Metaverse

Quick definition

The metaverse is a virtual world that can be accessed via the internet.

Key details

  • It is a shared virtual environment that combines elements of social media, online gaming, augmented reality (AR), virtual reality (VR), non-fungible tokens (NFTs) and other cryptocurrencies
  • Sensory inputs like sound and sight are placed onto real-world settings to create an authentic and futuristic user experience.
  • Some of the world’s biggest companies have made large bets on the future of the Metaverse, as exemplified by Facebook’s rebrand to Meta.

What is the metaverse?

The best way of explaining this is with an example. Imagine you are in your home wearing a virtual reality headset and headphones, and you are sitting at a table surrounded by avatars of your friends who are also wearing equipment at home. So, essentially, the metaverse is a completely new version of reality, allowing people to step into a new digital universe and interact with it and other people.

The word ‘metaverse’ really started to become prevalent when rumors began swirling that Facebook – one of the world’s largest tech companies – was set to change its name to Meta to be more reflective of their new focus on the metaverse and the technology behind it. This name change was made official in late 2021.

CEO Mark Zuckerberg firmly believes that the metaverse is the future of human interaction, stating in his 2021 Founder’s Letter “In the metaverse, you’ll be able to do almost anything you can imagine—get together with friends and family, work, learn, play, shop, create—as well as completely new experiences that don’t really fit how we think about computers or phones today…In this future, you will be able to teleport instantly as a hologram to be at the office without a commute, at a concert with friends, or in your parent’s living room to catch up.” 

How does the metaverse work?

The metaverse functions with an advanced version of virtual/augmented reality technology, combined with some of the latest and most powerful communications technology to allow for maximum connectivity.

All of the things that occupy the metaverse are designed. Architects, fashion designers, and artists are all able to contribute to the metaverse by designing digital homes, apparel, and collectable art. So, if you purchase an NFT of a painting by one of your favourite artists, you will be able to place it in your virtual house and invite others around to see it.

The items that occupy the virtual world – including land, buildings, avatars and even names – can be bought and sold, and this will usually be done with cryptocurrency, providing a layer of security and anonymity. In essence, the metaverse functions by completely reimagining the relationship between fiction and reality.

Will the metaverse succeed?

While some might be sceptical about the metaverse’s likelihood of success, it is rare that seasoned tech veterans like Zuckerberg make a bad call on the direction society is heading in. Moreover, with the surge in popularity of decentralised finance (DeFi), NFTs and blockchain-based games, there are numerous factors contributing to metaverse adoption.

In addition, numerous high profile clothing brands – including Dolce & Gabbana, Balenciaga, Charli Cohen, Clinique, and Rebecca Minkoff – have launched exclusive products into the metaverse. This demonstrates that the technology is being taken extremely seriously by institutional investors.

With Meta investing $50 million on ‘global research and program partners to build the metaverse in a responsible way,’ around 10,000 new high-skilled jobs are set to be created in the European Union. The sheer level of investment in infrastructure going on here is indicative of a new industry that should be taken very seriously.

How to invest in the metaverse

The main ways to invest in the metaverse are purchasing cryptocurrencies that can be used for payments, investing in NFTs, or buying metaverse stocks or metaverse ETFs.

Should I invest in the metaverse?

If you believe in the technology and anticipate strong demand from the market, and you are encouraged by the resources that major tech firms are ploughing into the sector, the metaverse could be an exciting area to invest in. You can have a look at our comprehensive guide about investing in Meta here. Just be prepared for some volatility along the way because with new technology like this, uncertainty is inevitable.

Where can I learn more?

To find out more about the metaverse, check out our investing hub page for links to all the resources you need. You can also learn more by checking out our cryptocurrency investing hub.


Fact-checking & references

Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.

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Charlie Hancox
Financial writer
Alongside his passion for trading, Charlie has represented Great Britain and won national championships as a water polo player, and as a budding film director, has… read more.