Larry Cheng, managing partner at Volition Capital, a Boston-based growth equity firm, argued on Wednesday that there is “a bit of a gold rush mentality to NFTs [non-fungible tokens] as the fiber and the texture of the metaverse” as he described the space, which is garnering increased interest from traditional companies, including Walmart.
The “metaverse,” is envisioned as an immersive online space where users can play games and interact with others as avatars in a computer-generated environment.
According to industry experts, people will be able to shop and attend virtual concerts as well as sporting events in the metaverse.
While the term dates back to 1992, in October, Facebook CEO Mark Zuckerberg announced that his company would change its name to Meta Platforms Inc., and also disclosed plans to transition it into a “metaverse company.”
Cheng, who focuses on investment opportunities in Internet applications, e-commerce and consumer products, told “Varney & Co.” on Wednesday that there has been a “massive explosion” in interest and investment in NFTs, “which are really the fiber of the metaverse.”
“They are what enable you to own real estate,” he explained describing NFTS. “They are what enable you to own virtual goods in the metaverse and so forth and they are soaring right now.”
Cheng pointed to data that highlighted the massive growth in NFT sales.
The total value of all NFT sales that took place in 2021 was $23 billion compared to less than $100 million in 2020, according to data published by DappRadar and noted by Cheng.
DappRadar noted in its 2021 industry report that “the NFT space experienced one of the most impressive expansions overall.”
“Strongly tied to the success of NFTs and blockchain games, the outlook for the metaverse and virtual worlds was already promising,” the report noted. “Nonetheless, after Facebook’s rebranding announcement, the metaverse outlook exploded positively.”
NFTs, which are fueling a frenzy among investors and artists looking to cash in on the market that has ballooned, are digital collectibles that are irreplaceable assets, which can be bought or traded like any other piece of property.
However, unlike a tangible asset, buying an NFT is like owning an encrypted JPEG that can be downloaded on your computer. Most NFTs exist on the Ethereum blockchain – the second-largest cryptocurrency platform behind Bitcoin.
The once-niche marketplace for NFTs has been around since 2017 and was largely under the public radar because of the jargon of blockchain, which is a digital ledger of irreversible transactions. Now, however, investors and crypto-fanatics are not only taking notice, they are rushing to spend billions in digital tokens.
“You see this massive explosion that frankly I have never seen that scale of market growth in my entire career,” Cheng told host Stuart Varney on Wednesday, as he explained the “gold rush mentality to NFTs as the fiber and texture of the metaverse.”
He then went on to explain one reason why he believes there is massive interest.
“A lot of these NFTs confer certain rights to their owners, including community access and certain real-world value and so, therefore, people are trying to find their footing within the NFT world,” Cheng said.
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When describing the metaverse, Cheng noted that people will be able to buy items using the space, explaining that a person’s current experience with their phone is considered “the beta version.”
“The metaverse will make the experience more immersive and you can actually own parts of the metaverse, you can transact in the metaverse, you can engage, you can play and you can work in the metaverse. So that’s where things are headed,” Cheng told Varney, noting that a virtual reality headset won’t be required.
Melanie Subin, the director of consulting for the Future Today Institute, echoed that sentiment and explained what to expect from the metaverse.
“It’s going to be a digital overlay onto our physical world and I don’t think that that’s going to mean that we are going to walk around wearing a VR headset all day,” she said.
“So Instead of having to pick up our phone and type something in every time we need it, we will have information that we need available at our fingertips and that could be through AR [augmented reality], that could be through holograms,” she added.
In a new filing with the U.S. Patent and Trademark Office, Walmart revealed plans to join other companies by offering cryptocurrencies and NFTs.
The Dec. 30 filing, listed under the retailer’s digital advertising business “Walmart Connect,” outlines a financial transaction service involving cryptocurrency, NFTs, and blockchain technology that will be used by members of an online community via a global computer network.
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“Walmart is continuously exploring how emerging technologies may shape future shopping experiences,” a spokesperson told FOX Business.
The retailer also appears to be laying the groundwork to enter the metaverse.
Separate applications called “Verse to Store”, “Verse to Curb” and “Verse to Home”, reveal plans for door-to-door shopping services and online ordering, while another filing seeks trademarks for the Walmart name and “fireworks” logo for health-care services and education in virtual and augmented reality.
Last month it was revealed that Ralph Lauren was racing to set up shop in the metaverse. The fashion brand opened in the online world of Roblox, with 47 million daily active users, Forbes reported, noting that Ralph Lauren stocked its virtual stores “with virtual puffer jackets, checkered beanies and other retro skiwear for the winter season, priced under $5.”
Digital demand for fashion and luxury brands is expected to grow from low levels and result in extra sales for the industry that could reach $50 billion by 2030, Reuters reported, citing Morgan Stanley.
“Revenue streams from digital mediums for luxury brands are negligible… We think this is about to change,” strategists at the U.S. investment bank reportedly wrote in a note in November, adding that “the Metaverse will likely take many years to develop; however, NFTs and social gaming (e.g., online games and concerts attended by people’s avatars) present two nearer-term opportunities for luxury brands.”
NFTs and social gaming could reportedly expand a luxury group’s total addressable market by more than 10% in the span of eight years and boost industry earnings before interest and tax by around 25%, according to Morgan Stanley.
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More companies are entering the space, with The Walt Disney Co. getting approval for a patent to project 3-D images on real-world objects in theme parks, The Los Angeles Times reported earlier this month.
On Tuesday it was announced that Microsoft is buying Activision Blizzard Inc., the maker of “Call of Duty” and “Candy Crush,” in a deal worth $68.7 billion partly in an attempt to expand into the metaverse.
“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” said Microsoft CEO Satya Nadella. “We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.”
Over the weekend, it was reported that The Brooklyn Nets have created their own virtual experience.
Dozens of cameras around the court will feed into a system that “quickly generates incredible lifelike 3D renderings in a matter of seconds” for a virtual watching experience, YES Network said in a Twitter video, noting that Barclays Center is “the first arena” with these cameras installed and the Nets are the “first pro sports team in America to have this technology.”
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FOX Business’ Kelly O’Grady, Lacey Christ, Lucas Manfredi and The Associated Press contributed to this report.