Ever since internet company Facebook (NASDAQ:) changed its name to “Meta”, the Metaverse has been on everyone’s lips. Many observers see the new digital space as the next stage in the evolution of the World Wide Web. But while big players like Meta are still working on implementation, the crypto world has already gone a step further. In the Metaverse project, users are already discovering the digital world of tomorrow. And: thanks to a sophisticated business model, more and more companies are now looking for a presence in the virtual space.
Current market assessment by Michael B. Bußhaus, founder and managing director of justTRADE
Virtual worlds are hot: the metaverse and games are currently considered the biggest growth market for the blockchain industry alongside decentralized finance (DeFi). Many observers see the metaverse as the constant development of social networks and our current Web 2.0. The world’s largest crypto asset manager, Grayscale, expects $1 trillion in annual revenue from Metaverse projects in the near future. In the long term, the new digital space should even compete with Internet companies such as Alphabet (NASDAQ:), which together represent a market value of approximately 15 trillion US dollars. At least that’s the prognosis. Although it will take a long time until then, it is already clear who is at the forefront of the battle for the Metaverse.
With a market cap of around $2.5 billion, virtual reality platform Decentraland (MANA) is one of the frontrunners in the Metaverse space. In the virtual world, users buy land that they can build with digital real estate or resell. Big, well-known brands quickly discovered the potential of the brave new world of blockchain. South Korean mobile phone maker Samsung (F:) opened its first virtual flagship store in Decentraland and fashion house Dolce & Gabana celebrated its first digital fashion week there.
New Identity in the Metaverse
The Metaverse is considered by many to be “the next big thing”, and it’s no coincidence that the internet group Facebook has Meta renamed. But what does the term metaverse really mean? Basically, the Metaverse is a virtual world where users interact with their virtual environment. The focus is on consistent digital experiences. While our current Web 2.0 offers many isolated spaces – such as meetings, streaming, virtual shopping or gaming – the metaverse wants to combine these individual experiences into a cohesive virtual world.
The Metaverse is meant to be a digital space in which people build a second virtual identity, or at least that’s the idea. This new world should hardly be inferior to our “real” world; it should look especially real through the use of VR headsets. While traditional internet companies like Meta are still in the phase of implementing this virtual playground, the Metaverse concept has long since begun in the crypto world. Decentraland shows how it can work.
Digital real estate: a rare commodity
Decentraland is an open virtual world based on the Ethereum blockchain. Users can visit digital community halls, shopping malls, art galleries, concerts and other virtual events with their characters and purchase digital goods there. An example: last year, Decentraland concluded a cooperation with Sotheby. In the digital galleries of the famous auction house, users can admire, buy and exchange works of art. There’s a reason for the growing presence of established brands and institutions making their way onto the digital scene. Decentraland is not only a technological playground for early Metaverse attempts, but also offers companies and users an exciting business model.
With its wide range of virtual experiences, Decentraland can convey the feeling of limitlessness. But in principle, the opposite happens: the world of Decentraland is limited. And that makes them particularly interesting for investors. The virtual area is divided into 90,061 plots, each corresponding to an area of 256 square meters. Each of these areas can be traded in the form of a so-called non-fungible token (NFT). In principle, NFTs can represent any asset – but cannot be exchanged for other assets of the same type. While one euro can be exchanged for another euro or one bitcoin for another, an NFT is not easily exchangeable for another NFT. Each of these tokens is therefore unique and irreplaceable – they are stored on the blockchain and clarify uniqueness, authenticity and authorship. Since all transactions are processed through , users benefit from the fast and secure infrastructure of the popular network.
Mana: Decentraland’s own cryptocurrency
Each package in Decentraland is therefore unique and can be traded as NFT – for example on well-known NFT marketplaces such as Opensea. Since the digital space is limited, the demand for NFT lands is correspondingly high. Companies want to buy virtual land as quickly as possible to be present in Decentraland’s Metaverse and place advertising there, for example. A crypto investor recently bought a virtual property for around US$2.4 million. However, the deal was not paid for in US currency, but in the form of Decentraland’s own cryptocurrency called Mana.
Mana is the token used to pay for everything in Decentraland – from clothes for your digital character to artwork, festival tickets, and land. With the increase in the number of users and the growing popularity of services and products in the metaverse, the demand for the token is also expected to increase. While a mana token was still worth around $0.07 at the start of 2021, the price has meanwhile risen to over $5. The mana currency is currently listed at around 1.80 US dollars, probably also due to the weakening of the overall market.
The rapid development of the industry is also visible elsewhere: while metaverse and gaming apps like Decentraland were still a niche in the crypto sector a year ago, they are now an integral part of the industry. Metaverse and blockchain gaming NFTs accounted for about 20% of the $23 billion NFT market last year, according to tracking platform DappRadar. The development shows: At least in the blockchain realm, the metaverse is long overdue.
About the Author
Michael B. Bußhaus is the founder and managing director of justTRADE. He was Managing Director of onvista bank and, as Head of Brokerage, was responsible for all securities activities of comdirect bank AG until 01/2019.
About justTRADE
justTRADE is an online broker from Frankfurt that offers traders to trade securities and cryptos consistently for an order commission of €0.00 (plus standard market spreads) and deposit offers. Over 500,000 securities – stocks, ETFs, ETCs, wikifolios, certificates, warrants and leveraged products can now be traded on a mobile device via iOS and Android or via the desktop browser, both traded via three exchanges ( LS Exchange, Quotrix and Tradegate Exchange) and over-the-counter four trading partners (Citi, Société Générale, UBS (SIX:) and Vontobel). Around 1,500 ETFs, ETCs and ETPs from ten providers (21Shares, Amundi, DWS, iShares, GlobalX, Lyxor, Vanguard, VanEck, UBS and WisdomTree) complete the range. With the ability to trade all 21 crypto stocks available from the same repository as all securities, justTRADE offers its clients an unprecedented offer in Germany. In addition, a total of approximately 200 securities are eligible for a savings plan at justTRADE.