Blockchain Blog 23: NFT | Metaverse— Market Opportunity

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Coinmonks

9 min readFeb 24, 2022

Crypto cloud economies are the next emerging market investment frontier and the Metaverse is at the forefront of this Web 3.0 internet evolution. The Metaverse is a set of interconnected, experiential, 3D virtual worlds where people located anywhere can socialize in real-time to form a persistent, user-owned, internet economy spanning the digital and physical worlds. The Metaverse is still emerging, but many key components have started to take shape and are revolutionizing everything from e-commerce to media & entertainment, and even real estate.

The Metaverse Value-Chain

When it comes to describing the metaverse, definitions and opinions abound. And while it’s difficult to put something as vast, conceptual, and, frankly, still emerging as the metaverse into quantifiable terms, Jon Radoff, entrepreneur, author, and game designer, breaks it down logically and thoroughly in The Metaverse Value-Chain

He moves up the value chain from infrastructure at the bottom to experience at the top, stopping at human interface, decentralization, spatial computing, creator economy, and discovery along the way.

A common framework is necessary for Radoff’s view of the metaverse. He writes:

“And while there will be many proprietary (and very fun) theme parks in the metaverse, I’m even more excited by the opportunity in the Switzerlands: a metaverse powered by a robust creator-economy enabled through decentralization.”

Metaverse Market

The Metaverse is still taking shape, but Web 3.0 opens virtual world crypto
networks are offering a glimpse of what the future of the internet may hold. The market opportunity for bringing the Metaverse to life may be worth over
$1 trillion in annual revenue and may compete with Web 2.0 companies worth ~$15 trillion in market value today. This potential has attracted companies like Facebook to pivot towards the Metaverse, which may serve as a catalyst for other Web 2.0 tech giants and investors to follow.

Mapping The Metaverse

An enthusiast, named Kaspar, who is an artist, and creator in Web3, is quite optimistic about the future of NFTs and Metaverse. He has mapped the Metaverse based on the association of Ethereum, DeFi, and NFT.

He has tweeted a thread where he has simplified the key terms in the metaverse ecosystem. Click here to read his entire thread.

NOTE: I do not agree or disagree on any one of them, I am just putting them here just because it gives a general idea about particular terms, and he has also tagged the Twitter handles of some of the cryptocurrencies which are part of the Metaverse ecosystem.

The Meta Thesis

The internet has always been about connecting people. Over the past three
decades, internet technology has evolved, and the way we all interact with the
the web has evolved with it. Much has changed, but three key eras of online-based communities could be thought of as:
• Web 1.0 — Netscape connected us online
• Web 2.0 — Facebook connected us into online communities
• Web 3.0 — Decentraland (Just an Example) connected us into a community-owned virtual world

As we moved across these eras, our interactions and the mediums
we used to create them expanded. We experienced firsthand how
organizational architectures connecting us transformed, how computing
the infrastructure we relied on matured, and how control over the web ebbed
and flowed between the community and big tech companies.

The Web 2.0 mobile internet changed how, where, when, and why we used
the internet. In turn, this changed the products, services, and companies we
used, which changed our business models, culture, and politics — the Web 3.0
Metaverse has the potential to do the same.

The Meta Market Opportunity

A greater and greater portion of our attention is going towards digital activities, especially for younger generations. Today, 1/3rd of our lives (8 hours/day) is already spent watching TV, playing games, or on social media. As we spend more of our time in these digital world experiences, we also spend more of our money within these digital realms to build our social status within these online communities.

Our social lives and gaming are converging and creating a large, fast-growing virtual goods consumer economy. It is estimated that revenue from virtual gaming worlds could grow from ~$180 billion in 2020 to ~$400 billion in 2025. The continued shift of game developer monetization is a key dynamic within this growth trend. Players are increasingly moving away from paying to play premium games towards free games, which developers monetize by selling players in-game items to enhance gameplay or social status within these virtual worlds.

This shift is accelerating further with the transition from Web 2.0 closed corporate metaverses to Web 3.0 open crypto metaverse networks, which are: Web 2.0 Closed Corporate Metaverse: centrally owned and controlled by big tech.
Web 3.0 Open Crypto Metaverse: democratically owned and controlled by global users.

Many gamers today spend their money and hours of their time building digital wealth within Web 2.0 closed corporate metaverse worlds. The problem is, most game developers don’t let players monetize their investment and efforts. Developers prohibit players from trading items with other players and keep these worlds closed so players cannot transfer their in-game wealth to the real economy.

Web 3.0 open crypto metaverse networks solve this problem by eliminating the capital controls imposed on these virtual worlds by Web 2.0 platforms. This new paradigm allows users to own their digital assets as Non-Fungible Tokens (NFTs), trade them with others in the game, and carry them to other digital experiences, creating an entirely new free-market internet-native economy that can be monetized in the physical world. This evolution of the “creator economy” is known as “Play to Earn”.

