Investing in the metaverse may be an idea too abstract for many, but at a time when Instagram and TikTok form a central part of many people's lives, is it really so hard to believe that ownership of our digital assets could become the next big trend?
The metaverse encompasses our online identity, images, songs, online purchases, even the clothes we might want to purchase for our avatar.
It has the potential to serve as a verification tool for art work or designer clothes as it tracks every single step of the product for the duration of its lifetime.
But is it an investment? Daniel Gee, managing director of Pello Capital, and owner of gamings company Ludus, speaks to FTAdviser In Focus about the metaverse's investment potential and why it is more than likely that it will become part of our daily lives.
FTA: What exactly do we mean when we talk about the metaverse as an investor?
DG: Metaverse is really the the evolution from Web 2 to Web 3. It's become a bit of a broad umbrella to really signify any types of Web 3 technology. So the core concepts are really proof of ownership, proof of copyright, and actually owning your data.
So instead of just producing – Web 1 was in effect static, one-way communication; Web 2 was the next iteration with the things like social media, two-way integration across platforms – Web 3 is actually the ownership of that data and communication.
FTA: So it's a way of tracking and verifying people's data?
DG: Non-fungible tokens are in effect proof of ownership of content, and that content could be anything, it could be me taking a photo of myself now and minting that as an NFT. I get royalties to that.
And when you think about royalties in music, art, sports, it's really tough. It's been an issue for music labels for years and years. How can we really track, for example, streams of a song, views of a piece of art, sales of a piece of art, if it's not being done through a Christie's or Sotheby's, how do we log that?
NFTs have kind of solved that problem by giving a centralised solution, saying every time something happens it's logged, it sits within this piece of content.
So really, if you buy an NFT you aren't just buying a picture, you're buying the history that comes along with that picture.
FTA: How does an investor invest in the metaverse?
DG: There's lots of interesting ways we can invest. What we're seeing at the moment with cryptocurrency is a really condensed cycle of adoption. There are ETFs, there are huge banks buying plots of land in Decentraland. So it's kind of moving really, really quickly.
The piece that is missing is the education piece; talking to people about how you can get exposure, how you can maintain a level of safety that you will get with traditional assets.