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01 March 2022

Web 3.0: The Metaverse

Without wishing to deliver profound prophecy, in the December 2021 issue of Market Insight, we took the somewhat brave leap of choosing to discuss a concept that is so infantile, we still have little idea of its true ramifications. Put simply, the Metaverse (aka Web 3.0) is a new iteration of what we call the internet; a virtual world in which users can interact with each other using a 3D environment. Users can access this new world through conventional PCs, or (perhaps more terrifyingly) virtual reality headsets.

I would not blame you for scoffing at the idea. ‘What has this got to do with business and my investments?’ I hear you ask. Well, having heard this term (usually coupled with talk of cryptocurrencies) being thrown around the investment community over the last year, I must confess my reaction was much the same. Was it that I felt this was just another step towards humanity’s disconnection from reality? Or was it that I thought it was another fleeting fad that would not be persuasive enough to draw in users?

Both are likely true, but it was earlier this year when Facebook’s founder, Mark Zuckerberg, announced the company would be changing its name to Meta Platforms that made many sit up and listen. You have to ask yourself, would a near-trillion-dollar company with possibly the most powerful customer engagement tool the world has ever seen, gamble its entire existence on a buzzword? (See: Facebook Moves Into The Metaverse).It’s unlikely, and it got me thinking what people thought about the internet before social media and smart phones. As a noughties teenager, I remember well the days when even accessing a PC computer was reserved for the one hour a week in IT lessons at school, which was too young to be predicting the power of an online world. I can only imagine it was met with apathy by most – email in the workplace was a useful new form of communicating, but that was probably about it. Nevertheless, while writing this piece, I was reminded of a fascinating 1999 BBC Newsnight interview with the late David Bowie discussing the potential of the internet with a bemused and highly sceptical Jeremy Paxman (a quick Google search will unearth the video for those interested):

David Bowie: “The potential of what the internet is going to do to society, both good and bad, is unimaginable.”

Jeremy Paxman: “It’s simply a different delivery system though? You’re arguing about something more profound.”


David Bowie: “Oh yeah, the actual context and state of content is going to be so different to anything we envisage at the moment. Where the interplay between the user and the provider will be so in simpatico it’s going to crush our ideas of what mediums are all about.”

Quite prophetic for the tail end of the 1990s, which gives some credence to the idea that we must remain open minded to these technological changes. After all, this interview must have been viewed with great cynicism at the time, and perhaps excused as the creative imagination of an eccentric artist. Nevertheless, I think it offers a lesson that we shouldn’t shun the power of technology and never assume it will remain static.

If the last two decades are anything to go by, it would be foolish to assume the Metaverse is just another vision of the far-flung future… or one that we can ignore for now and worry about later. On the contrary, it exists in some mediums already. Primarily, online platform Decentraland has 300,000 monthly active users (growing 10x in the last few months) who are forging their own virtual lives in the Metaverse. Users can access content, buy real estate and shop for goods using virtual currency on the Ethereum blockchain (See: Building Blocks: The Metaverse).

If this all sounds silly, take a look at Sotheby’s (yes, that’s the 300-year-old London auction house), which has a virtual art gallery and auction house in Decentraland, recording an eye-watering US$7.3bn of virtual art sales (aka non-fungible tokens, or NFTs) and US$100m in revenue for the business. Or perhaps Nike, which has already submitted several trademark applications to sell virtual apparel in this alternate world (See: Meta-Street). These are giants of their industries with brands that are tightly interwoven into the fabric of our society. If they are taking this seriously, shouldn’t we?

Perhaps, though as I said at the start of this, we are not here to deliver prophetic musings, merely to report to you a theme we are seeing shape conversations about the future of many sectors we invest in: technology, gaming, retail, and property, to name a few. I’ll let you make your own mind up on whether this is the start of a revolution or just another pair of Google glasses heading straight to the graveyard of crazes.

This article was taken from the December 2021 issue of Market Insight. To subscribe to our investment publications, please visit www.redmayne.co.uk/publications.

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. The value of investments and any income derived from them may go down as well as up and you could get back less than you invested.
Web 3.0: The Metaverse
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