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The development of Metaversen is influenced by the search for irrational innovation, the pursuit of the crowd, and the effect of this “internet power” addiction.

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The forecast for the economic potential of the metaversum is really optimistic. According to PwC, the total market value in 2030 will reach $ 1.5 trillion. Speaking of Goldman Sachs – small – $ 12 trillion – Mirosław Ciesielski notes on the pages of the Financial Observer.

What is Metaverse?

The answer to the question of what is metaverse is not easy. It is probably the easiest to describe it as Internet 2.0. This is, for example, a three-dimensional, alternative reality that can be experienced thanks to special VR (virtual reality) glasses. In a “traditional” computer game, the player uses the mouse to move his character as seen on a computer screen. In Metavers, we move our whole body by controlling our virtual counterpart (avataremx). Better and better technology aims to deceive our brains and convince them that we really are in this virtual world.

Better and better technology aims to deceive our brains and convince them that we really are in this virtual world.

Metaverse is an idea, but it is better to use the plural when talking about its implementation. Because there are many meta-universes with all kinds of properties. For example, NFT Worlds is a collection of 10,000 virtual reality games built with Minecraft. These realities, created by their NFT owners, allow them to work in the virtual world.

However, the most popular virtual universe is the Sandbox game, which allows you to buy virtual land plots for a specially created cryptocurrency SAND; and Decentraland. The latter art, programming (applications), etc. allows you to sell. It is also possible to buy virtual land using MANA cryptocurrency and then use it for profit.

Virtual real estate

Decentraland, Sandbox, Somnium Space and Cryptovoxels dominate the virtual real estate market. They have 268,645 plots of land with the highest prices on the market. In the first place, at least in the spring of 2022, is the Sandbox, where a plot of land (LAND) costs about $ 11,000. However, this is an average figure, because sometimes the ratings are higher.

In 2021, Sandbox’s total transaction volume was $ 350 million, three times that of Decentraland ($ 110 million and 21,000 transactions). The virtual plot of land in the sandbox consists of more than 160,000 plots of 96 x 96 meters.

Although the creators of the sandbox could potentially create an unlimited virtual universe, they chose a different solution. According to the industry portal, both “land” and other virtual “resources” there are limited, which leads to an increase in prices.

In January 2021, an investor interested in buying a “plot” in the world of Sandbox had to spend $ 100. By the end of December 2021, after a huge increase, the price of such a “plot” reached $ 15,000. In addition to businesses (often, but not just related to marketing, media, or cryptocurrency), the land was also acquired by the famous Snoop Dogg, who intends to use it to promote his personal brand. There was an uproar in the media, and as a result, people threw themselves on the ground for $ 450,000 to be next to a celebrity in the virtual world.

However, this is not the only example of mania in the market. After all, at the end of 2021, a virtual plot of land in Sanbox was sold for $ 4.3 million. The purchase of a luxury yacht for $ 650,000 was equally astonishing.

In turn, in the competitive virtual universe of Decentraland, at the end of 2021, someone bought a plot of land intended for fashion advertising. She has invested $ 2.4 million in the Fashion Street Estate in Decentraland.

Is virtual better than real?

For these amounts you can buy at least a few real homes. So why does anyone prefer virtual substitutes? After all, there is a simple difference between virtual land and real land – only the latter can be planted with grain that will feed a real person. There is a clear difference between a virtual home and a real home: only the latter will provide shelter from rain or frost. In order for someone to have a quiet fun in the metavers, he must have a real refuge in advance. On the contrary, this rule does not work.

In order for someone to have a quiet fun in the metavers, he must have a real refuge in advance. On the contrary, this rule does not work.

However, a fan of new technologies may say that “digital homes should not be lived in, but can be used to advertise, promote creativity or create various digital products.” Are you sure you can, or is it happening? Does the acquisition of virtual land serve any non-financial purpose? Yes. But rarely. As noted above in the Sandbox report Metaverse Analysis of Land Prices, “Most transactions are either long-term investments. […] or speculation […] Very little is being done to make efficient use of land to create virtual buildings, games or other experiences.

