Amid the pandemic, locked at home with days that seem the same, it’s no wonder the virtual world seems more appealing. Web 3.0, the apparent next iteration of the internet, is the next big thing. With Web 3, people, machines and businesses will trade value and information with others around thw world who they don’t know or explicitly trust, without an intermediary. Why does this matter? Becasuse it’s expected to fundamentally expand the scale and scope of both human interactions far beyond what we can imagine today.
Web 3, and specifically the metaverse, is the seeing major hype right now in news and on social media. Ark Invest’s Cathie Wood calls metaverse a “big idea that will infiltrate every sector.” Money is flowing as a result.
VC fund New Frontier Paradigm rraised $2.5 billion, in the largest vehicle of its kind for Web 3. FTX, Lightspeed, and Solana Ventures will invest $100 million in Web 3 gaming. Unilayer Capital has created a $10 million VC fund targeting the metaverse. And Citigroup alumni Matt Zhang launched a $1.5 billion venture that received interest from insituational inversrtors including pensions and family offices.
Meanwhile, VC firm Grayscale is predicting the metaverse could support an economy worth $1 trillion.
Companies that support the infrastructure of Web 3 will benefit from all this, including most obviously Roblox, a metaverse that has 43 million users daily. Unity Software, a content development platform, and Cloudflare, a content delivery network will also benefit. Nvidia, which sells chips to gaming and data centers, will also benefit.
There will be money to be made within the metaverse as well, and the rush for land has already started. Leading virtual worlds saw more than $100 million in “real estate” transactions in a single week. Sandbox took in more than $86 million. Metaverses can use their own digital currency, creating in-world economies, so this is all just the beginning.
Owners of this virtual land can unlock a potential passive revenue stream. Since these plots of digital land give players the ability to collect and gather resources in exchange for potential monetary value, or earn passively simply by owning it, crypto enthusiasts see it as a viable and lucrative investment for the long term.
There will be legal issues will all this, however, including cybersecurity, the need for strong agreements between companies. And who will moderate the content on the metaverse?
How much of this is hype remains to seen. Certainly, there will be booms and busts along the way. But based on the money flowing in and the wide range aspects to the sector, it clearly deserves attention.
In coming posts, we’ll look where the money is going: Who is investing in the Web3? How much? And what areas are growing fast? How can an individual tap into all this? The goal will be to learn and stay just a bit ahead of the curve.