**ILLUSTRATIVE OPEN VS CLOSED GAMING & METAVERSE EXAMPLES5**

In the metaverse, users dictate these types of seamless, real-world adjacent interactions across digital communities. Conversely, the closed nature of Web 2.0 corporate Metaverse platforms may put users at a disadvantage compared to Web 3.0 open crypto Metaverse networks. Established Web 2.0 corporations will need to disrupt their business models by opening up their ecosystems and removing their competitive moats. We don’t yet know the path Facebook will take with their Metaverse ambitions, but they — like other Web 2.0 companies — will need to make this challenging shift in the face of pressure to meet quarterly results for shareholders. Gaming is just one of the most immediately addressable segments where value is already starting to naturally shift to Web 3.0, but the Metaverse opportunity extends far beyond gaming. The Metaverse is estimated to be a trillion-dollar revenue opportunity across advertising, social commerce, digital events, hardware, and developer/creator monetization.

**GLOBAL METAVERSE POTENTIAL TOTAL ADDRESSABLE MARKET6**

The total market cap of the leading Web 3.0 Metaverse crypto networks sits at ~$27.5 billion. This pales in comparison to the ~$900 billion market cap of Facebook, the ~$2 trillion market cap of the gaming sector, and the $14.8 trillion market cap of Web 2.0 companies that could shift to the Metaverse or risk disruption

The Meta Web 3.0 Economy

Web 3.0 crypto Metaverses are emerging market virtual world economies with a continually developing complex mix of digital goods, services, and assets that generates real-world value for users. Early Web 3.0 metaverse worlds have been typically built on top of blockchain computing platforms (layer one) with a host of parties contributing to the development of the games and in-games items that can be freely traded on the blockchain.

Users purchasing these items are starting to build a new e-commerce experience. Examples of some more popular business activities within Decentraland and other virtual world economies today are:

These Web 3.0 Metaverse worlds are part of a larger interconnected crypto cloud economy. These decentralized protocols interoperate with and provide the technical infrastructure to support Metaverse virtual economies.

**BLOCKCHAIN-BASED VIRTUAL ECONOMY SEGMENTS**

The Meta Web 3.0 Metrics

The combination of these innovations has created a new online experience that’s already attracting users. Web 3.0 Metaverse virtual world users have seen rapid growth over recent years. Today, Web 3.0 Metaverse virtual worlds have nearly 50,000 all-time users (active wallets as proxy), up ~10x since the beginning of 2020.

**GLOBAL ALL-TIME ACTIVE METAVERSE WALLETS**

Compared to other Web 3.0 and Web 2.0 segments, Metaverse virtual world users are still in their early innings, but if current growth rates remain on their current trajectory, this emerging segment has the potential to become mainstream in the coming years.

Web 3.0 Metaverse virtual worlds are creating real-world value for the developers, third-party creators, and users building these emerging market internet-native crypto cloud economies. All-time value spent on Web 3.0 Metaverse item sales such as virtual land, goods, and services has topped $200 million.

By removing the Web 2.0 centralized companies that have historically controlled these online spaces, Web 3.0 Metaverse virtual worlds have benefited from rapid innovation and productivity gains.

Crypto virtual worlds have created a multi-million dollar primary and secondary market for creators and asset owners by eliminating capital controls and opening their digital borders to free-market capitalism.

During Q3 of 2021, total crypto fundraising totaled $8.2 billion with the Web 3.0 & NFT segment comprising $1.8 billion. Within the Web 3.0 & NFT sector, blockchain based gaming attracted ~$1 billion in funding across 14 deals, ranking it the top subsector within the category.

Capital investment into the sector has recently started to accelerate but compared to the $10 billion that companies like Facebook plan to invest, and the amounts that could follow from other companies and venture capitalists, the Metaverse is in its early innings.

Well, I am quite neutral about the Metaverse Market, the current situation is similar to the late 1990s dot-com bubble. If you read my previous blogs on Metaverse, you will feel it promising as well as unworthy at the same time. If you are someone who is really interested in investing in the NFTs or Cryptocurrency, then the last 4 or 5 blogs of this entire 28 Blogs on Blockchain and Cryptocurrency will be dedicated to research and analysis.
Metaverse Blogs:
Blog 17: Roots of Metaverse — Gaming Industry
Blog 18: Metaverse — A 3D Internet
Blog 19: Metaverse and NFTs
Blog 20: Metaverse — The Future is here
Blog 21: Industries disrupted by Metaverse

In the end, I found this youtube video very funny at the same time useful to see Metaverse from a different point of view.

Entire Series: 28 Blogs on Blockchain and Cryptocurrency

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