Vol 11: The limits of reality are your own imagination 🎮
Newsletter covering the latest in fashion, tech and wellness
Happy Friday! I hope you are hungry, because here’s some food for thought:
🍕 Facebook recently rebranded to “Meta” to take a position in the ‘metaverse’
🍔 Both Ethereum and Bitcoin are significantly up this week, with price targets of ~10x current levels in the long-run
🌭 Sotheby’s launches an NFT-only marketplace (metaverse.sothebys.com)
🍟 Tencent shares its metaverse strategy
Whether you are a n00b or 1337, the above movements are not random (+ fueled by the effects of covid-19 which has placed hundreds of millions in “zoom school” or remote work). Is the metaverse the next evolutionary step of the internet?
Some questions I will try to address: 1) What is the ‘metaverse’? 2) Who will build it? 3) How can you participate?
"These days, the reality is a bummer. Everyone is looking for a way to escape."
'Ready Player One', 2018.
What is the ‘metaverse’? ♾️
Definition
Originally coined in the 1992 novel “Snow Crash” by Neal Stephenson, there is no one definition of the “metaverse”. In short, the metaverse ("meta", meaning "beyond”, + "universe") is often referred to as the “hypothesized next iteration of the internet”. It supports decentralized, persistent online 3D virtual environments, meaning a virtual space within digital spaces such as online games, social media, and virtual reality. Think of the ‘Metaverse’ as an augmented version of the real world, where you can hang out with friends, work, visit places, buy things, and attend events.
“Anything that makes the virtual world more real and the real world more rich with virtual experiences can become part of the metaverse.”
Pony Ma, Tencent earnings call (Wednesday, 10 November)
History
Economists historically divided time spent into work or leisure. The concept of leisure has been expanded significantly over time as more activities have evolved (e.g. gaming) and humans are increasingly fascinated by visiting fictional worlds. Initially, we visited fictional worlds via books which offered short immersive visits using our own imagination. Then as cost and complexity of special effects and sci-fi content reduced, movies took over, offering a longer immersive visit into a fictional world. Now with hyper-local data centers, lower latency and edge computing, this could enable us to experience a fictional world, “the metaverse”, in a more immersive way.
Source: proprietary
The metaverse offers the next step in the gaming evolution, albeit it is difficult to perfectly depict given it requires numerous new technologies, protocols, companies, innovations and discoveries to work.
Source: proprietary, Matthew Ball.
According to Matthew Ball, the metaverse will have the following features:
Persistent , indefinite continuity without pause or resets
Synchronous and live
Existing in real time
Without a cap on concurrent participation
Fully functioning economy
Omni present , across digital / physical world, private / public networks and open / closed platforms
Unprecedented interoperability, across games and platform
Incredible range of contributors, combining both private individuals and public companies
If you are interested in learning more, I highly recommend to read the “Metaverse Primer” by futurist Matthew Ball.
Who will build it? ⚙️
There are many different ways to portray the metaverse ecosystem, for example the CB Insights Metaverse Market Map, Eight Core Categories Stack by Matthew Ball and the Seven Layer Ecosystem (below). I prefer the latter, albeit the structure could also be depicted as the below which sorts the layers based on “input” (“how”) and output (“what”):
Content, commerce, community: this category comprises the “what”: what we interact with, create, find and pay for: Content (“Experiences”), Commerce (“Creator Economy”), Community (“Discovery”, “Human Interface”).
Backbone: this category comprises the “how”: how the metaverse is enabled (“Decentralization”), how it is structured (“Infrastructure”) and created (“Spatial Computing”).
Seven layer ecosystem (source: Jon Radoff)
The layers comprise the below summarized features and key players:
Experiences: What we engage with (e.g. games, social, live music, eSports, shopping etc.)
Key players: Fortnite, EA Games, Sony / PlayStation
Discovery: How to find an experience (e.g. ad networks, social, curation, ratings, stores, agents)
Key players: Facebook, Discord
Creator Economy: Tools that enable people to create and monetize things (e.g. design tools, asset marketplaces, commerce)
Key players: Unity, Epic Games, Roblox, Beamable
Spatial computing: Software that converts things into 3D and allow us to interact with them (e.g. 3D engines, VR/AR/XR, UI, geospatial mapping)
Key players: Unity, Unreal Engine, Google AI
Decentralization: Enablers of a permissionless, distributed and more democratized structure. Computing power will become less like a datacenter and move closer to a utility on a grid (e.g. edge computing, AI, microservices, blockchain)
Key players: Microsoft
Human Interface: Hardware to access and experience the metaverse (e.g. mobile, wearables, voice, neural)
Key players: Oculus, Xbox, Apple
Infrastructure: Semiconductors, material science, cloud computing and telco networks that make it possible to construct any of the higher layers (e.g. 5G, Wi-Fi, Cloud, GPUs, materials)
Key players: Amazon, Nvidia
To learn more about the details of the layers, Jon Radoff has also written a thorough guide on Medium (The Metaverse Value Chain).
