Ep 42: I spy a metaverse
Investing in the metaverse. Ancient Empire NFTs.
Happy New Year! E ku odun! Bonne année! Feliz ano nuevo!
I started writing this edition 2 weeks ago but then I became unwell. Thankfully, I am feeling much better now. I hope 2022 brings more joy, growth and good health. Please stay safe out there.
I spy a metaverse🕵️
Steve Jobs unveiled the first iPhone 📱 15 years ago. Back then, Steve Ballmer, CEO of Microsoft famously laughed at the most expensive phone in the world ($500). Ballmer said the iPhone wouldn’t take off with business customers because it didn’t have a keyboard. The Wall Street Journal, Bloomberg, USA Today, The Guardian and even an iPod engineer joined in bashing the iPhone’s prospects. Flash forward today, over 2 billion iPhones have been sold. Recently, Apple became the first company to reach a $3 trillion valuation.
Technology adoption is difficult to predict. Experts are often wrong. We are wired to reach for negative news and naysayers. But then technology takes off much faster than expected in ways that couldn’t have been imagined.
This brings me to the metaverse.
Metaverse - the internet in 3D
The metaverse has featured in sci-fi novels since the 1970s but it surged to the popular lexicon when Facebook rebranded itself Meta. But this is not just a PR stunt. Mark Zuckerberg announced that Meta would be investing billions of dollars and hiring 10,000 people to build Facebook’s metaverse solutions.
Metaverse: dive in!
Yesterday, my wife and I were chatting about the metaverse. She described it as “the internet in 3D”. I don’t know if this is an original thought but I like the sound of it. It’s certainly easier than saying “The metaverse refers to a virtual space that is shared by different worlds, created by the combination of augmented reality, virtually-enhanced physical reality, and the Internet.”
Experience is the best teacher. So I took the plunge and went to 2 New Year Eve parties in Decentraland’s metaverse platform. Here’s a short clip.
Here are my initial thoughts:
+ Self expression: It was cool designing my own avatar and navigating the virtual world. You could completely reinvent yourself. I can see why fashion brands are heading over to the metaverse. Some people want to dress to impress in real life AND metaverse.
+ Activity 🏁: I toured an NFT museum, drove a car on a race track, climbed to the top of a couple tall buildings to survey the view and danced with a bunch of strangers. There is a ton of potential for activities. It would be cool to go to a theme park in the metaverse. But I’m gonna need to invest in some hardware so I can have an immersive experience.
+ New world: I started seeing the potential for new ways of gathering. My siblings are spread out between San Diego and London. We have monthly marathon Zoom calls to catch up. Perhaps one day we will family have reunions in a virtual replica of my parents house in Lagos, Nigeria.
+ Over hyped: I felt a bit let down. There’s been so much hype about the metaverse. I wanted to be blown away. I wasn’t. I’m also admittedly new to the scene, so maybe there’s a bit of user error. The the fact that an 8-year old played a masterpiece like Symphony No. 40 poorly does not make Mozart any less of a genius. So, I’m definitely going to spend more time exploring the metaverse. Let me know any tips you might have.
+No connections: How do you make friends in the metaverse? I was strolling around by myself. I danced in groups with strangers but I didn’t make a single connection. Maybe it wasn’t time and place. Or maybe I’m missing something. I also found a tracker to count number of people in Decentraland. There were 2,331 people logged in Decentraland at the time of writing. That’s really not a lot.
+Glitches: The user experience was a bit glitchy. It froze a couple times. I had some challenges toggling between different views. The experience reminded me how early we are. Most metaverse platforms are not even accessible on cellphones yet.
Takeaway: I don’t think we are on the cusp of mass metaverse adoption…that’s gonna take years. I do think the technology is part of our future but the user experience needs to improve, we need mobile phone access, maybe even more hardware ex headsets. I’d love to see the product roadmap. I am going to explore other metaverse platforms. I am also really curious to see what Meta has cooking. Facebook cracked the code on social media, can Meta do the same for the metaverse?
Early = Opportunity?
So what’s a guy to do if you spot an opportunity that isn’t quite ready for primetime? You invest! I’m clearly not alone here. But how should one invest? This really depends on your risk tolerance, conviction and goals. I don’t offer any financial advice, please do your own research. I’m simply sharing my current thoughts. What are yours?
