With the growing popularity of the metaverse, demand for digital assets is to rise, but investors should be aware of some near-term dangers, according to Yat Siu. He is the chairman and co-founder of Animoca Brands, and spoke on a Reuters panel on Wednesday.
As a Metaverse investor himself, he feels that digital assets will encounter hurdles in the face of China-like growth.
Users can buy virtual land and other digital goods such as apparel for avatars in blockchain-based virtual world environments using a cryptographic asset called a non-fungible token (NFT).
Crypto-currency aficionados speculated on the fast rising price of NFTs, which burst in popularity in 2021. An NFT representing a virtual world plot of property sold for $2.4 million last week.
When asked if the rapid rise of NFTs and the metaverse signaled an asset price bubble, Animoca Brands’ Siu stated there will be “bumps in the road,”. However, this applies to all finance, not just NFTs and crypto-currencies.
Animoca Brands, a Hong Kong-based gaming company, invests in and produces virtual worlds such as Axie Infinity and The Sandbox. They receives a cut of revenue from transactions in the games.
“One approach to define the metaverse’s expansion is similar to China’s growth 30 years ago,” Siu said at a metaverse conference. “But in a more constrained way,”.
“Maybe people didn’t comprehend it, but the development drivers that make China operate were visible: population increase, industrial growth, and so on. That is what the metaverse is like.”
While he believes that investors that have a long-term view of the metaverse’s utility would do well, he also believes that they must be “vigilant” about potential issues.
“The long term is good, but I believe you must know what you’re doing in the immediate term.”
In the third quarter, NFT’s sales volume surpassed $10.7 billion. Which was more than eight times more than the previous quarter.