Over the last 20 years, investors have created new ways to invest. Technology has given us the ability to think outside this realm of possibility and project our future (and funding) into new, exciting virtual adventures. A part of Facebook’s new identity, the metaverse could be a new investment opportunity. Keep reading to learn more.
What Is the Metaverse?
For years, virtual reality has evolved into a new tech frontier where users can make their own path in a new world. These new realities, coupled with the unfettered access to information that the internet provides, have untied into one universe – the metaverse.
In simple terms, the metaverse is a virtual reality created by Facebook’s parent company, Meta. It combines key elements of virtual reality with the power of social media so people can meet and connect in an entirely different (virtual) universe.
The metaverse works by using elements of virtual reality, holograms, artificial intelligence, and NFTs to create a world on top of the existing one. Instead of a video game, users can experience a new reality superimposed on the existing one to experience something new without leaving the comfort of home.
Potential
Meta has said that in the metaverse, users can go to work, the grocery store, and school while participating in everyday tasks without leaving their homes. Their avatars can take a spaceship to a board meeting or transport to a friend’s house.
These concepts aren’t new, and companies like Nintendo and Roblox have made headway in the virtual world long before Meta. Between the millions of video game and virtual reality users on other platforms, the potential for a completely new venture is irresistible.
Users could buy products, sell goods, and trade on a virtual stock market if they chose to. The possibilities are endless because the limitations of reality don’t bog down the metaverse. The user can own their virtual life by turning digital assets into NFTs to buy and sell with cryptocurrency. It’s a free market in a virtual world.
Investment Opportunities
Many companies have already put a stake in the metaverse. Performers like Lil Nas X have hosted virtual concerts and made real money off of virtual tickets. Sotheby’s announced their intention to start selling art NFTs in the metaverse while couture brands like Givenchy and Gucci plan on holding virtual fashion shows.
The newest edition to the metaverse economy is real estate. Land ownership is a powerful thing in the real world, and metaverse users take advantage of the benefits in their virtual realities. A handful of investors have already spent millions for digital land on the off chance that they could live next to celebrities.
The introduction of virtual real estate is new, but many investors and metaverse enthusiasts are optimistic that it will take off. Individual investors can invest in metaverse companies and coding centers or purchase NFTs.
Roundhill Ball Metaverse ETF is a metaverse exclusive stock market where investors can bid, buy, and sell to make money. Property buying is in its infancy, but digital assets are a great way to get started on your metaverse journey.
Should I Invest in the Metaverse?
Like cryptocurrency and NFTs, the metaverse is a new and exciting investment opportunity. The question is, should you invest?
In general, crypto, non-fungible tokens, and metaverse properties are outside the realm of possibility for those with little to no seed money. These ventures need capital to take off, and most people simply can’t provide that level of financial commitment. If you cannot invest in the stock market (in the real world), it’s probably not the best idea to invest in a virtual market.
There’s a level of uncertainty about the future of blockchain technologies that makes some people nervous. The U.S. government is considering regulating cryptocurrency, making the market plunge into obscurity. NFTs are also new, and it’s unclear whether the market is stable.
At this point, crypto and NFTs exist in a bubble where people are buying at a high rate, and it seems like the trends are only going up. But once the wealthy classes have their fill, what will the market look like for the average investor?
Prices for Ethereum and ape series NFTs are astronomical, and their value seems to be ever-increasing. Whenever we see a trend like this, there are concerns that the bubble will pop, eventually leaving investors to pick up the pieces.
The Dotcom Bubble
The dot-com bubble in the late 1990s is a cautionary tale for prospective investors. At the dawn of the 21st century, digital technology burst onto the scene in a big way. Companies rushed to create online versions of brick-and-mortar stores, and entrepreneurs flooded the internet with new websites.
Stock in dot-com companies shot up and dominated the stock market until 2000 when things took a turn. Major market contributors placed huge sell orders on their stocks, causing investors to panic sell, and the market plummeted in a few short weeks.
Hundreds of dot-com businesses shuttered in the following few years, leaving a vacuum in the market. The bubble burst, and investors lost millions.
Some are anticipating a similar rise and fall for blockchain technology. It’s too early to call, but investors should be wary of putting too much stock in a digital reality.
Other Concerns
Individual investors should also research how their metaverse investment yields will be taxed. In general, the IRS will tax cryptocurrency yields as regular investments. However, it’s unclear how the IRS will address property value in the metaverse.
Personal property and real estate taxes are a big deal and can have negative implications should the owner/investor fail to file their taxes correctly. There is no news regarding taxation and the metaverse, but that could be a massive hurdle for the industry.
Real World Tax Defense
Taxes are a fact of life, but when things go wrong, they can be devastating. If you are under a tax audit from the IRS, you need to contact an attorney. Whether the IRS is auditing your cryptocurrency yields or real-world property taxes, our attorneys may be able to help.
Contact Buchalter & Pelphrey Attorneys At Law to find out how we can help you.
Let our family help yours.