Future fund 📈
My goal is to build an investment position around the metaverse theme. I’m looking to hold for 5+ years during which I hope it offers handsome returns 📈. I will achieve this by dollar cost averaging (small weekly purchases) and making more significant opportunistic investments.
For as much I talk about crypto, stocks are still the foundation of my investment strategy. I primarily buy ETFs (basket of stocks) instead of shares of individual companies. Roundhill Ball launched a metaverse ETF in 2021. It’s made up of established tech companies investing in this space. NVIDIA (gaming chips), Meta (social media), Roblox (gaming), Microsoft (diversified tech), make up 30% of the holdings. Apple, Amazon and Snap are also part of the crew. It feels like like a safe tech bet unlikely to cause heartburn. Just watch the 0.75% fees. I expect more metaverse focused ETFs to be launched this year.
When Facebook made their fateful announcement, it sent the price of metaverse related cryptos soaring sky high. For reference, decentralized metaverse platforms like Decentraland have their own cryptocurrencies. You need them to buy land, products and services. Decentraland has MANA, Sandbox has the Sand token and Axie Infinity has Axies. I hold some MANA and AXIE.
I see two categories of metaverse cryptos: established vs newbie. The established cryptos include more well known projects like Decentraland, Sandbox, Axie Infinity which have attracted some following. These are less risky with higher chance of moderate returns. The newbie cryptos like Solice are associated with untested projects that were more recently launched. They are more risky with a higher chance of outsize returns. You have to do research to find and vet these projects.
Someone spent $450k to buy land next to Snoop Dogg’s virtual house. A part of me is recoiling from sticker shock at some of the prices I’ve seen. Not all land is created equally. I also don’t feel sufficiently knowledgeable to go ahead with this investment yet. In the ideal scenario, I’d like to own land across a couple platforms - this reduces my exposure if I don’t pick a winner. Let’s see.
1. Walmart goes crypto, metaverse
The stampede of brick-and-mortar businesses diving into the metaverse just got louder. Walmart, America’s largest retailer, is reportedly launching a cryptocurrency, a collection of NFTs and a metaverse project.
I found a tweet which reportedly shows how Walmart envisions metaverse shopping:
I appreciate that they are aiming to keep up with evolving technology. It reminds me of the early days of the internet when we initially copied and pasted our analog activities onto the web but over time internet native activities and habits emerged. We are still early.
2. Arkansas offering $10k in bitcoin
It looks like the State of Arkansas has been inspired by it’s favorite daughter (Walmart). Arkansas is now offering remote tech workers $10,000 in bitcoin if you relocate there. The Walton family have also invested and elevated the arts and parks near their headquarters. A couple of my friends have vacationed in Arkansas and came back with great tales of fun and adventure across lakes, hikes and parks. So far, over 35,000 people have already applied.
3. Ancient Warriors Empire NFT
Ancient Warriors is a new NFT collection of 4,444 warriors hailing from some of the greatest African and Latin American empires in history. The decentralized empire represents the might of the Aztecs, Zulus, Inkas, and Benin Kingdoms.
The underlying goal of the project is to help onboard people of African and Latin American descent into Web 3.0 by celebrating their cultural history. I am seriously thinking about getting one of these. This project goes live on Monday Jan 17. Each NFT is expected to sell for 0.5 ETH and minting fee is 0.05 ETH.
4. Rio de Janiero goes crypto
Mayor of Rio de Janiero kicked off the year by announcing the Brazilian city would be investing 1% of its treasury in crypto. This move is not in isolation. City government is looking into receiving tax payments in bitcoin and offering discounts to citizens who do so. The mayor wants to position Rio as a leading center for crypto.
5. Banks stablecoin
Last year, the President’s Working Group on Financial Markets issued a report on stablecoins wherein they recommended Congress require stablecoin issuers to be depository insured companies. None of the leading stablecoins might this qualification. Now a consortium of US banks are launching a stablecoin. This stablecoin would be programmed for use in wallets which have been KYC-ed. I think this is an exciting development. However, the FDIC has not yet confirmed whether these bank-issued stablecoins would be insured up to $250k like fiat is. I have been thinking about the DeFi mullet (FinTech on the front and DeFi on the back). This could be a significant enabler. Stay tuned!
That’s all folks! I hope you have a wonderful week.