Beneath the surface of the everyday, there exists a new world. An alternate reality created by tech savvy entrepreneurs and dreamers, individuals keen to capitalise on the limitless opportunities posed by technology.

This new realm, the metaverse, is no flight of fancy. In fact, it’s so huge Facebook changed its name last year to Meta Platforms and is channelling vast resources into creating virtual realms into which it hopes humans will flock.

While Meta hasn’t had a promising start (Mark Zuckerberg’s personal wealth plummeted by over $US70 billion since the beginning of 2022, according to Bloomberg) there’s plenty who believe money can be made in the metaverse. And those keen to invest in their future may want to start investigating for a slice of this brave new world.

Bryan Ventura, senior associate at law firm MinterEllisonRuddWatts, is a financial services and investment funds lawyer who specialises in financial technology and digital assets. He is also the chair of BlockchainNZ, a membership group for the blockchain and crypto community.

Ventura has worked alongside several extremely successful NFT (non-fungible token) start-ups and other crypto asset ventures, helping to launch and grow their projects, raise capital, and act as an adviser around legal issues.

He says the metaverse may allow investors to further capitalise on NFTs; that emergent metaverses may offer NFT owners entrance to a world that few can access but many desire. And scarcity in capitalism, as we know, equals value.

Unique, a one-off

To understand the potential of the metaverse, and the role NFTs may play in it, we need to understand what NFTs actually are.

“Non-fungible tokens” may sound like gobbledegook, but it means something that is unique, a one-off. People often use the Mona Lisa as an analogy for NFTs – you may see reproductions everywhere, but the only real one exists in the Louvre.

Anything digital file can be an NFT: a song, an image, a video clip, but it’s not the song, image or video clip that is valuable in itself (indeed they can be “stolen” with a right click and a save). It’s the “token” behind them that is valuable; a unique code created on a blockchain (think bitcoin) that only the owner has access to.

NFTs exist on distributed ledgers, which use cryptography and blockchain technology (anyone with a passing knowledge of crypto will know the term “blockchain”). Bitcoin is its own blockchain, but most NFT projects use another popular blockchain called Ethereum.

Blockchain technology is used to create digital art and there are a few New Zealand outfits doing just this, right now.

“Non-Fungible Labs and Altered State Machine are New Zealand projects using NFTs to build digital game characters, which can be seen on FLUF World or AIFA All-Stars NFTs,” Ventura says.

“Another NZ project, VeVe, is using NFT and augmented reality technology to digitise the billion dollar physical statue, comic book and pop art industries,” he says. “VeVe has partnered with Disney, Marvel, DC and over 100 world renowned licences.”

Hype boosts return

But how does the metaverse fit into this? Well, many creators of NFTs also have their eyes on the metaverse.

Take Bored Ape Yacht Club for example. These NFTs (cartoonish images of bored apes) were created on the Eretheum blockchain. From a starting price of around $US190 in early 2021, they were purchased by the likes of Paris Hilton (an NFT evangelist) and Jimmy Fallon.

The hype surrounding them pushed them over $US400,000, but the cryptomarket crashed in mid-2022 and they have dropped to around $US150,000 at the time of writing. (Still not bad for an under $US200 outlay.) There are also claims that the company behind them, Yuga Labs, is involved in the far-right, a claim they vehemently deny.

Yuga Labs is now developing a metaverse, Otherside. They released 55,000 purchased deeds (Otherdeeds) in 2022, for $US5,800 each (they all sold). Otherdeeds give owners the rights to their own “plot” of (virtual) land with distinctive characteristics and resources. Owners of BAYC NFTs were able to access them for free within 21 days.

Given the celebrity status of BAYC, Otherside may be a great success. Original Bored Ape NFTs could become prized artefacts in decades to come. Or maybe not. It’s still the Wild West.

But investment is often about risk. And those who are drawn to new technology, and the potential of the metaverse, may be keen to dip their toes in this (virtual) pool.

Still a work in progress

NFTs may be used in several ways in a metaverse: to purchase digital land; as tickets to exclusive virtual concerts; or as avatars for games. The “profile picture” art works may offer owners special benefits in their related metaverse. It’s still a work in progress.

And it’s all about finding the right NFTs to invest in. When it comes to NFT art, personal aesthetic preference is likely to play a role. It’s important to do research, find out a bit about the developer’s history and aims.

Ventura explains that BlockchainNZ provides free educational articles “on blockchain topics like NFTs, DeFi [decentralised finance] and what a blockchain is".

He says that when researching an NFT, googling basic information about any projects is also worthwhile.

“Joining a NFT project community, like Discord, and following their social media might also give people a good steer on whether the NFT project is genuine, and whether it might be a good project.

A trend worth investigating

It’s important to note that the NFT market is highly volatile. NFTs are purchased with cryptocurrency, which did plummet in value this year. As crypto payments are all anonymous, transactions between users cannot be verified – it may just be associated parties transferring NFTs between two accounts in order to create hype and escalate prices.

And according to a Reuters' story early this year, the top 27 most expensive sales (totalling $US1.3 billion), came from just two wallets. There’s no way of knowing who owned these wallets and if the sales were genuine.

Having said this, NFTs are still being generated, and purchased, with fervour. It’s certainly a trend worth investigating, but definitely a case of “buyer beware”.