Signs of speculative foam

Thus, if investors do not use virtual lands to create valuable goods (material or digital), perhaps these lands are worthless in themselves. Or less valuable than it first appears. Once the investors and speculators understand this, the bubble will burst. The situation is similar to Bitcoin, which is used mainly for speculation or “investment” (although it is called a “cryptocurrency”), not for payment.

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It should also be noted that people like Warren Buffett or Bill Gates do not invest in metavers. At least nothing is known about it. In the case of the former, it can still be accused of hatred of technology and technology companies (a weak argument at a time when 38.1% of Berkshire Hathaway’s portfolio was acquired by Apple). What about the founder of Microsoft and the guru of many IT professionals? Well, he doesn’t invest in virtual land, but he loves real land. Things got to the point where he and his wife became the largest landowners in the United States.

The logic of the founder of Microsoft is simple – there will be more people and the amount of land is stable. Real land is good for humankind, and its supply is limited.

Meanwhile, the situation is completely different in the case of metaversum. The creativity of developers can lead to the creation of an infinite number of virtual lands. The only solution is to present an artificial rarity of goods in a certain metaversion (like the creators of Sandbox).

However, no one can guarantee that this is a specific game, a token associated with the metaverse, or a “cryptocurrency” that will survive the next 5 or 10 years. Most likely, it will be “won” by a better, more modern colleague. This is similar to the situation with the Internet bubble – the Internet itself survived, but most of the first Internet companies failed to do so (see point-com bubble at the turn of the century).

To follow the innovation and the crowd

Even if the laws of economics and common sense prevail in the end, it may still be a long time before this happens. A high-speed train called Metaversum will take some of the lucky ones to the “wealth station”. The whimsical and erratic nature of man will help him in this.

Artificial intelligence is an opportunity to increase GDP

Behavioral economists seem to be investigating these errors ex officio. One of the things they discovered is the so-called innovation effect. In short, we prefer new sensations because they are new. There are countless examples here, and they go beyond the economy. For example, one study found that the innovation of a sports team moving to a new stadium increased its audience by 22% in its first year. Even changing the form of informing customers about energy consumption has probably helped to influence them. They began to save more – note Omar I. Asensio and Magali A. Delmas. People love innovation for innovation. Therefore, yesterday’s newspaper goes to the trash, and today’s newspaper is sold in the kiosk, and the portal, which is updated every 15 minutes, is gaining the greatest popularity.

Similarly, when investing – people prefer to invest in tokens, meta-universes, cryptocurrencies, Tesla shares, rather than very cheap shares of, for example, a water company or some city cleaning company. This largely explains speculative bubbles such as virtual “space” and virtual “objects”.

What’s worse is that when some people are maniacs, others follow them. This is a widespread effect known to behavioral economists. After some people invest in virtual “homes”, others can do it just because they did before. This influence is, of course, amplified when we make a “popular” or “influential” decision, especially if we approach it as an authority (the part of the brain responsible for independent decision-making when we switch to listening to authority). turns off “).

Metaversum and addiction risk

A darker factor that can support metaversum is our addiction. It is known that alcohol, drugs, as well as computer games in the brain secrete dopamine – a neurotransmitter responsible for pleasure. Man wants to enjoy it again and depends on its source. This explains the dependence on various digital distractions. However, if modern computer games are addictive, how much more will the brain work (or will it work) for an improved, more “real” metadata that provides more powerful experiences.

A darker factor that can support metaversum is our addiction.

As we read on the Family Addiction Specialist Addiction Treatment Center website, metaverse is a digital world on steroids.

“We expect that all virtual interactions with phones, tablets and computers will be more intense and stimulating, looking more realistic than our current experience,” the source said. The author compares the metaversion here with cocaine or heroin, which gives a very fast and strong feeling.

Interestingly, former Facebook “product manager” Frances Haugen also told the Associated Press he noted to the radical dependency that metaversion will lead to (and by the way, the corporate threat – now … called Meta – has more personal information).

It is cognitive errors (innovation search and herd mentality), as well as addiction, that can contribute to the development of the metaverse market and the earnings of some investors. The earnings of most of the participants in this new mania are very uncertain, depending on chance (choosing the right company / game / miracle to survive) and, in my opinion, ethically questionable.

The text was created for informational and entertainment purposes. This is not an investment recommendation.

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