Wall Street Analyzes the Metaverse
In a report released last week, Citi provided a detailed review of the metaverse. Researchers estimate that the total metaverse economy could reach $13 trillion by 2030 with five billion users. But reaching those numbers won’t be easy.
Citi’s study looked at the metaverse from a wide-ranging perspective. It included more than gaming and virtual reality. Other factors were considered in reaching their conclusions. The report takes in smart manufacturing technology, virtual advertising, online concerts, and digital currencies such as bitcoin.
Citi noted in the study that it will take time to gain efficiency. Digi the metaverse’s content streaming environment will likely require a “computational efficiency gain of more than 1,000x today’s levels.”
According to the bank’s report:
“We believe the Metaverse is the next generation of the internet, fusing the physical and digital worlds in a persistent and immersive manner, rather than being a purely virtual reality environment.”
The report states that the 5 billion figure is an estimate. It includes a mobile phone user base, and if the metaverse is limited to VR/AR devices, it projects closer to a 1 billion audience.
A Lot Of Work To Do
Citi stated that achieving the bank’s vision of a “Brave New Meta World” by 2030 will require substantial investment and technology enhancements.
Citi’s 184-page report delves deeply into numerous facets of the metaverse.
They contain a definition of the virtual realm, its infrastructure, crypto-assets such as NFTs, money, and DeFi, as well as regulatory changes affecting the virtual world.
Other Wall Street Players Are Bullish
Goldman Sachs estimated the sector’s value at $12.5 trillion in a December report. The bullish scenario…70% of the digital economy pivots to the metaverse and then doubles in size.
Morgan Stanley, another prominent investment firm, anticipated the same figure for the metaverse in November of last year.
Bank of America pointed out that the metaverse represents a big opportunity for the entire crypto industry.
JPMorgan Report…Into the Metaverse
Wall Street investment bank JPMorgan is the latest big name with ambitions in the Metaverse. They published a new report with some big predictions.
The JPMorgan Chase report, “Opportunities in the Metaverse” delves into virtual worlds. It details boundless opportunities the bank has envisioned.
The multinational investment bank predicts that companies large and small entering the Metaverse. $54 billion is currently spent on virtual goods every year, almost double the amount spent on music according to the report.
The firm made a bold prediction, the Metaverse will be all-encompassing. It will become a trillion-dollar market in the next few years.
“The metaverse will likely infiltrate every sector in some way in the coming years, with the market opportunity estimated at over $1 trillion in yearly revenues.”
JPMorgan states a “robust and flexible financial ecosystem” is essential for Metaverse growth. It will allow users to connect between both worlds – virtual and physical.
“Our approach to payments and financial infrastructure will allow that interoperability to grow,” it added.
The report asserted that existing gaming worlds have elements that parallel the global economy. These include population, GDP, in-game currency, and digital assets. The investment bank wants to be a part of this. Declaring that its core competencies in cross-border payments, foreign exchange, financial assets creation, trading, and safekeeping, can play a “major role” in the Metaverse.
The report did not reveal company plans regarding Metaverse developments. It did note that it’s working on new tech:
“We are building and scaling new emerging technologies to modernize infrastructure and business models including but not limited to tokenization and digital identity,”
Big Numbers From Virtual Worlds
The report highlighted some impressive stats from Metaverse projects and spending habits, and some projections for the coming years.
The average price of a parcel of virtual land doubled in a six-month window in 2021 to $12,000. Spending on in-game advertising will top $18 billion by 2027, it predicted. Adding that there are 200 strategic partners to date with The Sandbox, such as Warner Music Group.
JPMorgan, has also been bullish on Bitcoin. It has its own lounge in the Metaverse called “The Onyx,” a blockchain-powered platform for wholesale payments transactions. It may extend this to include virtual offices to reduce overheads and increase exposure.
BlackRock is about to enter the crypto space. The New York-based company will soon allow its customers to trade crypto. They will untilize the sophisticated Aladdin investment management platform.
This isn’t the first time BlackRock has expressed interest in crypto. In December 2020, CEO Laurence Fink said that increasing search volume for “bitcoin” on the company’s website indicated growing legitimacy. One of BlackRock’s funds bought bitcoin futures in March 2021. The company filed for a Blockchain and Tech exchange-traded fund that would own blockchain and crypto companies In January 2022. Other Wall Street giants such as Goldman Sachs, Citibank, Bank of America, and Morgan Stanley, started exploring bitcoin and digital currencies amid growing customer demand in 2021.
The metaverse is an immersive digital world created by the combination of virtual reality, augmented reality, and the internet.
- The content streaming environment of the metaverse will likely need a “computational efficiency improvement over 1,000 times today’s levels,” the bank said, and investment will be required in areas such as storage, network infrastructure, consumer hardware, and game development platforms.
- The metaverse concept isn’t new, the bank’s analysts noted. However, interest in the metaverse really began to snowball at the end of 2021 because of the rise in sales of non-fungible-tokens (NFTs) and big technology companies announcing their interest in the sector.
- NFTs are digital assets on a blockchain that represent ownership of virtual or physical items and can be sold or traded.
Currently, the most popular way to experience the metaverse is by playing a video game on a virtual reality (VR) headset, Citi said, but it is possible that the “metaverse is moving towards becoming the next generation of the internet or Web 3.”
- “This ‘open metaverse’ would be community-owned, community-governed, and a freely interoperable version that ensures privacy by design,” the report said. Its use cases include commerce, art, media, advertising, healthcare, and social collaboration, it added.
- What counts as money in this open metaverse is expected to differ from the real world, with different forms of cryptocurrency expected to dominate, alongside fiat currencies, central bank digital currencies (CBDCs), and stablecoins, the report said.
- If the metaverse is the new iteration of the internet, it is likely to attract greater scrutiny from regulators, policymakers, and governments, and issues such as anti-money laundering rules, the use of decentralized finance (DeFi), crypto assets, and property rights will all have to be addressed, the note added.
About The Author
Martin J. Young
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Martin has been writing on cybersecurity and infotech for over two decades. He has previous trading experience and has been covering developments in the blockchain and cryptocurrency industry since 2017. Contact Martin: LinkedIn