Some of the key players (random order):
Unity: 3D development platform (fully-integrated 3D engine and design studio for game developers)
Epic Games: Game-property owner (e.g. Fortnite), 3D engine (Unreal) and game store (Epic Games launcher, $300m+ in exclusive third-party games)
EA Games: Major game publisher (e.g. Battlefield), called NFT and blockchain games 'the future of our industry' last week
Sony / PlayStation: Major gaming / entertainment platform (PlayStation)
Microsoft / Xbox: Major gaming / entertainment platform (Xbox), social interactions / meetings (Mesh, Teams), one of the players poised to capitalize the most on the metaverse opportunity
Roblox: Gaming platform and developer tools comprising two programmes and one app (Roblox Player, Roblox Studio and ROBLOX)
Meta (Facebook): Social, wearables (Oculus) and experiences (despite Facebook’s recent rebranding and $10bn investment into the metaverse, some recent news claim privacy is a big obstacle for Meta to take pole position)
Discord: Social interactions
Apple: One of the undisputed leaders in hardware and wearables (controls the phone, Apple Watch), as well as AppStore
Nvidia: Hardware manufacturer, producing GPUs, nForce motherboards, Quadro workstations, ++
Google: Open source AI, social (Google Hangouts), Google Play store, search engine, and other features
Amazon: Data centers and Amazon Web Services (“AWS”) offering e.g. on-demand cloud computing platforms and APIs. Powers hundreds of thousands of businesses in 190 countries.
How can you participate? 🕹️
Disclaimer: The information contained herein is not, and shall not constitute an offer to sell, a solicitation of an offer to buy or an offer to purchase any securities, nor should it be deemed to be an offer, or a solicitation of an offer, to purchase or sell any investment product or service.
There are many ways to participate in the creation of the metaverse, both indirectly and directly. You can participate indirectly through investing into one of the following strategies, subject to your time horizon and preferred maturity stage of investing. Gaming publishers, hardware and engine companies are likely to launch ICOs (initial coin offering) and initial DEX offering (IDO) token sales, enabling investors to join long before these companies go public.
1. Indirect: Cryptocurrencies
For early-stage investments, cryptocurrencies may offer the best options. Consistent with Matthew Ball’s depiction of the metaverse, payments (support of digital payment processes, platforms, and operations) is an important part of the metaverse. However, “crypto” or “blockchain technologies” span and/or drive several categories in the metaverse, as they compute, interchange tools and standards, and are used for payments.
In the real world (also referring to “traditional” payments), non-cash payments are “running” on different rails (picture a train as money, and the rail being the infrastructure in which money is sent), such as ACH (“Automated Clearing House”), CHIPs (“Clearing House Interbank Payment System”), Credit Cards, PayPal, and peer-to-peer payment solutions. Each of these rails have different requirements, advantages and disadvantages. In the metaverse, where the majority of the economy involves virtual-only goods and services bought via purely digital transactions (and thus low marginal cost), payment rails should be “better”.
Here is a short summary of some common / emerging coins I follow:
Bitcoin: the oldest (created in 2008) and most popular digital currency in the crypto universe offering open source P2P money
Ethereum: the second most popular (created in 2013), also open source, but unlike bitcoin which is a digital currency, Ethereum is a blockchain based network that also runs the currency by the same name. Ethereum could simplify global payments as it facilitates other applications on its decentralized infrastructure, which enables smart contracts between two parties without the need for intermediaries.
Loopring: offers an Ethereum layer-2 scaling solution (the primary blockchain network for NFT collectibles) rumored to be powering GameStop’s NFT marketplace. This is an interesting solution as it enables faster, cheaper, more energy-efficient transactions as they are initially handled on a separate blockchain before “rolling" them up and introducing / committing them onto the Ethereum main net which requires more energy.
Other coins
2. Indirect: Create a portfolio
If you are bullish on the metaverse, you can create a stock portfolio of companies which are poised to have an integral role in enabling and creating the metaverse:
These seven names are often referred to as the top metaverse stocks to invest in:
Facebook Inc. (MVRS)
Microsoft Corp. (MSFT)
Unity Software Inc. (U)
Roblox Corp. (RBLX)
Amazon.com Inc. (AMZN)
Autodesk Inc. (ADSK)
Nvidia Corp. (NVDA)
Otherwise, Matthew Ball, the pioneer in groundbreaking metaverse content (founder of Roundhill Investments), has also created a metaverse ETF alongside Jacob Navok, CEO of Genvid Technologies.
3. Direct: Make a start-up
Whether you’re a coder, operator, gaming enthusiast, fashion connoisseur, engineer or none of the above, everyone has a skill that could be useful in the metaverse, just as in the real world. We are still in the early days, and there is thus big potential in starting something today. The metaverse may seem like a dystopia to some, but as it remains to be undefined, we could help shape it into the community we want.