In October, I wrote about the rebadging of the social media platform formerly known as Facebook. The beleaguered firm had de­cided that a name change might help to shed its image as a toxic platform known for amplifying hate speech, fake news and for using surreptitiously gathered data to boost engagement and advertising revenues.

The key to Facebook’s makeover was its pivot to the “metaverse”, a combination of virtual reality (VR), augmented reality (AR) and video where users “live” within a digi­tal universe. The term metaverse — “meta” (meaning “beyond”) and the “verse” (short­hand for “universe”) — was coined by Neal Stephenson in his 1992 science fiction nov­el Snow Crash, where humans interact with each other as avatars as well as with software agents in a three dimensional or 3D space that uses the metaphor of the real world.

If you watched movies like 2018’s Ready Player One or Free Guy released earlier this year, you got a glimpse of the upcoming metaverse. Some of you are old enough to re­member Second Life, the heavily hyped on­line virtual world, created by Linden Lab in 2003. Although hundreds of millions of peo­ple were supposed to have used the virtual world, it is a virtual ghost town now with just half a million users.

But the metaverse matters because it is a key building block for the next new phase of the internet or what some tech pundits have dubbed the Web 3.0. Pre-internet days before we surfed the World Wide Web, our dumb phones did not allow us to do instant messaging or emails as well as to watch mov­ies and live sports, or listen to music. In late 1990s, platforms such as Google emerged, which made the internet easier to navigate. The arrival of social media a few years later, followed by smartphones, made it even eas­ier for us to stay connected and marked the start of Web 2.0.

Now, the Web 3.0 internet era is dawning. Think of it as a new decentralised web with a new generation of internet applications and services powered by distributed ledger tech­nology or blockchains. The metaverse will just be an essential part of the new inter­net. “The metaverse will not fundamentally replace the internet, but instead build upon and iteratively transform it,” notes Matthew Ball, managing partner of EpyllionCo, a ven­ture capital firm and the author of the up­coming book The metaverse and how it will revolutionize everything. He likens the Web 3.0 transition to the handover from the early internet to the current mobile internet in the aftermath of smartphones.

“The metaverse is a natural progression of the current Internet,” Haim Israel, head of global thematic investing for Bank of Amer­ica in Tel Aviv, tells The Edge Singapore in a recent phone interview. “We already live in the metaverse,” he argues. “But it is a two di­mensional or 2D metaverse. We are already shopping online, banking online, even socialis­ing online.” As we move from a 2D metaverse to a more immersive, compelling experience of a 3D metaverse, Israel says we will get a lot more applications and be able to do a lot more things, just as our experience dramati­cally improved when we transitioned to the mobile internet nearly 15 years ago.

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You have already been inside the metaverse if you have played video games. Roblox Corp and Epic Games are already churning prof­its from the sale of software and services. Yet the real metaverse is much more than just Roblox, Fortnite or Minecraft or some of the other well-known versions of virtual worlds. The big money in the metaverse will not be generated if you started wearing those weird Meta Platform’s Oculus or HTC Corp’s virtual reality headgear but the use of the metaverse by industrial companies as well as in educa­tion and training.

Just how big is the commercial opportu­nity? Tech fund powerhouse Ark Invest esti­mates that revenue from the virtual worlds could approach US$390 billion ($531 billion) by 2025, up from around US$180 billion this year. Bloomberg Intelligence forecasts that the total market opportunity for the metaverse will more likely be in the region of US$800 billion by 2024. It is still early days but new use cases are emerging almost every other week that could render those forecasts as far too conservative.

“The metaverse will be as transformative and valuable as the emergence of mobile In­ternet and the fixed-line internet that preced­ed it,” says Ball. “It will touch every industry and profession, enlarging or disrupting today’s leaders, and leading to countless new com­panies and technologies,” he says.

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So what are we are likely to see as the Web 3.0 or the metaverse is rolled out over the next few years? “We will need faster com­puting power, data storage, telecom infrastruc­ture, cloud computing infrastructure and of course applications and software,” notes Is­rael. That means huge opportunities for the likes of graphics chipmaker Nvidia Corp, Uni­ty Software Inc, Roblox, Epic Games and oth­ers. You will be able to access the metaverse through a range of devices from smartphones to PCs to VR headsets by Oculus or HTC and AR smart glasses by Apple Inc or mixed re­ality gear from Microsoft Corp’s Mesh plat­form and Amazon.com Inc.

“AR is likely to be bigger than VR,” says Edison Lee, an analyst at Jefferies & Co in Hong Kong “but VR could materialise sooner as it requires no 5G and there is a big gaming user base that is ready to migrate”.

