Is There Any Gold in Virtual Worlds Like Metaverse? / Commodities / Gold and Silver 2022
Imagine all the people… living life inthe Metaverse. Once we immerse ourselves in the digital sphere, gold may go outof fashion. Or maybe not?
Do you already have your avatar? If not,maybe you should consider creating one, as the Metaverse is coming! What is the Metaverse? It is a digital,three-dimensional world where people are represented by avatars, a network of3D virtual worlds focused on social connection, the next evolution of theinternet, “extended reality,” and the latest buzzword in the marketplace sinceFacebook changed its name to Meta. If you still have no idea what I’m talkingabout, you can watch this educational video or just Spielberg’s Ready Player One.
Theidea of personalities being uploaded online is an intriguing concept, isn’t it? In this vision, people meet with others, play, andsimply hang out in a digital world. Imagine friends turning group chats onMessenger or WhatsApp into group meetups in the Metaverse of family gatheringsin virtual homes. Ultimately, people will probably be doing pretty mucheverything there, except eating, sleeping, and using the restroom.
Sounds scary? For people in their 30s andolder who were fascinated by The Matrix, it does. However, this is really happening. The augmentedreality technology market is expected to grow from $47 billion in 2019 to $1.5trillion in 2030, mainly thanks to the development of the Metaverse. China’svirtual goods and services market is expected to be worth almost $250 billionthis year and $370 billion in the next four years.
In a sense, it had to happen as the nextphase of the digital revolution. You see, we now experience much of life on thetwo-dimensional screens of our laptops and smartphones. The Metaverse moves us from a flat and boring 2D to a 3D virtualuniverse, where we can visualize and experience things with a more naturaluser interface. Let’s take shopping as an example. Instead of purchasing itemson Amazon, customers could enter a virtual shop, see and touch all products in3D, and buy whatever they wanted (actually, Walmart launched itsown 3D shopping experience in 2018).
OK, we get the idea, but why doesMetaverse matter, putting aside sociological or philosophical issues related totransferring our minds into the digital world? Well, it might strongly affect every aspect of business and life, just asthe internet did earlier. Here are a couple of examples. Famous brands, likeDolce & Gabbana, are designing clothes and jewelry for the digital world.Some artists are giving concerts in virtual reality. You could also visit somemuseums virtually, and instead of taking a business trip, you can digitallyteleport to remote locations to meet with your co-workers’ avatars.
Finally, what does the Metaverse imply for the gold market? Well, it’sdifficult to grasp all the possible implications right now. However, the mainthreat is clear: as people immerse deeper and deeper into the digital world, gold could become obsolete for many users.Please note that cryptocurrencies and non-fungible tokens (NFTs) are and will continue to be widely used aspayment methods in the Metaverse.
However, there are some caveats here.First, the invention and spread of theinternet didn’t sink gold. Actually, the internet enabled gold to be widelytraded by investors all over the world. Just take a look at the chart below.Although gold was in a bearmarket in the 1990s and struggled during the dot-combubble, it rallied after the bubble burst.
Second, the digital world didn’t kill the analog reality. Despite digitalstreaming of music, vinyl record sales soared last year, reaching a record highin a few decades. The development of the Metaverse could trigger a similarbacklash and a return to tangible goods like gold.
Third, some segments of the Metaverse look like bubbles. Maybe I’m justtoo old, but why the heck would anybody spend hundreds of thousands, or evenmillions of dollars to buy items in the virtual world? These items include virtualreal estates (CNBC says that sales of real estate in the metaversetopped $500 million last year and could double this year), digitalpieces of art or even tweets (yup, the founder of Twitter sold the first tweet ever for just under $3 million)!It does not make any sense to me, as I can right-click and download a copy ofthe same digital files (like aPNG file of a grey pet rock) for which people pay thousands andmillions of dollars.
Of course, certain items could increasethe utility of the game or virtual experience, but my bet is that at least somebuyers simply speculate on prices, expecting that they will be able to resellthese items to greater fools. When this digital gold rush ends – and given the Fed’stightening cycle, it may happen in the not-so-distant future – real gold could laugh last.
Thank you.
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Arkadiusz Sieron
Sunshine Profits‘ MarketOverview Editor
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