The Revealing Economy In The Metaverse

At first glance, it looks crazy. A young friend announced, loudly and with pride in his voice, that he had bought land in the metaverse and planned to build a house there. I asked why he needed a residency, why he didn’t just visit, shoot and do some curls with Zuck, according to the promotional material, then leave after attending a virtual concert with the avatars of his friends. virtual friend. It’s a kind of investment, he explained. One place in the midst of all this desirable activity is, he explained, to be thanked.

A little reflection convinced me that his plan was not as foolish at first nor new or revolutionary as he thought. My young friend’s expectations at Metaverse are perfectly in line with the basics of all money and investment. Just as there is nothing real or significant about the house he is planning or the metaverse for that matter, there is nothing real or significant about money or investment. In either of these areas there is no intrinsic value. All costs and all expectations of return depend solely on what people want and are thought to want other people. There is no other than that.

True, a metaverse home cannot heat its owner in the cold and can cool in the heat. It also doesn’t stop the rain from falling on his head, even if he’s willing to hide that plastic helmet 24/7. In that sense, it has less intrinsic value than a real structure in a real design. But the accommodation offered by the actual structure, the intrinsic part, contributed little to its value. A house on a safe waterfront is more valuable than the same building on an increasingly main street. This difference depends entirely on people’s preferences for the beach, and the success of the investment depends on people’s continued preference for the beach on Main Street. More than a hundred years ago, fashion and taste made the Main Street location even more attractive, and the prices reflected that difference, as did revenues, at least until preferences changed. .

It’s the same with stocks and bonds. Although stocks seem to have a closer connection to the physical world than to the metaverse, that connection has little or nothing to do with their value or prospects for appreciation. Investors only hold a bond because they are confident that the bond will pay interest as expected and return the principal at maturity. Stocks, too, offer nothing more than the belief that the issuer is doing something that people will appreciate and will continue to appreciate in the future. Value and appreciation depend entirely on these beliefs. There is nothing intrinsic or real world beyond them.

In fact, the whole process is mostly taken from the physical world because investors must also believe that the money expected to be paid by the bond or stock issuer will maintain its value in terms of other factors like the people. And it all depends on what people think the money is worth or will be worth if the investment pays off. Money is not intrinsic. Inflation is now an ongoing re-examination of people’s ideas of what money is worth compared to other things. Even if people have gold coins in their pockets, there is nothing intrinsic. Gold has intrinsic value only for a jeweler and the people who wear it, and yet it is only because they or others hold it in high esteem. Otherwise, gold coins have value only because the community agrees that they have value.

The story of a remote Polynesian island can provide insight. Those who visited the area for the first time recounted how community members hid valuables in giant stone wheels that they rolled into the lagoon for safety. Once a prosperous member of the community has amassed enough wealth, they use it – perhaps in the form of shells that are themselves just a storehouse of value because the community has agreed that they are – to buy a tire. . The community keeps an eye on who owns what tires. If that prosperous member of the community decides to build a house, he or she can sell the tire and use the money from the shell to buy labor and materials. (If the community has a banking system, he can alternatively borrow against the value of his wheel.) At a later date, he can decide to downsize and the whole process can be reversed so he has a safe deposit of value for the will of his children.

There is nothing in the Metaverse that has less substance than what our thriving Polynesian and his community believe has value. None of this has less substance than all modern investments. The young metaverse investor does not have to consider the physical or the intrinsic. Like any other investment, all he has to think about is how to give others his stake. It’s a bet, and possibly a good one, on future popularity in the metaverse. Mr. Zuckerberg owns a large amount of property in the metaverse. Since the place is digital and he is the creator of it, his assets are considered eternal. He has a keen interest in promoting the attractions of the virtual resort he has built. If he succeeds, he will get a lot of shells to buy perhaps a physical island or a large yacht.

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