The metaverse is a burgeoning sector in the crypto space and the virtual world. It stands at the forefront of crypto enthusiasts and gamers’ attention following Facebook’s rebranding to Meta. The prices of metaverse coins skyrocketed as a result. Between early 2020 and 2021, metaverse projects have gained ten times active user traction.
In November 2021, Grayscale, a crypto investment giant, released “The metaverse, Web 3.0 Virtual Cloud Economies” report mainly focusing on the metaverse and its future potential. Grayscale is bullish on the metaverse potential upon receiving mainstream acceptance and market opportunity. Grayscale’s bullish report highlighted the growth potential of the metaverse, projecting the metaverse to be worth $1 Trillion in a few years. In addition, the report explored the burgeoning sector from the angle of open metaverse worlds, supported by interconnected crypto-economy.
The data on all-time active metaverse wallets from early 2020 to June 2021 shows the metaverse active user base grew ten times. The Grayscale report emphasizes the new online experience created by integrating the metaverse platforms with crypto coins, DeFi, decentralized cloud storage, and decentralized governance. In return, new active users are attracted to the metaverse. According to the report, venture capitalists are also experimenting with the emerging trend. Fundraising for blockchain gaming in Q3 of 2020, for example, accrued to over a billion, which was 12% of the entire crypto space fundraising total in that quarter. In addition, the sector ranked as the top sub-sector in the NFT and Web 3.0 category. The burgeoning industry shows the potential of becoming mainstream in a few years if the growth rate maintains the current trajectory.
Metaverse: $1 trillion market opportunity
Tech giants like Facebook, Apple, and Microsoft are on the verge of developing products that back the emerging sector. Facebook, for instance, rebranded to Meta, a project aimed at integrating virtual reality, augmented reality, and social media. The project includes 3D spaces that allow users to learn, play, socialize, and even build. Conversely, Meta draws similarities to some metaverse projects in the blockchain domain like Decentraland. As a result, the gaming and crypto-backed metaverse economy boomed to all-time highs in terms of market cap and prices.
Major businesses have taken a punt at the new opportunities that virtual spaces offer, ranging from selling their hardware and software products to accessing virtual goods, advertisements, and services in the metaverse. Moreover, Microsoft aired its interest in releasing tools that support its virtual world interests in the future, like The Teams App that enables the usage of custom digital identities or avatars from 2022. Game creators are also experimenting with virtual concerts in metaverse platforms like Roblox and Epic Games.
On the flipside, minor businesses and fashion brands are also attempting to grab the limitless opportunities the metaverse brings at an early stage. Nike, for instance, is selling their merchandise to digital avatars as NFT on gaming platforms like Roblox. Nike has stores in the platform where users can purchase their virtual goods and services. On the other hand, Accenture revealed having bought thousands of Oculus glasses to train their new employees.
The Grayscale report suggests that the mass adoption of the metaverse is influenced by the emergence of NFTs, DeFi services, and Play-to-Earn games. Moreover, firms and businesses championing the tools supporting the metaverse can also be acknowledged for mass traction. While people may still be ignorant of blockchain technology and cryptocurrencies, they recognize the inevitable arrival of the metaverse.
Metaverse trend adoption
Over the years, many people have become interested in terms like crypto and NFT, while some put their bags on virtual worlds and interact, build, and spend time there. Entrepreneurs are now using blockchain technology to create financial systems, purchase and sell digital land, and make independent trustless, and permissionless management systems.
Grayscale analysts are confident about the trend’s adoption that is likely to drive metaverse to a $1 Trillion industry with rapid active user growth. Despite being a new term, many people have shown interest in knowing its elements or being associated with it. Hence, some of the investments on the metaverse can be linked to the population’s fear of missing out (FOMO).
What does the future look like for metaverse?
The report notes the key factors that could contribute to the speculated growth of the metaverse segment. Some of the factors that fuel the metaverse growth include:
- Increased leisure time
- Non-fungible tokens
- Social networks
- Aggregate funds spent on digital interests and hobbies
- Cultural move from paid games to free games
- Play-to-earn, amongst other Web 3.0 innovations.
The in-game spending model in premium virtual world games amounted to $40 billion in 2020’s global revenue alone. The gaming sector is estimated to hit hundreds of billions by 2025 from the 2020s accrued $180 billion, majorly influenced by the in-game model. According to the report, the shift from Web 2.0 metaverses to Web 3.0 iteration further accelerates the change in virtual world gaming. This is primarily due to the introduction of play-to-earn in Web 3.0 community-based metaverses.
The Web 3.0 community-based crypto metaverse benefits from the rapid productivity gains and innovation. The report asserts that the virtual worlds create a multi-million dollar opportunity for content creators and investors in both primary and secondary markets. The opportunity is achieved by eradicating go-betweens or capital controls. In addition, the crypto metaverses allow interoperability by opening digital boundaries to the free market.
Closing Remarks
The fact that metaverse bridges the gap between the virtual and the physical worlds shows its connectedness to our daily lives despite being new in town. Its adoption by global tech pundits like Facebook and Microsoft has further driven the virtual worlds to massive adoption. The market opportunity presents the metaverse with a potential to reach $1 Trillion within a couple of years.
