What Is the Metaverse? Complete Trading Guide

Whether on the news or on social media platforms, you've probably heard the word "metaverse" one way or another but did you ever stop to consider what it means? 

In this article, we’ll delve into the fascinating and futuristic realm of the metaverse, and we’ll discuss how you can dip your toes in this burgeoning virtual world.

TL;DR: Key Metaverse Points

• Market size: The global metaverse market is projected to reach £1.3 trillion by 2030, according to Goldman Sachs research

• Major investors: Meta has invested over £13.7 billion, Microsoft spent £68.7 billion on Activision Blizzard, and Sony allocated £3.6 billion for Bungie

• Trading exposure: Direct via share CFDs (Meta, Microsoft, Apple), or  the Metaverse Giants Index (BMTVGI), and specialist ETFs like METV

• Core technologies: Virtual reality (VR), augmented reality (AR), artificial intelligence, blockchain, and cloud computing drive metaverse development

• Key sectors: Gaming, social networking, enterprise collaboration, digital commerce, and virtual real estate present investment themes

What Is the Metaverse?

The metaverse represents a persistent, shared 3D virtual space where physical and digital realities converge. The term combines the Greek prefix "meta" (meaning beyond) with "universe," literally suggesting a realm "beyond our universe."

According to research from McKinsey & Company, the metaverse is "the emerging 3D-enabled digital space that uses virtual reality, augmented reality, and other advanced internet and semiconductor technology to allow people to have lifelike personal and business experiences online."

Unlike traditional internet browsing, the metaverse offers immersive experiences where users can:

• Interact naturally through avatars in 3D environments

• Conduct business in virtual offices and meeting spaces

• Own digital assets, including virtual real estate and NFTs

• Experience entertainment through concerts, games, and social events

• Shop and transact using cryptocurrencies and digital wallets

The metaverse builds upon existing internet infrastructure while introducing new technologies, including virtual reality headsets, haptic feedback systems, advanced graphics processing, and blockchain-based ownership verification.

Metaverse Technology Foundations

Virtual and Augmented Reality

Virtual reality creates fully immersive digital environments, whilst augmented reality overlays digital information onto the physical world. According to IDC research, global spending on AR/VR technology reached £31.1 billion in 2023, with enterprise applications driving significant growth.

Companies like Meta have invested heavily in VR hardware development, with their Quest headsets capturing over 70% of the consumer VR market share, according to Counterpoint Research data.

Artificial Intelligence Integration

• AI powers metaverse experiences through:

• Natural language processing for realistic avatar interactions

• Computer vision enabling gesture and movement recognition

•  Machine learning algorithms personalising user experience

•  Procedural generation creating vast virtual environments automatically

NVIDIA's Omniverse platform exemplifies AI-driven metaverse infrastructure, providing collaborative 3D workspace tools for enterprise clients, including BMW, Siemens, and Lockheed Martin.

Blockchain and Digital Ownership

Blockchain technology enables verifiable ownership of digital assets within metaverse environments. Non-fungible tokens (NFTs) represent unique virtual items, whilst cryptocurrencies facilitate transactions.

Research from Gartner indicates that by 2026, 25% of people will spend at least one hour daily in the metaverse for work, shopping, education, or entertainment purposes.

Major Corporate Investments in the Metaverse

Meta Platforms: The Biggest Bet

Meta, formerly Facebook, represents the most significant corporate commitment to metaverse development. According to company filings, Meta's Reality Labs division has invested over £13.7 billion annually since 2021.

CEO Mark Zuckerberg stated in Meta's Q3 2023 earnings call: "We believe the metaverse will be the successor to the mobile internet, and we're committed to building the fundamental technologies that will make this vision a reality."

Meta's metaverse investments include:

• Hardware development: Quest VR headsets, Ray-Ban smart glasses

• Software platforms: Horizon Worlds, Horizon Workrooms

• Infrastructure: Advanced graphics processing, cloud computing capabilities

• Content creation: Tools for developers and creators

Microsoft's Enterprise Focus

Microsoft has positioned itself as the enterprise metaverse leader through strategic acquisitions and product development. The company's £68.7 billion acquisition of Activision Blizzard, completed in October 2023, strengthens its gaming ecosystem across mobile, PC, and console platforms.

Microsoft's metaverse initiatives encompass:

• Microsoft Mesh: Mixed reality collaboration platform

• HoloLens: Enterprise-focused AR headsets

• Azure cloud services: Infrastructure supporting metaverse applications

• Teams integration: Virtual meeting spaces and avatars

According to Microsoft's fiscal 2023 annual report, the company generated £15.5 billion from gaming revenues, positioning it well for metaverse monetisation opportunities.

