Metaverse and NFT: A Comprehensive Analysis from Virtual Games to Investment Opportunities

Do you remember the movie “Ready Player One” where the protagonist puts on VR glasses to race and collect treasures in the fantastical world of the “Oasis”? In fact, you already have your own “simplified Metaverse” experience!

When you spend 60 yuan to purchase LINE dynamic stickers and use the Bear Big head-shaking GIF expression to respond to elder images in the family group, these actions are essentially only one key difference from NFT enthusiasts purchasing virtual real estate in Decentraland or trading digital art on OpenSea: what you pay for is the “access rights to the game company's server,” while what they purchase is a “digital asset that can be used across platforms.”

The Metaverse, as one of the most notable technological trends in recent years, has sparked widespread discussion. So, what exactly is the Metaverse? What role do NFTs play? How should ordinary investors participate in this digital revolution? This article will provide a detailed analysis of these questions.

Definition and Essence of the Metaverse

The concept of the Metaverse originated from Neal Stephenson's 1992 science fiction novel “Snow Crash,” which depicts a virtual space parallel to the real world, where each person in reality has a networked avatar. Today, the Metaverse is widely understood as a visually rich virtual environment where people can work, entertain, shop, and socialize. These activities are all closely linked to blockchain technology and NFTs.

Blockchain, as the technological foundation of the Metaverse, provides decentralization and security guarantees. NFTs (Non-Fungible Tokens) serve as unique identifiers for digital assets, playing an important role in the economic system of the Metaverse.

The viewpoint of venture capitalist Matthew Ball may help us better understand the importance of the Metaverse: “The Metaverse represents the fourth wave of computing revolution following mainframe computing, personal computers, and mobile computing.”

The Key Position of NFTs in the Metaverse

NFT plays the role of a “digital identity card” in the Metaverse ecosystem, providing proof of ownership and scarcity protection for virtual assets. Through the immutable and decentralized characteristics of blockchain, NFTs bring a relatively fair and transparent economic structure to the Metaverse, allowing users to freely conduct transactions.

The Metaverse without NFTs will face many limitations, such as:

• Purchased game items cannot be resold, and their value is locked to a specific platform.
• The designed virtual clothing is for personal use only and loses its potential for commercialization.
• The Metaverse properties that were painstakingly built could be delisted by the platform at any time, posing a risk of asset zeroing.

The following are the main differences between traditional digital assets and NFT assets:

The Impact of the Metaverse on the Cryptocurrency Market

The Metaverse and the cryptocurrency market show a high degree of correlation, having once led the entire crypto market forward. At the same time, the bull and bear cycles of cryptocurrencies also directly affect the popularity and price fluctuations of NFTs.

During the previous bull market, Metaverse projects like Decentraland and The Sandbox sparked a frenzy, attracting a large number of investors to purchase virtual land. This craze drove a significant influx of funds, boosting the entire cryptocurrency market. For example, the MANA token surged over 4,000% during the 2021 bull market, far exceeding Bitcoin's performance during the same period. The average price of virtual land in The Sandbox skyrocketed from 1,000 to 45,000, with an increase that even surpassed real estate in Taipei.

However, as the cryptocurrency market declines, the floor price of Metaverse-related NFT projects continues to set new lows, with some obscure projects even facing the embarrassing situation of being ignored.

In the long run, the development of the Metaverse still holds potential, as it represents a completely new social and economic model. However, investors need to enter cautiously, as future success will depend on technological innovation, user engagement, and the sustainability of the ecosystem.

How to Participate in Metaverse Investment

For ordinary investors, purchasing and trading NFTs or project tokens is a low-threshold way to participate in the Metaverse. Here are the basic steps to participate in NFT trading:

1. Choose a reliable NFT trading platform, such as Gate.

2. Set up a digital wallet: Common wallets like MetaMask are used to connect to NFT trading platforms and perform transaction operations.

3. Buy cryptocurrency: Purchase cryptocurrencies such as Ethereum (ETH) through exchanges like Gate and transfer them to your digital wallet.

4. Choose and purchase NFTs: Browse the platform and select the NFTs you are interested in for purchase.

5. NFT trading: You can choose to sell the NFTs you hold, set a price, or participate in an auction.

Three important reminders for safe participation in the Metaverse:

• Never enter your private key on unfamiliar platforms (the private key is equivalent to a bank password, keep it confidential).
• Avoid using the same password to register multiple Metaverse accounts.
• Be cautious of NFT airdrop advertisements claiming “guaranteed profits”.

Metaverse Investment Suggestions and Considerations

Investing in the Metaverse requires a certain level of expertise and experience. Due to the lack of liquidity in most projects, investors may face the risk of being unable to exit. For beginners, it is recommended to start learning and experimenting with small amounts of capital.

In addition, be wary of some fraudulent projects that claim to be part of the Metaverse. Some projects lack substantial content, and once market enthusiasm wanes, asset prices may plummet sharply. It is advisable to steer clear of unfamiliar or lesser-known Metaverse projects.

The following is a comparison of Metaverse/NFT investments with other mainstream investment methods:

Future Outlook of the Metaverse

In the long term, the development prospects of the Metaverse remain optimistic. Many tech giants such as Meta (formerly Facebook), Microsoft, and Google have begun to make large-scale investments in Metaverse-related technologies.

From a technical perspective, virtual reality ( VR ) and artificial intelligence ( AI ) will become core components of the Metaverse. From an economic standpoint, the Metaverse is expected to further expand its share and influence in the virtual economy. Related products and services will show diversification, and new business models and industrial chains have the opportunity to truly take root, promoting the integration of the virtual and real worlds. In short, the Metaverse has the potential to fundamentally change people's lifestyles, social patterns, and economic activities.

In the currently established NFT field, it is expected that more innovative forms and supporting models will emerge in the future to adapt to the development trajectory of the Metaverse. In this process, relevant laws and regulations are expected to be improved, which will help lower entry barriers and regulate market behavior.

Common Questions Related to the Metaverse

Q: Do the Metaverse and NFTs have fraud risks? A: Although this possibility cannot be completely ruled out, mainstream and well-known Metaverse projects usually have a foundation of practical application, rather than being purely market speculation. As a development trend recognized by mainstream capital, the Metaverse overall still focuses on technological innovation as its core objective.

Q: Is the investment risk in the Metaverse high? A: All investments carry risks, and Metaverse investments are no exception. Participating in some seemingly cheap but actually lacking substantial content “Metaverse/NFT” projects, without basic understanding and judgment, indeed poses higher risks. However, since leverage trading is usually not involved, as long as investors maintain good trading discipline and choose projects with sufficient liquidity, Metaverse investments can also be relatively flexible in risk management.