Monetising the industrial metaverse

The most overlooked part of the metaverse opportunity is industrial. The metaverse will allow industrial firms to become more effi­cient, slash costs and innovate helping make them more globally competitive. Already many firms in North America and Europe are using the metaverse to mimic production process­es to see what they will look like in the real world. German automaker Bayerische Mo­toren Werke AG or BMW is already using metaverse applications to improve productivi­ty, manufacturing processes as well as indus­trial design. Right now, the only way to test the efficiency of a new manufacturing plant is to build one and then see how it works. Yet setting up plants is not cheap. By virtually try­ing out different processes on the metaverse, industrial firms can save a lot of time, effort and money. “The industrial metaverse is not a moonshot,” says Israel. “It is already tak­ing shape now. Over the next three to four years, we will see widespread metaverse appli­cations across the industrial arena,” he says.

Graphic chips giant Nvidia rolled out its own industrial metaverse, called Omniverse, a year ago. It gives 3D designers a shared vir­tual world from which they can collaborate across different software applications and from different geographic locations. Swed­ish telecom equipment firm Ericsson is us­ing the Omniverse to build digital twins for its 5G networks.The company is building city- scale digital twins to help accurately simulate the interplay between 5G cells and the environment to help optimise 5G perfor­mance and coverage.

BMW recently signed an agreement with Nvidia to build a metaverse that enables it to see how future mobility will look like. Nvidia is helping other automakers reconfigure their electric vehicle EV plants and autonomous ve­hicle AV assembly lines. Roblox is working with South Korea’s Hyundai Motor on the metaverse to help test new vehicles virtually. Nvidia is also working with defence equip­ment maker Lockheed Martin on its manu­facturing processes. It is also working with the US Department of Agriculture Forest Ser­vice and the Colorado Division of Fire Preven­tion & Control, to run simulations of wildfires with its Omniverse. Nvidia will use variables like wind direction, topography and whatever other information is available to create a dig­ital twin of a wildfire and predict how it will play out. Athleisure firm Nike is using the metaverse to design and test new sneakers.

It is highly unlike that one company will dominate the metaverse or the Web 3.0. “The big success of internet was because it was al­ways an open platform, says Israel. “Anyone can build a website or an app for a smart­phone. Anyone can come up with their own content and services. That’s what will hap­pen with metaverse as well.

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“The metaverse is about creating expe­riences. It is the internet for Gen Z (people born between 1997 and 2012) If one platform is not being updated, Gen Z will just move on. New technologies, new things will come along. The only way to rejuvenate Web 3.0 is by keeping it open,” he says.

Crypto currencies key to Web 3.0

Another important area of Web 3.0 is pay­ments. “We will buy stuff online for use on­line,” says Israel. If we are going to live more of our lives online and it is an open-source platform that can be accessed by people from all over the world where people from all over the world it is likely that the payment meth­od will be digital or cryptocurrencies rather than dollars or euros or yen. “Because there is no unified global platform that everybody can agree on, it is more likely that blockchain will be the key platform,” he says. Already the main way to pay for virtual goods like non-fungible tokens (NFTs) is cryptocurren­cies. As people start using cryptocurrencies in the metaverse, it will likely change the whole narrative around digital currencies.

How can you profit from the coming metaverse boom? You can try buying stocks that have exposure to the emerging tech­nology. In the aftermath of Facebook’s de­cision to rename itself as Meta in late Octo­ber, its shares initially surged 13%, only to fall later. Other so-called metaverse “plays” saw their own shares do the same. One way to bet on the rise and rise of the technology is to buy into one of the many broad-based metaverse-focused exchange-traded funds or ETFs that have been listed over the past six months. The biggest of them is Roundhill Ball Metaverse ETF (ticker symbol: META) which is based on an index that was created by EpyllionCo’s Ball.

Among its top holdings are Nvidia which supplies computing power to support the metaverse has the largest weight in the index or over 7%. Among other major components of the ETF are software powerhouse Micro­soft which also makes Xbox gaming console, e-commerce giant Amazon.com which has a growing cloud gaming footprint, world’s larg­est gaming firm China’s Tencent Holdings, Metaverse software firm Roblox, cloud com­puting services firm Fastly and gaming engine firm Unity Software Inc. Also in the index are iPhone maker Apple, Meta Platforms and Singapore-based Internet firm Sea.

Most of us have lived through the first two iterations of the internet. Now, the third one beckons. “The metaverse will be the biggest disruption that humans have ever experienced,” says Simon Powell, an analyst at Jefferies & Co in Hong Kong. “It is a wrapper that will roll up other digital platforms.” The oppor­tunities to monetise Web 3.0 are likely to be far bigger than e-commerce, search advertis­ing and social media that were at the centre of the first two versions of the Internet.

Assif Shameen is a technology and business writer based in North America

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