Apple's Augmented Reality Strategy

Apple entered the metaverse space with its Vision Pro mixed reality headset, launched in February 2024. Priced at £3,499, the device targets premium consumers and enterprise applications.

Apple's metaverse approach emphasises:

• Augmented reality: Blending digital content with physical environments

• Privacy protection: On-device processing and user control

• Ecosystem integration: Compatibility with existing Apple services

• Premium positioning: High-quality hardware and software experiences

Industry analysts from Wedbush Securities estimate Apple's Vision Pro could generate £30 billion in annual revenue by 2030 if adoption accelerates.

Google's Infrastructure Play

Alphabet, Google's parent company, focuses on providing metaverse infrastructure through cloud computing and AI capabilities. Google Cloud offers tools for metaverse development, including:

• Immersive Stream for XR: Cloud-based rendering for AR/VR applications

• AI and machine learning: Tools for creating intelligent virtual environments

• YouTube VR: 360-degree video content platform

• Google Earth VR: Immersive geographical exploration

Research from Mordor Intelligence suggests the metaverse infrastructure market will reach £74.4 billion by 2028, presenting significant opportunities for cloud computing providers.

Trading  the Metaverse

Share CFD Trading

CFD trading allows investors to gain exposure to metaverse companies without owning underlying shares directly. Plus500 offers CFDs on major metaverse stocks, including:

• Meta Platforms (META): The leading metaverse infrastructure company with comprehensive VR/AR development

• Microsoft Corporation (MSFT): Enterprise metaverse leader with cloud computing and gaming assets

• Apple Inc. (AAPL): Premium AR/VR hardware manufacturer with ecosystem integration

• NVIDIA Corporation (NVDA): Graphics processing and AI infrastructure are essential for metaverse applications

• Alphabet Inc. (GOOGL): Cloud infrastructure and AI capabilities supporting metaverse development

Metaverse Giants Index CFDs

The Metaverse Giants Index (BMTVGI) provides diversified exposure to companies involved in metaverse development. This rules-based index tracks US exchange-listed stocks engaged in virtual reality, augmented reality, gaming, and digital asset creation.

Index constituents include:

• Roblox Corporation (RBLX): User-generated gaming platform

• Unity Software (U): 3D development engine for metaverse applications

• Snap Inc. (SNAP): Augmented reality social media platform

• Coinbase Global (COIN): Cryptocurrency exchange facilitating metaverse transactions

Exchange-Traded Funds (ETFs)

The Roundhill Ball Metaverse ETF (METV) offers exposure to companies developing metaverse technologies, including computing hardware, networking infrastructure, virtual platforms, and digital assets.

METV's portfolio includes established technology companies alongside emerging metaverse specialists, providing balanced exposure to the sector's growth potential.

Cryptocurrency Exposure

Digital currencies play crucial roles in metaverse economies by:

• Facilitating transactions: In-world purchases and peer-to-peer transfers

• Enabling ownership: NFT-based property rights and digital collectibles

• Providing governance: Decentralised autonomous organisation (DAO) participation

• Supporting creators: Monetisation tools for content developers

Popular metaverse-related cryptocurrencies include tokens from virtual worlds like Decentraland (MANA), The Sandbox (SAND), and Axie Infinity (AXS).

Metaverse Market Sectors and Applications

Gaming and Entertainment

Gaming represents the most mature metaverse sector, with established revenue models and user bases. According to Newzoo research, the global games market generated £184 billion in 2023, with metaverse-style games showing particularly strong growth.

Key gaming metaverse trends include:

• Play-to-earn models: Users earn cryptocurrency through gameplay

• Virtual concerts: Artists performing for digital audiences

• User-generated content: Players creating and monetising virtual items

• Cross-platform integration: Shared experiences across multiple devices

Virtual Real Estate

Digital land ownership has emerged as a significant investment category within metaverse platforms. According to DappRadar data, virtual real estate sales exceeded £500 million in 2023 across major platforms.

Virtual property investments involve:

• Location value: Premium positions in popular virtual worlds

• Development potential: Building commercial or residential structures

• Rental income: Leasing space to other users or businesses

• Appreciation prospects: Value increases as platform adoption grows

Enterprise Collaboration

Business applications represent significant metaverse growth opportunities, particularly for remote work and training scenarios. PwC research indicates that VR training can be up to four times faster than classroom learning, whilst improving retention rates by 75%.

Enterprise metaverse applications include:

• Virtual meetings: Immersive collaboration replacing video calls

• Training simulations: Risk-free practice environments

• Product development: Collaborative 3D design and prototyping

• Customer experiences: Virtual showrooms and demonstrations

Digital Commerce

E-commerce within metaverse environments offers new revenue opportunities for retailers and brands. According to McKinsey research, metaverse e-commerce could reach £2.6 trillion by 2030.

