I think it would be a fair statement to make, that some people are still sceptical about the Metaverse. However, Citi bank sees tremendous potential in the concept of the third dimensional reality.
In a recent report, Metaverse and Money Decrypting The Future, Citi issues a bullish forecast for web3 and the metaverse, which describe a future vision for the internet built around decentralized technologies and virtual worlds.
The metaverse economy could be an $8 trillion to $13 trillion total addressable market by 2030, Citi says – but is that justifiable?
$8 trillion to $13 trillion TAM
The bank’s definition of the metaverse goes beyond sticking to virtual worlds, like gaming and applications in virtual reality. Citi’s broad vision of the metaverse includes smart manufacturing technology, virtual advertising, online events like concerts, as well as digital forms of money such as cryptocurrencies like bitcoin.
According to Citi analysts, the “Open Metaverse” will be the next version of the global internet – also known as Web 3.0. Rather than visiting websites through a browser, it’s likely that a 3D user interface of the “Open Metaverse” will replace current browsers such as Microsoft Explorer and Google Chrome.
Under this umbrella, the Metaverse could see 5 billion unique internet visitors by the end of the decade, driving trillions of dollars in revenue in this next-generation of the internet, according to the report.
Citi is just the latest banking giant to call the metaverse and web3 a trillion-dollar opportunity.
In research published in December, Goldman Sachs put a $12.5 trillion number on the space, in a bullish outlook that assumed one-third of the digital economy shifts into virtual worlds and then expands by 25%.
“We believe the Metaverse is the next generation of the internet — combining the physical and digital world in a persistent and immersive manner — and not purely a Virtual Reality world,” the report reads.
“A device-agnostic Metaverse accessible via PCs, game consoles, and smartphones could result in a very large ecosystem.”
The 5 billion estimate, the authors concede, is a broad one, that includes a mobile phone user base. If the metaverse is confined to VR/AR devices, it expects the audience to be closer to 1 billion.
Infrastructure Investment
Before any of that can occur, though, significant infrastructure investments will be needed
“In the current state, the internet infrastructure is unsuitable for building a fully-immersive content streaming Metaverse environment, that enables users to go seamlessly from one experience to another,” continues the report.
“To make the vision of Metaverse a reality, we expect significant investment in a confluence of technology.
Low latency — the time it takes a data signal to travel from one point on the internet to another point and then come back — is critical to building a more realistic user experience.”
Finances in the future, it predicts, will be a mix of traditional forms of money and cryptocurrencies, noting that “money in the Metaverse could exist in different forms”.
NFTS will also play a key role, it says, enabling a form of sovereign ownership of digital items for users.
The Citi report acknowledges that right now, the Metaverse is largely defined as an immersive assortment of online gaming environments that rely largely on 3D interactive play with others or augmented reality offline. But that will evolve in the coming years.
“This “Open Metaverse” would be community-owned, community-governed, and a freely interoperable version that ensures privacy by design. Users should increasingly be able to access a host of use cases, including commerce, art, media, advertising, healthcare, and social collaboration.
A device agnostic Metaverse would be accessible via personal computers, game consoles, and smartphones, resulting in a large ecosystem,” states the report.
It’s worth noting that this vision of an “Open Metaverse” will be decentralized and not managed by any single company or organization. This is different from the proposed metaverses by organizations such as Shiba Inu or Facebook’s parent company Meta, which is proposing a centralized virtual world of its own, at least in its current iteration.
To achieve this “Brave New Meta World,” Citi states that it will require massive investment and technological upgrades for this vision to become reality by 2030.
“The content streaming environment of the Metaverse will likely require a computational efficiency improvement of over 1,000x today’s levels. Investment will be needed in areas such as compute, storage, network infrastructure, consumer hardware, and game development platforms,” the report reads.
With a potential market value of $13 trillion at stake, the investors and tech will occur is the current mantra.
However, bullish forecasts from Citi and others come even as investments tied to the metaverse have underperformed of late.
A huge amount of money already has flowed to companies addressing the space, meaning some of the growth is already baked into equity prices.
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