Meta Platforms (formerly Facebook) will begin trading under the symbol MVRS in just a few weeks. The rationale behind it is that it better reflects the company’s focus on augmented and virtual reality along with a whole host of immersive web technology.
The social media properties Meta owns will retain the same names and branding, making this change similar to Google’s corporate shift to Alphabet (GOOGL).
Since the announcement, Microsoft (MSFT) has also announced its plans to expand into the “metaverse.” But what exactly does that mean, and what does it mean for investors?
The term “metaverse” was coined by sci-fi author Neal Stephenson in his 1992 novel Snow Crash and is probably best represented in the recent novel/film Ready Player One. Both present a digital world overlaying a dystopian real world in which characters choose to live primarily online. This may seem far-fetched at first glance, but most readers are already operating in or are familiar with some iteration of the metaverse.
Twitter, for example, is a form of the metaverse. Users have profile pictures that serve as “avatars” (their representation in the digital space) and interact with other people entirely online. The popular games Roblox and Fortnite are more robust examples of a metaverse, and both include limited digital ownership of avatars and in-game assets.
Ownership, specifically verifiable ownership, is the next and most monetizable aspect of the growth of the metaverse. Twitter is already working on updates to allow users to verify their ownership of the images they use as profile pictures. This is insignificant if your profile picture is just a picture of yourself but is very significant if your profile picture is a $100,000 NFT (non-fungible token), such as a Bored Ape Yacht Club.
Why?
Verifiable ownership is the difference between owning the Mona Lisa and a convincing reproduction. The value of the Mona Lisa is not the image itself, but the collective acknowledgment that it is unique and valuable. It’s not far off from Twitter’s existing practice of verifying accounts with a blue checkmark; however, the upcoming changes will rely on blockchain technology (the same blockchain technology that powers cryptocurrencies) to verify ownership.
Put simply, the metaverse is a digital space in which you have verifiable ownership of unique digital assets.
So, what is the metaverse going to look like for users? Based on their recent demos, Meta will be offering a somewhat cartoonish virtual reality space that will allow you to interact with friends, family, coworkers, etc. You’ll be able to build out virtual offices and homes, virtual clubs and venues, play games, and buy unique virtual assets, likely with a cryptocurrency that either already exists or (more likely in my opinion) that Meta is developing.
None of these features will be unique to Meta. In fact, you can already find the same experiences in existing places like Sandbox and Decentraland.
What differentiates Meta’s efforts is the company’s resources and prevalence. Facebook has billions of users worldwide and, in some places, it is the only way to access the internet at all. In fact, Facebook offered data subsidies to millions of users in Africa and South America in order to become the de facto access point to the internet for those users.
The fear, among cryptocurrency traders and blockchain developers, is that Meta will create a “walled garden,” a place that offers a premium virtual experience in a highly centralized environment. In that case, Meta would allow easy, low-cost access but maintain its current censorship controls and data harvesting practices, which would allow it to monetize a new virtual economy the way it monetizes our existing digital economy.
I personally support a decentralized and democratized metaverse. That being said, the cost of transactions on decentralized blockchains and the technical knowledge required both serve as significant barriers to entry. A low-cost, centralized point of access, the “walled garden” if you will, appears far more likely to onboard millions or billions of users than the existing, disparate, competing metaverses that are currently duking it out in cyberspace.
What is the metaverse now? Expensive, difficult to navigate, highly segmented, reliant on multiple competing blockchain technologies.
What is the metaverse going to be with Meta? Inexpensive, user-friendly, centralized, based on a singular blockchain.
Facebook is spending billions of dollars toward its transition to Meta and is making that bet fairly early in the development phase of what promises to be a transformative technological evolution. As much as it pains me to write this, I believe this is exactly the right bet at exactly the right time to fuel decades of growth for the company.
The company has committed billions over the coming years in the hopes of giving itself the early-mover advantage, which is a high-risk/reward proposition. A new leader could come along, or better tech could arrive (Facebook did it to Myspace after all), but I would target Meta Platforms (as the company is now known) as a long-term accumulation target and a more conservative play on blockchain growth than direct investment in highly volatile cryptocurrencies.
Do you think cryptocurrencies and blockchain tech are here to stay or are they just a flash in the pan?