Virtual commerce innovations encompass:

• Avatar fashion: Digital clothing and accessories

• Virtual stores: Immersive shopping experiences

• Brand experiences: Interactive marketing campaigns

• NFT marketplaces: Unique digital asset trading

Trading Risks and Considerations

Technology Adoption Uncertainty

Metaverse success depends on widespread consumer adoption of VR/AR hardware and software platforms. Current limitations include:

• Hardware costs: Premium headsets remain expensive for mainstream consumers

• Technical complexity: Setup and usage barriers for non-technical users

• Content availability: Limited compelling applications beyond gaming

• Network infrastructure: Bandwidth requirements for high-quality experiences

Regulatory Challenges

Government regulation could impact metaverse development through:

• Data privacy: User information collection and processing requirements

• Digital asset regulation: Cryptocurrency and NFT legal frameworks

• Content moderation: Safety and appropriateness standards

• Competition policy: Market concentration and antitrust concerns

Market Volatility

Metaverse stocks have demonstrated significant price volatility, influenced by:

• Technology hype cycles: Speculation and reality alignment

• Earnings performance: Revenue generation versus investment costs

• Market sentiment: Risk appetite for emerging technologies

• Economic conditions: Interest rates and growth expectations

Competitive Dynamics

The metaverse landscape remains highly competitive, with multiple companies vying for market leadership:

• Platform fragmentation: Multiple incompatible virtual worlds

• Standard wars: Competing technical specifications

• Network effects: Winner-takes-all dynamics in some segments

• Innovation pace: Rapid technological change and obsolescence risk

Future Outlook for Metaverse 

Market Growth Projections

Multiple research organisations project substantial metaverse market growth:

• Goldman Sachs: £1.3 trillion market opportunity by 2030

• Morgan Stanley: £8 trillion potential market size

• Gartner: 25% of people will spend one hour daily in the metaverse by 2026

Still, only time will tell what lies ahead.

Technology Development Trends

Key technological advances supporting metaverse adoption include:

• 5G networks: Enhanced connectivity enabling mobile metaverse experiences

• Cloud computing: Reduced hardware requirements through edge processing

• AI advancement: More realistic and intelligent virtual environments

• Hardware innovation: Lighter, more comfortable, and affordable devices

Industry Integration

Metaverse technology integration across traditional industries presents investment opportunities in:

• Education: Virtual classrooms and training programmes

• Healthcare: Medical training and patient therapy applications

• Manufacturing: Digital twin and remote collaboration tools

• Finance: Virtual bank branches and trading environments

Practical Trading Strategies

Diversified Approach

Given the metaverse market uncertainty, diversification across multiple companies and sectors can reduce concentration risk:

• Large-cap exposure: Established technology companies with metaverse investments

• Pure-play investments: Companies focused primarily on metaverse development

• Infrastructure providers: Semiconductor and cloud computing enablers

• Content creators: Gaming and entertainment companies

Phased Investment

Gradual position building rather than substantial initial investments:

• Pilot positions: Small initial allocations to test investment thesis

• Performance monitoring: Regular assessment of company progress

• Position scaling: Increased investment as metaverse adoption accelerates

• Risk management: Stop-loss levels and portfolio allocation limits

Longer-term Perspective

Metaverse investment may require patience as technology adoption and monetisation models mature:

• Development timelines: Infrastructure and content creation take time

• Market education: Consumer behaviour changes gradually

• Revenue realisation: Monetisation models need validation

• Competitive shakeout: Market leaders may take years to emerge

Conclusion

The metaverse represents one of the most significant technological and investment opportunities of the next decade. With major corporations committing billions of pounds to virtual reality development and market research projecting trillion-dollar opportunities, the sector offers compelling prospects for informed investors.

However, metaverse investment requires careful consideration of substantial risks, including uncertainty in technology adoption, regulatory challenges, and significant market volatility. Success will likely favour diversified approaches across established technology companies, emerging specialists, and supporting infrastructure providers.

Through CFD trading platforms like Plus500, investors can gain exposure to leading metaverse companies, including Meta, Microsoft, Apple, and specialised funds like the Metaverse Giants Index. Whether through individual share CFDs, diversified ETFs, or sector-specific investments, multiple pathways exist for participating in the development of the metaverse.

As virtual worlds evolve from science fiction concepts to commercial realities, investors who understand both the opportunities and risks will be best positioned to benefit from this transformative technology revolution.

*Past performance does not reflect future results. The above are only projections and should not be taken as investment advice.