Wish you all a very good morning and a merry Christmas. Hope you all are enjoying the weekend.
Today, I shall discuss about my entry into the Crypto space, and my thinking behind my bet.
I wrote about Crypto fixed deposits in my last investor letter. Well, my bet is not on earning from crypto FDs, but on the crazy life our kids or the grandchildren may lead in next two to three decades. And that is metaverse.
As most of you might know that facebook has recently changed its name to Meta, which is derived from the word Metaverse.
The WEB3 concept
I am neither a web technology guy to understand these terms, nor a guru to teach any of you. But I shall try and explain, what my tiny little brain could grasp so far. To understand WEB3, we must first understand, WEB1 & WEB2.
The interest started off with WEB1 in 90s, where we could see a static webpage presented to us, with the content that a creator wanted to show. WEB1 was only for consumers but a consumer didn’t have the privilege to interact with those contents.
Then came the WEB2, which enabled the consumers to interact with the content and made it dynamic. For example, a blog. This interaction was taken to the next level by search engines like google and creating a great user experience and people interaction like Facebook. But if you see, most of the web2 where we interact is majorly owned and controlled by very few corporations like google, facebook or twitters of the world. This makes them the most powerful organizations who can dictate the terms & conditions. They define rules of engagement.
When people feel that they are governed by a small group of people, or the corporations, they find ways to break out it. Hence, the dawn of WEB3. This runs on the blockchain technology, where the network is owned and controlled by the consumers and not by a specific organization. The rules are set by the users of the network and not by the government or by the powerful organizations.
What is a Metaverse ?
A metaverse can mean different things to a different people. At the end of the day, it is just the collection of multiple elements of the technology, providing virtual reality, augmented reality or giving the experience of living in a digital world.
In last 10-15 years, most of our interactions with family or friends have been on a 2D desktop site or a mobile app. Metaverse is a whole new 3D interactive internet.
While facebook’s metaverse concept is still centralized, there are metaverses that run on blockchain technology and have been up and running for few years now. Decentralnd, Sandbox and Treeverse are just few examples of the Crypto metaverse. These metaverses have been built on the crypto currency network and hence, all the transactional information is decentralized.
How world may look like in next 20 years ?
Who could imagine, all of us having a high end smartphone in our hands 20 years ago ? Who could imagine, many of us would be spending a big part of our day looking at the phone ? But that’s the new normal now. If you have to wait for a friend in a mall for 10 mins, the first thing you do is pick up your phone and start doing something. 20 yrs ago, you just stood there and stared at the mall entrance cursing your friend for being late.
Now imagine, if you could visit the mall with the same friend just sitting at your home in a pajama. The mall would look exactly like it looks in reality, the same shops, same stairs, same advertisements and the strangers passing by you. Go further and imagine you interacting with a stranger and asking for the direction to a shop. You can hear the real voice of that stranger and get a real answer. Imagine you walking into a footwear shop inside the mall and buying a pair of digital shoes. You can even talk to the real sales guy asking for advice. Of course, you can’t wear that shoes in the real world but you can wear it in the Metaverse for others to see.
The stranger you spoke to or the salesman you took advice from are the real people sitting in their respective homes with the VR headset on and logged into the mall’s digital copy. You would be a living a digital life without getting out of your house and experiencing the world on a 3D virtual reality headset.
Sounds so stupid, doesn’t it ? You never want to get on with that kinda lifestyle. But hold on. Not so fast. The certainly grows into dilemma and then to adoption, when more and more people start adopting to that life. You shall have no choice to but to be there. In today’s world, you almost don’t exist, if you are not on facebook, whatsapp and LinkdIn. Why is that ? Just because everyone else who recognize you as a person are on those platforms. The arrival of Covid may have just paved a highway to the new digital life.
Currently the experience in the metaverse might be premature. But that’s what internet was 20 years ago. Now there are thousands of tools and technologies that are available to create a great user experience on the internet, and make things more realistic in the digital world. This advancement will now continue in the metaverse space.
So, what am I investing in ?
Just as we spoke of a digital mall, imagine if you had to rent a shop in that digital mall to showcase your products for people to see or buy. Just like in the physical world, you would be paying the rent month of month in a crypto currency. First you need to pay the real money to buy the currency that works in that metaverse. It is just like you paying INR to buy US dollars before visiting America. In the digital world, you would be paying INR to buy a crypto currency of that metaverse.
Currently there are very few popular metaverse. Decentralnd and Sandbox are the leading players in this space. You can buy a land in Decentralnd using their currency called MANA which runs on a Ethereum network. Or you can buy a land in Sandbox using their currency called SAND or enter gaming using Polygon’s MATIC crypto currency.
I am not buying the land but I am buying these Crypto currencies. I have invested a small amount of money in both MANA and MATIC just this week.
Is it gambling ?
Absolutely. A crypto currency as such does not have any intrinsic value, unless more and more people believe in it and adopt it as a medium of value exchange. A 1000 rupee note is just a paper, but it has value just because someone else is willing you give you groceries for that paper. A crypto currency is just like that.
I am betting on the idea that MANA and MATIC would be the most adopted cryptos in the Metaverse. I could be totally wrong, since there would be more metaverse coming ,with different cryptos. Which one prevail, is anyone’s guess.
Just 10 years ago, no one could guess with certainty that Facebook will be the absolute winner in the social media space. I remember Myspace and Orkut which came earlier to facebook but didn’t win the race. However, a person who bet on facebook back in 2012 would have made a lot of money and the person who bet on Orkut, would have lost all of it.
How much to Invest ?
I have earmarked 1% of our net worth to be invested in this space. Since the odds of winning are totally unknown, I would never be making a move that could dent our livelihood.
Who will win the race of Metaverse and how this world will shape up is anybody’s guess. These things will go through the booms and busts, but the technology on which they all run is here to stay. And that is Blockchain. If only, there was a simple way to bet on that.