Disclaimer: Not financial or investment advice. Any money-related decisions you make are your full responsibility. Only you are accountable for the results.

TLDR

• The metaverse doesn’t have anything to do with one specific company.
• JPEG NFTs are by far the least interesting use case of NFT technology.
• GameFi can be profitable, but hasn’t seen serious adoption, yet.

What Does Meta Have To Do With The Metaverse, Anyway?

Well….not very much. The metaverse existed long before Facebook started focusing on it. They've even changed their name to reflect their new direction. People view their move as an attempt to capitalize on hype, and it might be. Many companies are building out their own metaverses, and Meta is just one.

The metaverse is a virtual universe where people use avatars to interact with each other. You could use these online shared spaces for communication, games, or even work. Sometimes a metaverse is in third-person, like a 2D/3D video game, but this is changing. Using virtual reality headsets allows the metaverse to be 100% immersive. Both will be popular in the future. We are seeing a shift towards the full immersion that virtual metaverses provide. Imagine joining a meeting as an architect and being able to walk around the house you designed! This is just one of the endless possibilities that the metaverse can provide.

Some popular examples of traditional metaverses are Second Life and Roblox. Blockchain metaverse projects include The Sandbox and Decentraland. Horizon Worlds is a free virtual reality metaverse. It offers an integrated game creation system and virtual concerts, among other things. This allows users to interact with others despite their actual location. Horizon worlds is very basic now. It will become much more realistic as technology and adaption increases.

Currently, most metaverses are clunky and offer poor user experience. This will improve with time. In the future, we will see lots of specialized metaverses, such as 100% digital campuses. This would allow a teacher to take the students on virtual journeys. In an upcoming article we will dive into the metaverse, and see where it can take us.

Isn’t An NFT Just A Really Expensive JPEG?

One of the most profitable NFT collections is the Bored Ape Yacht Club. The original mint cost was under $200, and they didn’t even sell out. In less than a year, the total value of buying and holding a single BAYC was well over $400,000. This ROI is bananas!

NFT stands for non-fungible token. What does that mean? Let’s talk about the word fungible.

Fungible means that something can be traded indiscriminately with another identical item. For example, if you have a one dollar bill, it has the same value as every other one dollar bill. You can trade for other one dollar bills without any concern for differences. These dollar bills are fungible.

By contrast, an NFT is a non-fungible token. Each NFT is unique. Depending on its specific characteristics, it can have a unique value.

One example might be a rare sports card. Its value comes from various traits. These are things like the condition, the specific athlete, and number of copies printed. You can think of these traits as the card’s characteristics. Even two copies of the same card can have differing values due to differences in traits.

NFT traits are like sports card traits. NFTs have a digital signature on the blockchain. Even two NFTs with otherwise identical characteristics are distinguishable by their signature. You can use this signature to verify both the authenticity and ownership of the NFT.

So what is “minting”? The term “minting” refers to publishing an NFT on the blockchain. Let’s imagine we had a JPEG that we wanted to turn into an NFT. We would mint the JPEG on our chosen blockchain. In return, we would receive a token that represents the ownership of that new NFT in our wallet. We can use the digital signature of the token to prove that our wallet owns that NFT.

Bored Ape Yacht Club isn’t only a name, it's a club! They have private parties in upscale spots with VIP treatment for all holders. So, who else is in the club? Madonna, Kevin Hart, Shaq, and Wiz Khalifa, to name a few. Owning these NFTs is one of the best ways to get access to people and places that you wouldn’t get otherwise.

NFT use cases are extremely exciting, for example:

• Sharing royalties with user-generated content creators automatically and fairly.
• Representing ownership and autheticity of real world items like cars, watches, and homes.
• Providing identity and credit ratings.
• More secure legal documents.

This doesn't even scratch the surface of what is possible…..more on these use cases in our NFT report coming soon!

GameFi…...Is Everyone Getting Rich But Me?

Most likely not, although some people definitely have.

“Play to earn” has been blowing up recently. GameFi games are like normal games, except they involve blockchains and financial incentives. This means you can earn crypto for playing video games. Some people have gotten very rich playing these games. Last year someone bought an NFT in Splinterlands for $12K that gave them more than 100% in returns. They sold it for almost $700,000 less than a year later (check it out below). 💵 💵

Splinterlands is one good example, but there are many more. Axie Infinity is the golden child of the play to earn model. At its height, Axie had almost 3 million active players. Many of them earned way more than they would have made working a full time job. Last year an entry level Axie was selling for $350. Lots of people made money and bought property from breeding and selling Axies - but even that wasn’t the real money. Buying AXS coins for 60 cents in early 2021 and selling them in early 2022 for ~$165 (Which many people did…) was a return of around 275x!! Between the price of the coin and the price of the NFTs, Axie’s market cap was able to reach almost $10 BILLION. Those are some real gains!

The reality is - and this is an unpopular opinion - these are shit game models. They aren’t sustainable. The good news? People can make money even if it’s a bad model.

Conclusion

All three areas have seen huge growth over the last few years and will continue to grow as real world application increases. But are they all just bubbles that will pop at some point? Are they just inflated gimmicks making people rich? In this series of reports, we will be diving deeper into the metaverse, NFTs, and GameFi and exploring these questions. We will also be explaining some good and bad mechanisms and what projects we think could come out as a winner in each of these areas. Comment any project you’d like us to consider, as we will look to do some deep dives after. Stay tuned!