Metaverse investments lead to big gains, bigger losses
March 9, 2022
The world of internet money-making is a bizarre place full of lives ruined and fortunes made overnight. The chance, however small, for massive reward often entices people, particularly those without financial education, to invest large amounts of their money into the next big thing. Currently that opportunity is the metaverse. However enticing, it is currently too early, too risky and dubiously legal for high schoolers to be investing in the metaverse.
Investment opportunities on the cutting edge of internet technology are often characterized by a lack of understanding from investors about exactly what the product is, and the metaverse is no different. Lack of information about the technology has driven investment but also apprehension about potential returns.
Some tangible ways exist to invest in the metaverse. Companies making processors, like AMD and Qualcomm, have products that would be necessary for the functioning of the metaverse. Therefore, these companies have the potential to see stock share price increases if the development of the metaverse continues.
Microsoft, Meta and even Roblox have made commitments, both verbal and monetary, to create a footprint in the metaverse. Meta has already invested $10 billion in metaverse-related development, and Microsoft purchased Blizzard for $68.7 billion, which they believe will “provide building blocks for the metaverse.” These companies’ involvement in the metaverse space could improve their performance if it does well in the next few years.
A variety of less established projects have also cropped up in the space, such as Decentraland and The Sandbox. Both of these projects allow users to buy virtual plots of land, which are secured as NFTs on blockchain. These investments are much less known than more conventional investment methods, so it’s hard to know how they’ll do.
While the majority of digital investments remain in this state, financial educator Rebecca Maxcy, the director of the UChicago Financial Education Initiative, cautions people to think before they invest.
I don’t think kids should be investing like this. If they want to do it, it should be coupled with financial education. I feel like there’s this gamification of investing right now, and it’s doing more harm than good.”
— Rebecca Maxcy, Director of UChicago Financial Education Initiative
Ms. Maxcy recommends that the average person be a passive investor with a diverse portfolio. She cautions against purchasing single stocks and believes the same holds true for digital investments.
There are also concerns about the involvement of young people in many of these digital investments.
Ms. Maxcy said, “I don’t think kids should be investing like this. If they want to do it, it should be coupled with financial education. I feel like there’s this gamification of investing right now, and it’s doing more harm than good.”
As it stands, investing in the metaverse is not a good idea for high schoolers, there are better financial opportunities for the U-High students interested in investing.