Metaverse Week - Transcending the Virtual into Reality - Fast!

Unless you’ve been shying away from mainstream media, odds are you will have heard of the “metaverse”. While some are actively engaging in this virtual space, others have yet to be given a real opportunity to understand the metaverse – or whether it could be a viable investment opportunity.

This is something London based events group “Metaverse Week” aims to address, organising real life events for those with an interest in or curiosity surrounding virtual reality and the opportunities it presents (whether financial or otherwise). The founder of Metaverse Week, Balbir Judge and marketing strategist, Cerasela Vlad, curate differently themed weeks, for example most recently Film Metaverse Week in London which explored the growing interplay between virtual reality and the film industry. Events are hosted at a variety of venues from outdoor garden spaces to plush Soho private members’ clubs.

The Metaverse Week events act as an entrepreneurial stage and information hub. I’ve attended several and have been genuinely intrigued by the diversity of individuals present. I’ve enjoyed speaking with varied individuals, particularly those in the creative space (such as graphic animators and artists) who are pouring their artistic soul into virtual art to reach new audiences. There is also no shortage of entrepreneurs promoting their metaverse ventures but thankfully they do not push attendees to invest. In short, Metaverse Week events are a suitable place for anyone – because when you learn how the metaverse will likely impact our lives in the decade ahead, it’s worth being informed.

For those newer to the concept, the metaverse (coming from “Meta” [beyond] and “Verse” [universe]) is a computer-generated universe that offers immersive gameplay, social interaction, and artistic expression, usually accessed via a virtual/augmented reality headset. Your metaverse character (“avatar”) can socialise with friends or attend live events. You could be transported to a football pitch as your favourite team kicks off or appear on stage with your preferred band/artist who is playing live to millions around the world. In 2020, Travis Scott hosted a virtual concert (image below) on Fortnite which recorded the highest number of attendees in event/concert history with 12.3 million people attending virtually. DJ Marshmello and Ariana Grande are other artists who have held virtual concerts on Fortnite.

More than any online initiative in the past, the metaverse is being developed into a functioning de-centralised economy – and herein lies the investment opportunity. In the metaverse, cryptocurrencies (or digital currencies) are used to buy virtual goods. NFTs (tokens) can be used as keys to access special online spaces and can take the form of many things including digital art. Substantial amounts are already being deployed to buy land in the metaverse – digital land! HSBC is one such purchaser. In March 2022, in the same week HSBC announced its planned closure of 69 physical UK branches, HSBC purchased a plot of digital land in The Sandbox – a 3D game maker platform – where it is building a virtual stadium, offering shared screen experiences for gamers, sports enthusiasts and entrepreneurs. Another term you may hear being used in conjunction with the metaverse is “Web3” which derives from Ethereum founder Gavin Wood, referring to a "decentralized online ecosystem based on blockchain”.

If you are unconvinced as to the financial viability of the metaverse, what comes next might be described as your “reality check”. Despite the current “crypto winter”, Bloomberg Intelligence predicts the metaverse market will reach $800 billion by 2024. Companies are speaking more about the metaverse in their earnings reports and in particular the benefit of getting involved now. Blackrock (the veritable giant of asset management with $10 trillion AUM) stated in a recently published metaverse report from 3rd May 2022 that they “believe this move to the metaverse has significant implications for investors and – even if the metaverse isn’t mainstream until later this decade – the investment opportunities are here now”. They state in the same report that “initial opportunities might be found in companies that will supply components for – and assemble – the?next generation hardware such as augmented reality glasses”. CBI Insights produced a helpful guide to some of the companies supporting the expansion of the metaverse – see guide at bottom.

Technologically, a normal phone/computer screen is not going to fully facilitate the metaverse. Instead, as Blackrock mention above, easily available high quality virtual reality headsets, augmented reality glasses and powerful 5G mobile networks will enable the transition. It should be noted that Apple are already working on the hardware needed to fully support the metaverse and we’re all aware that Facebook (who even changed its name to “Meta Platforms” in their attempt to monopolise the space) is heavily invested. Other big investors in the metaverse include Microsoft and Disney, who are onboarding virtual reality and immersive technology in their theme parks.

There are many issues to consider over the coming years as the metaverse takes hold, one of which is ethics. How confident can a person transacting in the metaverse be that no criminal activity is being facilitated by their purchase? The blockchain (digital ledger) stores assets and transacts them. While it is highly encrypted and therefore almost impossible to compromise, the blockchain is not performing fraud checks/due diligence akin to real world transactions.

I spoke about this point at a Metaverse Week event at One Canada Square, Canary Wharf in June with Thomas Tallis, an Oslo based strategic adviser to a company called IAMX. He/IAMX believes the solution to lack of verification available is the use of a Decentralised Identifier (“DID”) which enables a person (or any entity) to prove their identity without having to rely on third parties or external authorities. In this scenario, the firm (IAMX) creates a digital folder, which they state is approved by the World Wide Web Consortium (W3C) and could be used on 42 different blockchains, to verify an identity. Here, the privately owned firm, IAMX, performs its own KYC (Know Your Client) either using the identity wallet they have created for you in their ecosystem or by using pre-authenticated data, derived from telecoms partners. However way you look at it, this gives a firm like IAMX – and its ecosystem – certain prowess, akin to a government agency, particularly when IAMX decide whether to grant you the DID. If interested, IAMX website iamx.id has further details on DIDs.

It’s even worth considering a scenario where identify fraud takes place, whether a firm like IAMX could even detect fraudulent documents. Also, what recourse could a person have against the DID provider if they have been disadvantaged by someone who was given a DID by them under false pretences. What jurisdiction would enter into such determinations in the decentralised world?

It’s worth noting however that individuals will continue to engage in metaverse transactions and the above concerns will unlikely deter the majority from continuing to use – and finance – the space.

Another such question is the environmental impact of the metaverse and NFTs. There are conflicting views on this – some state that the metaverse will reduce the need for business travel via the introduction of more virtual meetings, thereby diminishing pollution. Others argue that the method of NFT production is harmful to the environment due to the large amount of electricity needed to process the associated blockchain transactions. Again, Metaverse Week events are a great forum to raise such issues, not least because of the high calibre and knowledge base of the speakers/participants present.

Film Metaverse Week attracted influential speakers from both the film and business world alike including the original investor in Alibaba Group - Charles Xue, still the largest venture capital investor in China, fund manager and CEO of Oxford University Accelerator, Abbas Kazmi, managing 100 million USD seeking to invest in innovative startups. There were artists such as Sabrina Mariena who specialises in digital oil painting NFTs and fashion designer Linxi Zhu who co-founded Formless which helps designers reach more audiences with augmented reality technology.

The technological world continues to evolve and the belief is strong amongst many that the metaverse will be more than a transient gimmick.

If you want to learn more about upcoming events then visit the Metaverse Week LinkedIn page or website metaverse-week.com. Metaverse Week is sponsored by Phoenix Community Capital and Spectrum NFT.

Please note the above is for information purposes only and does not constitute investment advice.

The below graphic is sourced from CBI insights. https://www.cbinsights.com/research/metaverse-market-map

Company names are for illustrative purposes only and do not represent investment/stock recommendations.

Article sources;

https://www.marketingdive.com/news/fortnite-virtual-rap-concert-draws-record-123m-attendees/576781

https://www.reuters.com/business/finance/hsbc-buys-virtual-plot-land-digital-push-2022-03-17

https://www.wired.com/story/web3-gavin-wood-interview

https://www.bloomberg.com/professional/blog/metaverse-may-be-800-billion-market-next-tech-platform

https://www.blackrock.com/uk/solutions/step-into-the-metaverse