Matthew Ball on the Huge Metaverse Opportunity

September 14, 2022

The metaverse might not be as trendy a topic as it was back in October when Facebook famously rebranded itself as Meta, but it’s still a massive investment opportunity, according to Matthew Ball, chief executive officer of Epyllion. 

Epyllion is the majority shareholder in Ball Metaverse Research Partners, which provides the index behind the $482 million Roundhill Ball Metaverse ETF (METV), the largest of seven U.S.-listed metaverse ETFs. 

Speaking at the Future Proof Wealth Festival in Huntington Beach, California, Ball cited figures from various investment banks estimating that the metaverse economy could be worth anywhere from $2.5 trillion to $16 trillion by the end of the decade.  

That’s a massive sum that could nearly double the value of the digital economy, which Ball said is currently worth $20 trillion, or 20% of world GDP.  

What Is the Metaverse? 

Though he’s written lengthy essays and a book on the topic, Ball gave several succinct definitions of the metaverse. In the first instance, he called the metaverse “a next-generation version of the internet.”  

“When we think of the metaverse, we are thinking of it in succession to today’s predominantly mobile and cloud era,” he said. 

Ball explained that, like the internet itself, the metaverse is not any one technology; it’s a system that includes “real time-simulation, a network of persistent experiences, adjoined to fundamental overhauls to the standards and protocols that we use as a part of the internet itself, supplemented by many new technologies which foster new use cases—[such as] cloud gaming and crypto.” 

Or as Ball summed it up, the metaverse could be considered “a 3D network of simulations.” 

He predicted the amount of time spent in these simulations will rise over time.  

“An increasing share of human time, labor, leisure, spend, wealth, happiness, etc., will exist inside these virtual worlds and many of us will exist inside 3D virtual spaces without actively choosing to do so,” Ball explained. 

The Metaverse & Web3 

Closely connected to the concept of the metaverse is crypto and web3. But Ball explained those are still two separate things. Crypto could make the metaverse better, say, by allowing for the interoperability of various platforms and virtual worlds—but it’s not a necessary ingredient of the metaverse per se. 

For instance, in the fictional story, Ready Player One, the metaverse-esque virtual world, The Oasis, was created and controlled by a single company.  

Nevertheless, with crypto a growing force, it’s hard to imagine a future without it. As Ball remarked, the blockchain allows information and assets to escape the confines of centralized platforms to a place where they are accessible to all. 

“You put your identity not on a user account that you build on Meta, but on the blockchain, thus pushing that information into the public good,” he said. 

Virtual Real Estate 

Though crypto is likely to be a part of any future metaverse, what form it takes is still very much up in the air. Virtual real estate in the form of nonfungible tokens were all the rage in 2021, trading hands for many thousands of dollars in some cases—but Ball said he’s unsure whether these virtual plots of land can retain their value.  

“There’s a debate around whether virtual real estate—scarce goods for which proximity matters—is valuable. I’m actually not sure whether it is,” he said.  

Ball noted that with today’s internet, when it comes to the most valuable real estate—domain names—proximity doesn’t matter.  

That’s why he suggested that any investor wading into crypto, whether it be cryptocurrencies or NFTs, take a diversified approach. That’s the strategy behind the Ball Multicoin Bitwise Metaverse Index Fund, which holds a few dozen separate tokens.  

“You have some consumer-facing platforms, like Sandbox; you’ve got other tools-based companies; then you have the underlying blockchains and the layer 2s [blockchain scaling solutions] on top of that,” Ball added. 

Four Valuable Categories  

In addition to crypto, Ball said he sees four primary categories that will be particularly valuable as the metaverse economy grows. One is chip companies.  

“We have always had scarcity of computing power. Those that have the expertise there—such as Nvidia, Intel and AMD—[will do well]. If the metaverse is to be realized, its demands on computing power will far exceed anything we’ve previously imagined,” Ball said. 

Secondly, he said to take a look at the various hardware providers, including today’s giants in smartphones, or those developing new extended reality, mixed reality and AR/VR devices.  

The third category includes those companies that help facilitate transactions within virtual and digital experiences.  

“New economies bring about new payment rails, whether we’re talking about Shopify, Square, Stripe, FTX or crypto at large. That payment network is going to be particularly valuable,” Ball noted.  

Finally, the last category includes the simulation systems themselves. 

Within this category, he named consumer-facing platforms like Roblox, Fortnite, Minecraft and the digital twinning platforms of Microsoft. 

Many of these companies can be found in METV, which currently has 43 holdings.  

 

Email Sumit Roy at [email protected] or follow him on Twitter @sumitroy2 

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