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The Metaverse : One Giant Step Too Far

Ask five different people what the metaverse is and you’ll get five different answers; cyberspace, a new name for Mark Zuckerberg’s empire, the dark web, virtual reality, video games…. we could go on. The thing is, no one is very sure what it is because it’s something that doesn’t actually exist yet. Right now it’s as mysterious a concept as the internet was in the 70s or social media before the advent of the smartphone.

Sure, aspects of the metaverse as a concept of what it could be, do exist now. Virtual reality, artificial intelligence and high-speed internet will all form part of a metaverse if it does come fully to fruition, however there’s nothing gluing all these elements together. Complicating matters further, the elements themselves are still evolving.

When and How will the Metaverse Evolve?

In short, it depends. If the metaverse is to be the next generation of the internet, allowing individuals to inhabit virtual 3D worlds and connect and communicate with others who aren’t in the same physical space or location, then technology has some serious catching up to do. High-speed internet will need to be available to all; bulky virtual reality (VR) headsets and wearable augmented reality (AR) will need to become smarter, lighter and more accessible to the masses and cryptocurrencies will have to overcome environmental opponents to facilitate cross-border virtual transactions on a mammoth scale.

We’re in 2022 and as much as 37% of the world’s population have never used the internet and even in developed countries, the rollout of 5G and fiber broadband networks is sketchy at best. Today’s 4G connections may just be able to handle multiplayer games like Roblox and Fortnite but to reach a point where billions of people can access and take part in a virtual world from anywhere at any time is going to need ultrafast internet; we’re talking 6G and beyond and it seems unrealistic that this would happen before the end of the decade as some have suggested.

Assuming the technology can and will catch-up, there are some huge assumptions being drowned out by the hype. Firstly, how do we know that everyone is open to hanging out in a virtual world, adopting VR and AR to work, shop and play and secondly, you’d need to buy into the futuristic vision of a bunch of tech CEOs who want to completely replace the face-to-face human experience we’ve craved during the last two years with digital versions of ourselves.

If this digital identity then becomes our one and only identity for the purposes of everyday life such as banking, managing documents, working and shopping, data privacy and control over personal data becomes a bigger concern than it already is. So much of the control over our own data and indeed, rights and civil liberties seem to have been insidiously chipped away in recent years and while it may sound extreme, some would say forfeiting privacy for technology is another step towards a totalitarian society.

Investors Scramble for a Piece of the Metaverse

Despite warnings of high stakes and big losses, investors have been scrambling to secure their own plot of virtual real estate in the metaverse. Following Facebook’s announcement that they were going all-out on metaverse, investors have recorded 400-500% profits on virtual property in the few months since.

There are already a number of platforms dedicated to trading plots of land, commercial and residential buildings in a world where you will never physically get to step in them. It sounds pretty ridiculous right but nonetheless, just like waterfront lots in the Greater Toronto Area right now, sought-after virtual plots are selling into the hundreds of thousands, even millions in some cases.

Retail plazas, art galleries and all types of commercial ‘spaces’ are being snapped up and visitors to the metaverse are not only trading property, they might be selling art or getting a residual income from a gas station, all in cryptocurrency of course. One of the biggest virtual real estate platforms, Decentraland, allows you to purchase using ETH or MANA (both newer crypto-technologies based on Bitcoin); you simply have to connect your digital crypto wallet and away you go.

Celebrities and stars have been among the first to get in on the act, utilizing the metaverse to create a duplicate of their real-world lives, host concerts for millions streamed worldwide, sell merch and throw member’s only parties. For one investor, it was worth $450,000 to scoop up a plot of virtual land next door to Snoop Dog on the ‘Sandbox’ platform where the rapper has built his own virtual world named ‘Snoopverse’.

Owning a pad next to your favorite singer could well be an impulse buy too far as investing in virtual real estate is highly speculative and high-risk. Some of the challenges dominating metaverse investing include;

  • Trading happens using Non-fungible Tokens (NFTs) or blockchain technology and the big returns on offer from early deals have led to a number of high-profile NFT scams. It’s all very high-tech but the metaverse is not immune to hacking, phishing and malicious code being dropped to gain access to your funds. On this basis, inexperienced investors need guidance to ensure they’re buying from reputable, official channels;

  • Cryptocurrencies are extremely volatile - if the currency takes a big hit, so does your investment so it’s vital to expect big fluctuations;

  • Unlike a property or piece of land in the real world, If the platform you're investing on fails and is taken offline, your investment also disappears with it.

Real World Not Quite Ready for Metaverse

As we’ve uncovered, there is no one definition of what the metaverse is because it’s a work in progress. The tech companies are doing a good job of selling a story but at least in the medium-term, the metaverse will mean some better technology for gaming and conferencing and another iteration of the internet. Only once individuals and businesses can move seamlessly and safely between online worlds with their digital belongings and VR and AR technology becomes as ubiquitous as the smartphone will we see widespread adoption.

Investing in a virtual world may be innovative and forward-thinking, exciting even, but dipping a foot in the water at this point is risky - if you can’t afford to lose, wait until the waters are a lot less muddy.

Reach out with any questions on the virtual or real-life real estate market, we’re always happy to hear from potential investors.

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