It doesn’t take much to remind me that technology continues to move faster than my ability to keep up. And such is the case with Decentraland (CCC:MANA-USD). It’s a first mover in the emerging metaverse and MANA is its crypto token.
I don’t spend a lot of time on social media as it is today. So to say I haven’t paid much attention to what may be happening in the emerging metaverse is accurate. That doesn’t mean I don’t understand the appeal, if only on a rudimentary level.
And one thing that I know about Decentraland is that cryptocurrency plays a big role in the utility and enjoyment that residents experience. In doing so, it may be the metaverse that gives cryptocurrency its best chance for mass adoption.
MANA Crypto is Creating Utility
In reviewing the metaverse and the MANA crypto’s role in facilitating its growth, it occurred to me that something ingenious is happening. By creating a virtual world where crypto can easily be exchanged, MANA has developed a use case that’s much further along than other cryptocurrencies.
One current limitation to cryptocurrency is the inability to use it as a widespread medium of exchange. Yes, you can convert crypto to fiat currency, but for many people, that defeats the purpose of owning crypto in the first place.
I know there are proclamations that widespread adoption is only a matter of time. Count me as a naysayer. At least not as long as the price of these investments remains volatile. However, it’s that volatility that adds to the allure of cryptocurrency. There aren’t many fiat investments that create such a heightened sense of risk and reward.
This is where the metaverse comes in. One of the current use cases for MANA in Decentraland is for buying virtual real estate (in the form of an NFT). Many people have cryptocurrency portfolios that have grown far beyond their initial investment of fiat money. That means it’s literally costing them no fiat currency to purchase virtual land. That makes sense, because as Mark Hake writes, there is no basic underlying value for virtual real estate.
A True Second Life
The potential utility doesn’t stop there. if you can buy virtual representations of things you would buy in real life, why not use virtual currency to pay for it? The metaverse is giving individuals a chance to reinvent themselves in ways that we may not truly understand yet.
I have my concerns about that. There are already concerns about our privacy in the metaverse. And there are bigger concerns about the effect it has on already eroding societal and cultural norms. As a parent, I see an erosion of basic social skills in my children and their friends. There are lessons I have to reinforce at ages that I thought it would be common sense.
One Step Ahead of Regulators
In the coming months and years, society will have to wrestle with these and other questions. I hope we do before we lose entire generations to a virtual world. And if we don’t the government is likely to fill that breach.
My InvestorPlace colleague Faizan Farooque mentioned the potential for regulation as being a risk for Decentraland. And I can’t disagree with that. However, it seems that investing in the metaverse may give investors a bit of a longer lead time. After all, if regulators are having some difficulty figuring out how to regulate crypto in the real world, how will they get their arms around crypto being used in a virtual world.
Should You Add Decentraland to Your Crypto Portfolio?
I have concerns about the metaverse. But I also know that many investors reading this article won’t share those concerns. So I’ll say this. I believe that Decentraland has the potential to be a fascinating, and profitable, investment. And one reason for that is the fact that it makes cryptocurrency a medium of exchange in a “build your own internet” sort of way.
As with any crypto investment, I’ll remind you that there is risk involved. And you should only be investing money that you can afford to lose. But as part of your crypto portfolio, I see MANA as a reasonable investment.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.
