What Is the Metaverse?

By Nicholas Rossolillo – Updated Nov 13, 2024 at 9:57 AM

Key Points

The metaverse is a virtual world accessed via computing devices expanding social and economic interactions.
Early uses of metaverse in gaming and social platforms suggest growing digital economy opportunities.
Business applications of the metaverse aim for immersive, efficient collaborative experiences.

The term "metaverse" has been around for decades and was coined by author Neal Stephenson in his 1992 sci-fi novel Snow Crash. But the metaverse has gone viral lately, helped along by Mark Zuckerberg's decision to rebrand Facebook as Meta (META +0.59%). Since then, metaverse has become a buzzword, frequently invoked by the media to get article clicks, capture eyeballs, and use as a platform to discuss cool tech stocks.

But what exactly is the metaverse? Are we all doomed to live in it one day? And is it really worth all the hype?

A virtual road leads to a planet with the word metaverse in front of it.

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About the Author

Nicholas’ investing experience began when he opened up a retirement account shortly after finishing high school. His work experience in financial services began in 2007 in an internship position with a national brokerage firm in Arizona. While his career path led him into civil engineering and related fields, he stayed personally involved and active in the investment realm. He eventually returned to a career in investments and financial services in 2012, running a branch office for the same national brokerage firm, this time just outside of Spokane, WA. During the Great Recession, he began developing a flexible and global investing approach that could evolve with a tumultuous and ever-changing world. Wanting to offer that approach to investment management to his clients paired with a financial planning and consulting business, he founded Concinnus Financial in 2014. Nicholas grew up in a small town on the Northern California coast just a few minutes from the Oregon border. Growing up in a rainy, quiet little town, he developed a love of music and can play several instruments. He now lives with his wife Kasey and their two Humane Society-rescued dogs. Together they enjoy the outdoors all four seasons of the year, cooking, and craft beer and wine.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Nicholas Rossolillo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Meta Platforms, Microsoft, Nvidia, Roblox, Unity Software, and Zoom Video Communications. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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Social apps such as Meta's Horizon Venues (which, to be fair, is still very early on in development) try to solve some of these issues. Available via a Quest 2 VR headset, 3D avatars can give a greater sense of presence when interacting with friends and family, and even live events can be attended together via the app. For example, the NBA has made some games available on Horizon Venues, giving Quest 2 users an immersive way to watch a basketball game complete with interaction with other fans. Sound like a stupid idea? Maybe. But when the television was a new thing, some people might have thought viewing a live event on a TV rather than attending in person was a dumb idea, too.

3. Business use

Social interaction can be bridged into other practical uses for the metaverse. Large parts of the workforce already spend most of their time using impersonal digital tools (email, documents, Zoom meetings, etc.). So the metaverse for work is a question of when these digital experiences become more immersive, collaborative, and human.

Top semiconductor designer Nvidia (NVDA +2.26%) CEO Jensen Huang described the metaverse as a collection of virtual worlds, each one created by a different company, that are connected to each other via the web and can be accessed throughout the workday. Nvidia also envisions the metaverse as extending into the physical world, like the ability to interact with a bot (via an avatar) that can be used to retrieve information or complete work tasks.

Other use cases include constructing "digital twins" of a physical space, either one already in existence or one that has yet to be built. The ability to view and interact with a virtual representation of the physical world has tremendous value. For example, a factory can first be built virtually to aid in construction planning, experiment with different manufacturing line layouts, and simulate production under different conditions. The cost savings and increased efficiency of such capabilities can't be overstated.

In other words, rather than simply viewing something (a live broadcast, webpage, work document, etc.) on a display, the metaverse is imagined as allowing us to be a more direct participant in a virtual experience.

A person's presence in virtual worlds is represented by an avatar that can interact with the virtual world and other people in it. According to Zuckerberg in an interview on the Lex Friedman podcast, "... one definition of this is [the metaverse] is about a time when immersive digital worlds become the primary way that we live our lives and spend our time."

Parts of the metaverse

Does that mean the metaverse won't exist until we are all trapped inside this virtual fantasy realm? Not exactly. By some definitions, the metaverse doesn't have to be accessed using VR. Three-dimensional worlds are already in existence today and can be used without VR. While some might argue they aren't immersive enough (meaning it should feel like we are in the virtual space rather than just looking at it on a two-dimensional screen) to be called part of "the metaverse," early versions of this ambiguous tech term are here.

As for how the metaverse is used, here are three broad cases.

1. Video games

An early use for the metaverse is in the video game industry. Think popular video games such as Microsoft's (MSFT +0.59%) Minecraft, Epic Games' international hit Fortnite, or the online game and creation platform for kids Roblox (RBLX -1.07%).

Although most people still play video games using a traditional device like a computer, smartphone, or gaming console, all the components for an immersive experience are there in some games: A customizable avatar representing the player is made, the virtual world can be interacted with by the player, there's a social component with other players, and an economy exists in which digital goods can be bought and sold.

As for the digital economy component, goods can be purchased with physical money such as dollars, with currency developed specifically for the game (such as Robux in the Roblox platform), or even with cryptocurrencies (some blockchain projects are even selling virtual real estate in the form of NFTs). This concept of the economy being extended into a virtual world (or onto the internet itself) was a primary reason some cryptocurrencies like Bitcoin (BTC +0.82%) were developed.

Most of today's games are rudimentary in comparison with how some envision the future of the metaverse economy, but this digital exchange of virtual products using digital currency within a video game provides a general idea of how it might work.