There Is No Need For FOMO and YOLO When Big Companies Explore The Metaverse

2022/02/15 10:00:00

Numerous companies are throwing money and effort into their exploration of the Metaverse. That enthusiasm trickles down to the consumer level, even if most people have no idea what they are buying or getting themselves into. Metaverse attention is reaching FOMO and YOLO levels, but is that a good trend?

Companies Bet Big On Metaverse and Virtual Land

Even though the Metaverse does not exist today, many well-known companies intend to explore opportunities in the virtual world. It is commendable to see firms embrace new and innovative technology, even if they aren't necessarily sure about the long-term outcome. There is no guarantee the Metaverse will become popular, and it might not even exist in reality for years, if not decades, to come.

Virtual land is one of the big ‘plays‘ of mainstream companies. Prices of virtual plots have increased by over 500% in recent months, ever since Facebook — now Meta — confirmed its Metaverse push., for instance, acquired a $2.5 million land plot in Decentraland, one of the infrastructure providers for virtual worlds. In Decentraland, landowners can build on their plot and design the location as they see fit. That includes potential monetization opportunities, among other things.

Republic Realm, a company actively exploring virtual real estate development, went one step further. The company bought a land plot in The Sandbox, a different Metaverse project, to the tune of $4.3 million. These amounts have a clear FOMO level associated with them, although they can also provide a first-mover advantage if the Metaverse ever comes to fruition. Even so, it will take years for that technology to come to market, and spending millions of dollars at this time seems a bit absurd.

Earlier this week, McDonald's (MCD) shocked the world by filing nearly a dozen trademark applications. More specifically, the patents apply to a virtual restaurant to deliver food in the Metaverse and real-life. It seems the company is afraid of missing out on this new trend, and "virtual food and beverage products" are their primary focus. That push into the Metaverse includes NFTs to operate a virtual restaurant online featuring home delivery. McDonald's also plans events, entertainment services, virtual concerts, and establishing a virtual McCafe.

Getting In Early Isn't About Locations

As Metaverse virtual estate sales topped $500 million in recent months, one may be inclined to think the location of a land plot is essential. That is not necessarily the case. Instead, people will care more about what they can do at the location rather than where it is. Visitors can teleport anywhere with ease, making a venue's location far less important than the entertainment and other benefits it may provide.

As such, consumers should not FOMO into buying land in the Metaverse just yet. More specifically, over $500 million in sales comes from investors, speculators, and big brands. Those brands can afford to lose money on this venture, yet the average investor and speculator, might not. So at this stage, only buy virtual estate if you plan to do something with it. All virtual worlds have tens of thousands of parcels, most of which have been bought early on to flip for profit, yet that trend cannot continue forever.

Moreover, it is essential to understand the average consumer does not need to own land in the Metaverse to explore these virtual stores, venue halls, etc. Visiting the virtual world can be done through computers, mobile devices, or VR/AR hardware. While some locations may be more exclusive and require NFTs to access, it is best to research whether you need to visit them in the first place. Virtual worlds are designed to be open to everyone rather than limit access.

Understand NFTs Before You Buy Them

Given the mainstream attention on Metaverse and NFTs, many people have started to throw money around without knowing what they are buying. People are bound to pay attention when a company like Playboy mints thousands of NFTs. However, most people may have never looked at what this NFT means or does, other than represent the infamous bunny logo.

The "Rabbitars" serve as digital artworks that represent cartoon-like bunny characters to sell on the OpenSea marketplace. They also provide exclusive offers, giveaways, and assorted Metaverse experiences. Furthermore, Playboy (PLBY) will introduce a merchandise drop tied to the Rabbitars. All of this sounds exciting, but most people may not need the merchandise, offers, or giveaways in their life. However, the NFTs sold out quickly. Unfortunately, their price has been dropping quickly from up to $2,000 to below $500 since mid-November 2021.

Similar to other companies and brands issuing their NFTs and Metaverse push, the functionality of these "investments" relies primarily on future promises. While there is a collectability aspect to owning a Playboy NFT, it doesn't do much for most, and it doesn't hold its value either. Therefore, FOMOing into these launches is not necessarily the best idea unless there is a solid utility for these non-fungible tokens from day one. If there is no solid technological improvement or innovation, it makes little sense to spend hundreds, if not thousands of dollars on NFTs.

Closing Thoughts

While companies may be willing to spend millions on NFTs, virtual land splots, and patents, that doesn't mean every consumer should do the same. Companies often explore new opportunities, yet most of them never come to fruition, let alone getting commercialized. There is no Metaverse to speak of today, as the necessary infrastructure does not exist yet in a consumer-friendly form.

As such, there is no need to feel FOMO or YOLO emotions when looking at these headlines. Some NFTs may be more appealing due to the benefits they provide today or in the future, but there is no need to spend money on items you don't need, even if they are virtual ones. Accessing the Metaverse will always be free — even if some projects might gate access to their land plots or events — and until it has come to life, watching on from the sidelines may be the smart financial decision.