of persistent, real-time rendered 3D worlds and simulations that support continuity of identity, objects, history, payments, and entitlements, and can be experienced synchronously by an effectively unlimited number of users, each with an individual sense of presence.” – Matthew Ball, a venture capitalist who penned a series of articles called, “The Metaverse Primer”
Facebook has recently formed its own executive team to focus entirely on development of the metaverse, as part of its virtual-reality arm, Reality Labs. In July, CEO Mark Zuckerberg stated that within five years he expects Facebook to be a metaverse company, not a social media company. It calls the metaverse “a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you.”
Virtual reality (VR) and augmented reality (AR) are two technologies essential to the metaverse.
Other aspects of the metaverse may include real-time 3D computer graphics, personalized avatars, person-to-person social interactions, and the exchange of virtual goods for currency.
How is the metaverse different from virtual reality?
This can be a confusing distinction to make, but Matthew Ball says, “Virtual reality is merely a way to experience the metaverse.” By that explanation, virtual reality is a part of the metaverse, but there is much more to it than that.
Perhaps the metaverse is more akin to a “massive communal cyberspace, linking augmented reality and virtual reality together, enabling avatars to hop seamlessly from one activity to the next,” as The Washington Post puts it. While virtual reality is certainly a crucial facet of the metaverse, it’s an oversimplification to equate the metaverse with virtual reality alone.
Take a look at these metaverse stocks—most of which are not “pure” metaverse stocks but develop hardware or software to power the metaverse:
- Alphabet (NASDAQ: GOOG, GOOGL): Investing in augmented reality
- Fastly (NYSE: FSLY): An edge computing infrastructure-as-a-service (IaaS) platform
- Unity Software (NYSE: U): Provides support for VR technologies
- Facebook (NASDAQ: FB): The social media platform has branched into VR with Oculus and its app Horizon Workrooms
- Nvidia (NASDAQ: NVDA): A semiconductor company whose chips may power servers and centralized computers
- Roblox (NYSE: RBLX): A VR that already contains a basic metaverse
- Sony (NYSE: SONY): A company with gaming consoles and VR headsets
- Autodesk (NASDAQ: ADSK): Software firm with SaaS and software being used to design virtual worlds
- Shopify (NYSE: SHOP): E-commerce payment services company with an NFT platform and an AR app called Primer
- Roundhill Ball Metaverse ETF (META): A brand-new thematic ETF founded by venture capitalist Matthew Ball
Why does the metaverse matter?
In a cynical way, the metaverse is viewed by some as a means of escaping regulations. Some, like researcher Joan Donovan, think “As long as you can make technology seem fresh and new and cool, you can avoid regulation.” After all, if authorities don’t understand the metaverse, how can they impose rules upon it?
As it becomes more commonplace to see non-fungible token (NFT) trading, virtual avatar attendance at events, and cryptocurrency transactions, it’s clear the metaverse is moving forward.
A somewhat simplified explanation of the metaverse is this: It’s the internet, but so much more. Matthew Ball claims in his essays, “We can guess that the Metaverse will revolutionize nearly every industry and function.” It has the potential to impact payment services, healthcare, entertainment, consumer products, labor, and the development of new industries.
The full metaverse may be decades away, with many technological advancements and business shifts yet to come. While games like Fortnite and Roblox, or platforms like Facebook and Geocities, may seem a tempting explanation for the metaverse, it’s much more nuanced.
According to Kayvon Tehranian, founder and CEO of NFT marketplace Foundation, the metaverse may be a chance to improve what the creators of the internet got wrong. The New York Times reported Tehranian calling blockchain technology the key to the metaverse, and people’s engagement with it secondary.
Much like the gradual shifts of emergent technologies in the past, we may not recognize the tectonic movement toward the metaverse in real-time. Some are skeptical as to whether the metaverse will actually matter in a few years. Others believe it will happen over time, building a sort of framework for a society that’s more interconnected than ever before.
Whatever side you’re on, one thing is obviously real: The investments people are making into the metaverse and all its adjacent components.